It is time to end the charity overhead myth
Howard Lake | 8 July 2013 | Blogs
The burden that all charities struggle under is the myth that overheads are a sign of inefficiency and that staff are creaming off cash that could otherwise be spent directly on beneficiaries. Some charities don’t help the sector, by proudly declaring that every penny donated will go on charitable work.
Anyone who runs a business, or even stops to think about how organisations run, will of course recognise that some ‘overheads’ are essential if the business is to achieve its aims. You need staff, buildings, people who are very good at what they do, heating, lighting and so on.
So, I’m pleased to see a campaign underway in the US aiming to tackle The Overhead Myth. Its creators rightly argue that
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[quote align=”center” color=”#999999″]the percent of charity expenses that goes to administrative costs—commonly referred to as “overhead”—is a poor measure of a charity’s performance.[/quote]
The CEOs of the country’s three main sources of information on nonprofits – GuideStar, Charity Navigator, and BBB Wise Giving Alliance – wrote an open letter to the donors of America arguing that the “overhead ratio” is not a valid indicator of nonprofit performance.
The campaign, valuable and long-overdue as it is, raised some eyebrows from within the US nonprofit sector. Some pointed out that many donors’ and the media’s focus on administrative costs has been fuelled by the existence of sites like these.
About Howard Lake
Howard Lake is consultant editor of UK Fundraising. He founded the site in 1994 and successfully sold it in 2022. As director of Giving X Ltd he is exploring growing giving on a massive scale.
He is the founder of Fundraising Camp and co-founder of GoodJobs.