Torpedo the Ratio

I recognize the inherent risks associated with letting go of tight financial controls. I see the awkwardness of talking to donors about the cost of raising a dollar. I see our industry playing Twister—Semantic Version with expense allocation, coming out with legal structures that allow us to say, “100 precent of your donation goes to the cause.” We all know that offices, desks, computers, employees, etc., are not free. We know a marketing-minded visionary donor agreed to “0 percent of your donation goes to the cause” to allow us to make that other statement legally, though not logically.

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The Real Cost of Overhead

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.

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