Charities Urged to Crush Overhead Myth, Take Actions Toward Overhead Solution
(Press release, October 21, 2014) — As Americans donate generously this holiday season, the three CEOs of the leading information sources on nonprofits — GuideStar, Charity Navigator and BBB Wise Giving Alliance — issued a joint letter urging charities to help crush the false notion that overhead ratios serve as the sole basis for trusting a charity and to help move toward an Overhead Solution by demonstrating ethical practices, managing toward results and educating funders.
The Overhead Myth campaign is a continuing collaboration among the three major nonprofit information providers that distributed a joint letter last year to the donors of America denouncing the overhead ratio as a primary measure of charity performance. This year's open letter published on www.overheadmyth.com is addressed to nonprofit organizations — and asks for their help in moving toward an Overhead Solution by:
- Demonstrating ethical practice and sharing data about performance by informing donors about their goals, strategies, management and governance.
- Managing toward results by using performance-based management systems and understanding the true costs of achieving their missions.
- Educating donors, especially in fundraising materials, about how they accomplish their charity work and not spotlighting financial ratios as a major way to confirm trust.
"Based on the overwhelming response to our first letter to the donors of America, we know that the nonprofit sector is hungry to dispel the Overhead Myth," said Jacob Harold, president and CEO of GuideStar. "Our second letter, addressed directly to nonprofits, builds on that momentum by providing actionable steps so nonprofit leaders can focus on meaningful and measurable results rather than misleading, simplistic overhead ratios."
The open letter and supporting materials and resources offered at overheadmyth.com is under a Creative Commons license, and nonprofit organizations are encouraged to print it for free and use it how they wish.
"For many years BBB Wise Giving Alliance has encouraged donors to verify their trust in charities by considering the full picture of an organization's performance and not just financial ratios," said Art Taylor, president and CEO of BBB Wise Giving Alliance. "We also believe that charities have a responsibility to steer donors towards a better understanding of their activities and accomplishments and look forward to helping them share that message."