BBB Wise Giving Alliance, Charity Navigator, and GuideStar Join Forces to Dispel the Charity ‘Overhead Myth’by Nick LaFleur on Jun. 17, 2013, under alert, Life, Tips
The leaders of the country’s three leading sources of information on nonprofits- BBB Wise Giving Alliance, Charity Navigator, and GuideStar have come together to denounce the “overhead ratio” as the sole measure of nonprofit performance.
The letter, signed by all three organizations’ CEOs, marks the beginning of a campaign to correct the common misconception that the percentage of charity’s expenses that go to administrative and fundraising costs- commonly referred to as “overhead”- is an appropriate metric to evaluate- solely or predominantly- when assessing a charity’s worthiness and efficiency.
The nonprofit sector, all three organizations say, has often erroneously focused too heavily on overhead, which has starved some nonprofits from investing in themselves as enterprises and created what the Stanford Social Innovation Review calls, “The Nonprofit Starvation Cycle.”
“All three of our organizations – BBB Wise Giving Alliance as well as Charity Navigator and GuideStar – have been speaking publicly but separately for some time about the need to shift the conversation from overhead to impact and broad accountability standards,” stated Art Taylor, president and CEO of BBB Wise Giving Alliance. “This campaign is a big step forward in harnessing each organization’s unique voice to distribute one powerful message: let’s move beyond overhead.”
The open letter, published today on a new website, www.overheadmyth.com, states: “Overhead costs include important investments charities make to improve their work: investments in training, planning, evaluation, and internal systems—as well as their efforts to raise money so they can operate their programs. When we focus solely or predominantly on overhead… we starve charities of the freedom they need to best help the people and communities they are trying to serve.” The letter goes on to recommend that donors focus their attention on more relevant factors behind nonprofit performance: transparency, governance, leadership, and results.
The Overhead Myth letter is under a Creative Commons license, and nonprofits are welcome to print it for free and use it how they wish.
To learn more about the Overhead Myth campaign and get involved, please visit www.overheadmyth.com. For more information on Southern Arizona charities visit Wise Giving of Southern Arizona at www.tucson.bbb.org/charity.