I'd like to restrict my donation to pay for salaries, rent, professional development, health insurance, a bonus, a staff retreat, or fundraising. In sum, if it's "overhead" I'd like the charities I support to spend 100% of my donation on it. Most people want the exact opposite. Funder after funder, foundation after foundation, all caught in the same trap. A vicious trap. A trap called out by a highly controversial and timely advocate: Dan Pallotta, author of Uncharitable: How Restraints on Non-profits Undermine Their Potential. I wish you could see the amazing presentation he gave at the Texas Non-Profit Summit last month, but sadly the "content was removed by owner", whatever that means. Kudos to Greenlights and especially the brilliant Kim Wilson, for bringing Dan Pallotta and his provocative message to our industry. I'm halfway done with Dan's book. The first half of the book tackles an argument around non-profit compensation that seems to trump and polarize people into a complete bottleneck of an argument that renders them useless for getting to what I believe is most important issue at hand: an arbitrary meaningless yardstick destroying the effectiveness of non-profit industry and the very fabric and essence of philanthropy.
What's the yardstick? A societal obsession that's led to the institutionalization of the belief that a non-profits percentage of spending on fundraising and administrative is an indication of effectiveness AND worthiness of a funders donation.
Hogwash. Here are 5 reasons to donate to overhead.
1) How much money a charity spends on administrative or fundraising expenses is arbitrary and meaningless. It says absolutely nothing about what matters: how effective the agency is at fulfilling their mission. Some agencies rent space. Some get it for free. That doesn't matter: what matters is how is the charity impacting the lives it's trying to change? If it can't serve its clients because there's no parking at their "free" in-kind office space then they aren't very efficient and my gift is more likely to make a bigger impacting at at agency paying rent.
2) The "ratio" of general and administrative expenses to program expenses is a fabricated number to start with. Charities decide what expenses are allocated to programs and what are allocated to overhead. There isn't one way to do it. There are many. One ED entered every expense into Quickbooks, regardless of the charge, to 90% programs, 3% fundraising and 7% administrative. I would estimate she is in good company and many charities, especially larger ones, follow her formula. At the non-profit I started and led for twelve years I took a different approach: expenses and timesheets were billed directly to the programs they were spent on or served (i.e. summer camp, after school etc). To put it simply, "overhead" is in the eye of the beholder.
3) Helping ensure that people are compensated fairly for their talents and dedication, that achievements are rewarded, that staff can live comfortably, that workers have the technology infrastructure to thrive and efficiently serve clients and raise money, and work in facilities that are fully operational, optimal and safe is aGOOD investment. It's money well spent. End of story. Nuff' said.
4) Whatever happened to the joy of giving? To the spirit of philanthropy? Do we really think so low of people at charities that we honestly can't trust them with the very dollars we want to give? Hmmm...if we feel that way have we really spent enough time getting to know them? Or do we have trust issues? If so, why are we giving? Are you a bitter, cave-dwelling, catlike creature with a heart "two sizes too small," living on snowy Mount Crumpit, just north of Whoville, home of the merry and warm-hearted Whos? If so, please stay on Mount Crumpit and stay away from charitable ventures in Whoville. A true philanthropist is made of many admirable traits and after generosity come equal parts of faith and trust. If you don't have that, don't give. Sadly, non-profits are courting enough grinches already and don't need another.
5) Focus on what is important in the first place: that Headstart is giving kids a headstart to succeed. That adoption agencies are getting kids adopted into safe, loving homes.
What's the overhead in your house? Paper towels? Toilet paper? Could you live without that? I hope you wouldn't try. Should we judge you for spending on that?
Give and stay classy,
Rachel