No Donor Pays for Overhead

There are three things you can do in 2016 to change this overhead discussion from a negative one to one that is logical, that makes sense and that your donors warmly will embrace:

1. First, get your head right about this topic. The way I worked through this topic to get to a balanced place was to look at how much effort it takes to make a product or make profit in a commercial company. I also looked at how much effort it takes to get anything done.

What I mean here is when you start to examine the effort put out to achieve a result, you begin to understand that it takes far more effort to get a result than you thought. As I have examined this in a number of areas of life, I finally settled on the fact that the relationship of cause and effect—of effort to make something happen versus achieving the result—was a lot larger than I had thought. If all you had to do in life was make a 10 percent effort and get a huge result, life would be easy. So, this is how I did it.

You might have a different path. My point here is stop and think about this a bit. And ask yourself the question—what does it take to get the program delivered in a nonprofit? And how important a role is overhead to making program happen? Your honest answer will help you land in a better place.

2. Realize that major donors can understand how overhead is a critical part of delivering program. More and more enlightened donors are really getting it in this area. They know what it takes to get things done. Many major donors are businesspeople and entrepreneurs. They know what they went through to be successful. They know what overhead they had to have to make things work. They really do understand. But you need to talk sensibly about this. And that is why…

3. You can make a difference in this area. If you start talking about this in a calm, professional and sensible way, you can start to change this around as your donors begin to understand that delivering life-changing help to people and to our planet will not happen without these basic support systems in place.

Another way you can make a difference here is to place the overhead costs, on an allocated basis, as part of the program costs. Too many MGOs are presenting programs to donors without two overheads attached—Overhead No. 1 is the overhead of the program itself. Overhead No. 2 is the allocated portion of overall organizational overhead the program should carry. Both of these should be attached to the program as you present it to donors. This makes sense. It’s right thing to do.

I love overhead! And you can too. It is the power—the driver that makes the good happen. It is the fuel in the engine. What a great thing! Start working to really believe this and help your donors believe it as well. It will make such a difference to them, you, your organization and the nonprofit world in which we all are operating.