The Overhead Myth

By April 28, 2015Finance

By Art Taylor, president, BBB Wise Giving Alliance, Jacob Harold, president/CEO, GuideStar USA,Ken Berger, president/CEO, Charity Navigator |

To the Nonprofits of America:

We write to ask for your help to end the Overhead Myth — the false conception that financial ratios are a proxy for overall nonprofit performance. Last year we wrote a letter to the donors of America asking them to consider the results (especially outcomes and impact) created by nonprofits, and to not judge you solely on percent of charity expenses that go to administrative and fundraising costs. While overhead can help us identify cases of fraud or gross mismanagement and serve as a part of an organization’s dashboard of financial management metrics, it tells us nothing about the results of your work (i.e., how you meet your mission). … To that end, we ask three things of nonprofits.

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