Busted! The Overhead Myth by Laura Hennighausen, Director of Funder Relations

It’s November. The leaves are turning, the days are getting shorter, and you know what that means in the world of fundraising - the return of people on social media crusading against making year-end donations to nonprofits with “high overhead”.

The Overhead Myth, a name coined by GuideStar, BBB Wise Giving Alliance, and Charity Navigator in 2013, is the misguided notion that nonprofit effectiveness can be measured in part by the ratio of budget dedicated to general operating expenses including rent, utilities, benefits, and *gasp* salaries. Believers declare that they want to see their donations going to directly serve a charity’s clients or programs. But how do they imagine the work actually happens?

General operating support dollars are the most important to a nonprofit and often the hardest to come by. Operating support funds what is unsexy but necessary - how can a shelter or art gallery operate if there are no lights to turn on, or no one to turn them on?

It’s important for nonprofits to be honest about what it takes to accomplish your work in order for the public to truly understand the need. I am a big proponent of telling our clients to ask for what they really need - don’t adjust your fundraising goal so it sounds less intimidating, be transparent. And don’t subscribe to the idea that you have to keep your overhead as low as possible to be fundable. We must all advocate for competitive salaries in our industry in order to retain top talent and touting how little we pay the people in charge of achieving our missions does nothing to address these inequities.

We should be promoting how great general operating dollars are. Donors often ask what is most needed, and this is it! Nonprofits need funding that is flexible and can be used to support these most essential needs. And why shouldn’t an Executive Director or Education Coordinator make a reasonable salary? Without their time and talent, these life-saving programs wouldn’t happen in the first place.

So this end-of-year giving season if you see someone posting on social media saying not to donate to a certain nonprofit because of overhead, speak up! Vu Le has some great suggestions on How to deal with uninformed nonprofit watchdogs on his NonprofitAF blog.

We can all do our part to educate donors and advocate for what we really need.