On Nonprofit Overhead Costs

Change

overhead is important to ensuring that donation dollars are spent in the most influential way possible

By Debi Wolski Matese, Manager of Performance Improvement and Safety, At least once a year (usually around the holidays), one of my well-meaning friends posts a table on Facebook that illustrates which common charities have the highest overhead, along with a friendly warning to keep donations away from those charities. After all, we don’t want our donations to pay for *gasp* salaries! The implication is that any nonprofit with high overhead must be misspending the charitable donations it receives.

I usually intervene, posting briefly about why overhead is important to ensuring that donation dollars are spent in the most influential way possible. There is usually no meaningful discussion after that. The fact is that most of us believe that overhead is bad.

Consider the following:  

  • Overhead ratio is “imprecise and inaccurate,”
  • Companies with high-quality training and development programs (overhead!) generate 26% more revenue per employee and realize 40% less voluntary turnover than their peers,
  • Investing in the appropriate team (overhead!) to run programming means better outcomes, thus a greater Return on Investment (ROI),
  • The outcomes of a program are the best indicator of quality, and are indicative of the best investment for a donor.

This year when you are considering your year-end donations, I ask you to reexamine the criteria that you use to determine which organizations you support. Spend a moment to research organizations to ensure that they provide quality programming.

To learn more about the YWCA Greater Cleveland’s program outcomes, call 216-881-6878. Please donate online to support our work to eliminate racism and empower women.

How can you best support those nonprofits that are important to you? Comment below.

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This entry was posted in Nonprofit Management, YWCA Greater Cleveland and tagged , , , , , , , , , , , , , . Bookmark the permalink.

2 Responses to On Nonprofit Overhead Costs

  1. Jerome Baker says:

    Thanks for clearly providing information about overhead spending in non-profit organization, and how to perceive them differently.

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