The nonprofit starvation cycle

By Ann Goggins Gregory and Don Howard, Stanford Social Innovation Review |

Organizations that build robust infrastructure—which includes sturdy information technology systems, financial systems, skills training, fundraising processes, and other essential overhead—are more likely to succeed than those that do not. This is not news, and nonprofits are no exception to the rule.

Yet it is also not news that most nonprofits do not spend enough money on overhead. In our consulting work at the Bridgespan Group, we frequently find that our best online casino clients agree with the idea of improving infrastructure and augmenting their management capacity, yet they are loath to actually make these changes because they do not want to increase their overhead spending. But underfunding overhead can have disastrous effects, finds the Nonprofit Overhead Cost Study, a five-year research project conducted by the Urban Institute’s National Center for Charitable Statistics and the Center on Philanthropy at Indiana University.

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