I’m happy to see the discussion in the nonprofit and charity sector tuning away from who has the lowest overhead. Although keeping overhead low can be a sign the organization is not wasteful, it says nothing about how effective they are.
One of the first vocal activists against the overhead stigma was Dan Pallotta, his TED talk was one that opened my eyes to a different way of thinking about fulfilling objectives instead of just watching you cost of fundraising.
Art Taylor, Jacob Harold, and Ken Berger
Recently three very influential people in the nonprofit community have released a letter to the public, and to nonprofits warning about the obsession with keeping costs low. You can read the letter at http://overheadmyth.com/letter-to-the-donors-of-america/.
You may also want to listen to an excellent interview with them on Tony Martignetti’s podcast Nonprofit Radio at http://tonymartignetti.com/2013/09/nonprofit-radio-september-6-2013-overhead-myth/.
Recently I read With Charity for All by Ken Stern, it’s a must read for anyone in the nonprofit sector.
While profit is an easy way to measure how effective a for-profit company is, it can be a little more difficult to calculate how effective a non-profit is, but still a core part of fulfilling the mandate of the organization.
Ken’s book has some great real-world examples of where some organizations may actually hurt the very cause they were created to help. This is why people need to start acting more like an investor and less as a donor, expecting a return on their investment.
This is difficult because of poor research and reporting by many organizations. This needs to change. I wouldn’t invest in a company that didn’t know if it was, or ever will be profitable, why would I donate my money to an organization that didn’t know if it had any impact?