Charity Overhead: Myth, Mystery or Just a Misunderstanding?

If you've been paying attention to the both the trade publications and consumer media, you've probably noticed a more frequent focus on overhead — that combination of fundraising and general and administrative (operations) that costs money that is then not available for programming — than, you know, fulfilling your mission.

But let's face it — overhead is a fact of life. Electricity, printer ink and telephones are generally not optional extras. We need a certain amount of overhead to function. Just try convincing your employees that working in a stifling hot room in July without the benefit of a chair to sit on is a realistic expectation; sweat shops are frowned upon, probably even more so than charity overhead rates. And to make matters worse, those persnickety employees insist on being paid, using the excuse that they, too, have overhead — like food, water and toilet paper. Not glamorous — but hey, that's reality.

I recently viewed the DVD of a panel discussion, "Charity Watchdogs, Donor Perceptions and the Overhead Myth," a program held Jan. 30 by the Direct Marketing Association of Washington (D.C.). Since I haven't read much about the content of this discussion, I want to share with you comments from the panelists that I found interesting, insightful and, yes, at times, challenging. Don't expect to agree with them all, but "listen" and then decide what else you can do today to give your donors confidence that you are worthy of their support.

Dan Pallotta, president and CEO, Charity Defense Council: Yes, the man who perhaps started all this discussion when he gave a TED Talk entitled "The Way We Think About Charity Is Dead Wrong" was on this panel. Following are a few of his opening comments: "We do this work because we want to see problems solved in our lifetimes." "The deepest flaw in the use of the fundraising measure is its injustice towards and discrimination against less popular causes."