Even In Charity Work: It Takes Money To Make Money

Don't Fear The Overhead

Raising money for your charitable organization takes money. And time. These commodities (along with the office lease and the electric bill and the sticky notes…) are often lumped into the category of ‘overhead.’ Moreover, the category ‘overhead’ is often presented as the antithesis of the charity’s good work for its constituents. But, the Red Rooster Group argues, such self-imposed categories do a disservice to the very charities claiming they have a handle on lowering their overhead for the sake of their charitable work.

The problem, the group argues, is real: charities should present themselves as frugal and efficient with their donations. But if charities get caught up in arguing for that efficiency at the cost of raising those donations, the appeal becomes self defeating.

While no [one] is arguing that nonprofits shouldn’t be efficient with their money, financials alone do not indicate the type of problem the organization is attempting to solve and their effectiveness in doing so. Many organizations spend little on fundraising (they rely on diminishing government grants – not a great strategy) and have no clue how to eliminate the cause of the social problem that they are addressing, and indeed will never actually do so. They have simply institutionalized a method of serving a specific population.

Given the malfeasance of banks, Wall-Street brokers, Enron, AIG (we’ll just stop here), charities rightly want to appear ‘transparent’ and develop trust as to where their funds are being used. Yet the category of ‘overhead’ is so vague that many charities fudge the expenses within that category, which – of course – defeats the ideal of transparency. Fudging the expenses also is a wishful denial of the fact that time and money have to be spent to raise further money over time.

In an effort to answer their own question, the Red Rooster Group posits a 12-point list of criteria to consider the success of a nonprofit’s work. The non-binding list provides some excellent ideas about how to present a charity or mission-based business to its constituents, customers, and (potential) benefactors. We quote only two here, relevant to the issue of fetishizing overhead:

6: Organizational Effectiveness. Is the organization just getting by or does it have sound policies and practices in place to ensure its success? Is it investing in marketing and infrastructure that will allow it to grow?

10: Values. Does the organization say one thing and do another or is it acting in sync with their values? (Such as providing social services for their clients, but failing to pay their employees a living wage to provide benefits).

Both of these (and many of the others) require ‘overhead.’ So don’t shy away from that fact or try to mask it. Be frank with your supporters about the costs, and explain why the costs are part of the overall impact of what your organization has accomplished and will accomplish.