The Real Cost of Overhead
Prior to this bombshell exploding, a few staff members had, from time to time, suggested the paper in question be shredded. Not on your life. It costs money to have it shredded and carted away, and it's a real waste not to reuse it. We want the highest rating for the lowest overhead, they were told.
This tale of woe, although culminating in a true crisis of trust, was years in the making. Most such debacles usually are. They start when you create the conditions for them. Like overnight success, the overnight failure is usually 10 years in the making.
Liz's worthy organization sought to be frugal for years. Not a bad thing. Gradually, but surely, this desire to be financially responsible morphed into a cost-cutting monster. That's when the need to keep faith with investors, donors — those who pay the bills — somehow got lost in the desire to maximize cash flow and reduce overhead to zero — if possible.
Every activity has its cost. The key is keeping these costs in proportion to their return. Being willing to re-examine long-held assumptions and make change is essential to remaining relevant to those who support you as well as those you serve. Whenever we believe we have it all figured out, that's a sure sign that we do not.
Recovering from a breach of trust is possible. It won't be easy. It won't happen immediately. As I wrote to Liz in my response to her, you can do it if you're willing to be honest with yourself, 'fess up to your supporters and then ask them how you should move forward.
The last part is the hardest. It's difficult to take direction from others, especially those whose trust we've violated. Assuming the intrinsic worth of our mission without validation from those who invest in us is very risky, however.
Larry believes in the power of relationships and the power of philanthropy to create a better place and transform lives.
Larry is the founder of The Eight Principles. His mission is to give nonprofits and philanthropists alike the opportunity to achieve their shared visions. With more than 25 years of experience in charitable fundraising and philanthropy, Larry knows that financial sustainability and scalability is possible for any nonprofit organization or charitable cause and is dependent on neither size nor resources but instead with the commitment to create a shared vision.
Larry is the author of the award-wining book, "The Eight Principles of Sustainable Fundraising." He is the Association of Fundraising Professionals' 2010 Outstanding Development Executive and has ranked in the Top 15 Fundraising Consultants in the United States by the Wall Street Business Network.
Larry is the creator of the revolutionary online fundraising training platform, The Oracle League.
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