A quick glance around social media reveals that the infuriatingly pesky overhead myth is alive and kicking. Although I have no empirical data to verify this, it seems that belief in this destructive concept has intensified since the pandemic.
For those who are unacquainted, the overhead myth asserts that the less a charity spends on overhead costs such as rent, salaries, telephone and wifi, the more money it’s able to direct “towards the cause”. However, separating “programming” expenses from direct or indirect operating expenditures is easier said than done.
Proponents of the myth are guided by the utopian vision of charities being staffed exclusively by selfless volunteers who forsake their worldly possessions, take a vow of poverty and devote every waking minute of their lives to serving others. The notion that anyone should earn a living wage in the nonprofit sector is evil and they’re insistent that none of their donations should ever be used to fill anyone’s bank account.
Exactly where we find such monumentally altruistic souls in large quantities remains a mystery. Of course, such a magical place does not exist. Yet so many unenlightened donors naively and stubbornly contend that charities should operate as close to a “zero budget” as possible.
Volunteers are awe-inspiring and are the backbone of the social impact sector. They can also leave an organization and its programs at any time for a host of perfectly understandable and acceptable reasons.
Delivering programs in a rent-free space without investing a dollar towards administration is something every nonprofit wants. It is also profoundly unrealistic.
The persistence of the overhead myth prevents several charities from accumulating the donations they need to make any discernible change in their communities. However, Giving Tuesday is a special opportunity to push back against the myth and educate donors about the inescapable importance of overhead expenses.
As mentioned above, one cannot neatly divide operating and programming costs. We must seize the opportunity to explain to our prospects and donors that when we employ people to manage nonprofit services, we’re retaining skills, knowledge and expertise that can ensure that desired outcomes become a reality. The risk that they will depart at any given moment leaving the organization and its clients in the lurch is removed.
Investing in administrative expenses is crucial because it ensures that sensitive and confidential information is protected, appointments are set, meetings are scheduled, donation receipts are processed on time, and program supplies is consistently replenished.
Paying for appropriate space for programs is also vital. Whether a nonprofit rents, leases, shares or purchases a primary location, it must be comfortable, bright, barrier-free and useable for a variety of activities. Ample space is needed for storage, reception and offices and other purposes. Space that is provided free-of-charge is frequently cramped, dark, poorly ventilated, inaccessible, has limited parking, or inconveniently located.
To achieve optimal change that enhances the quality of life in their community, a charity must direct funding towards electricity for devices and equipment, heating and air conditioning to ensure the comfort of all participants, telephone and internet for effective communication and information-sharing with their constituents, transportation for volunteers and postage for those who prefer snail mail.
As you connect with donors and prospects on December 3rd, be sure to help them to understand why earmarking reasonable sums of money towards operating expenditures is a critical step that ensures a charity’s program achieve impact. Without qualified staff, trained and supported volunteers, suitable space, and reliable phones and internet connectivity, nonprofits cannot fulfill their mandates.
Politely suggest that your donors and prospects also read some of the writings of Dan Pallotta and view his recent film, Uncharitable. Mr. Pallotta is a champion for the eradication of the overhead myth and presents many compelling arguments for the eternal extinction of this rancid concept. His ground-breaking TED Talk video in 2013 where he professes some of these key points has garnered more than 4 million views on Youtube.
Finally, enlighten your supporters further by stating that investing in your organization’s fundraising initiatives will strengthen its long-term sustainability and position it to make a larger impact in the future. Increasing your nonprofit’s ability to generate more revenue empowers it to obtain the resources it needs to deliver programs with greater ease. Ultimately, maintaining a reliably well-stocked inventory of resources enables your organization to take giant strides towards realizing its mission and vision.
