Yes I know it’s a tired and aggravating, and frankly ugly subject. No matter how much we hope it doesn’t come up in conversation, somebody inevitably voices their unshakeable belief that charities should spend as little as possible on overhead.
Such was the occurrence while I chatted with a friend over a glass of wine last week. With the warmer weather approaching, we were discussing the merits of different summer camps our children attended. When I mentioned the name of a well-known camp for kids with special needs, my friend instantly labelled them as one of those organizations “that spends too much on administration”.
As I rolled my eyes, I asked him why. “I want to see how much they’re wasting on administrative costs because none of my hard-earned money is going into the pockets of rich spoiled directors!”
“There’s no way I would ever donate to that group without seeing their finances.” Biting my tongue with the pressure of the jaws of life, I politely pointed out how non-profit leaders earn as little as 10% as their counterparts in the private sector.
“They still blow way too much on overhead in my opinion” was his retort. However, after I pressed him to list a single ounce of proof that this charity was “blowing way too much on overhead”, he abruptly changed the subject.
Although these conversations often evoke a visceral response from individuals from the non-profit space, we must practice patience and understanding when engaging others. The truth is the charitable sector has done a lousy job of explaining the important and indivisible linkage between operating costs and charitable impact. An uncomfortably large portion of the donor public still have very negative and uninformed views regarding “overhead” spending by non-profits.
As we interact with others from outside of the charitable domain, realize that they may not be aware of key aspects of non-profit operating budgets that conceivably could shift their perspective. Our duty is to enlighten them with these facts so we may move the dialogue in a positive direction. Below are five (5) potentially opinion-shifting aspects many may not understand about philanthropy:
1) Linkage Between Overhead & Program Delivery
Many in the community -at-large aren’t familiar with the close connection between “overhead” costs and direct program delivery. Managing intake procedures for many social service agencies such as conducting needs assessments on clients and safeguarding sensitive information is inextricably linked to program deliverables. Other standard administrative tasks that also directly affect program outcomes include volunteer screening and evaluation, service evaluation, and producing staff orientation manuals. Failing to include these expenditures in charity operating budgets would absolutely prevent them from sufficiently delivering programs and creating positive change.
2) Salaries Are An Investment In Crucial Skills
People outside the non-profit sector may not view staff compensation as an investment in the retention of vital skills, knowledge and experience that if absolutely necessary to ensure that effective service outcomes are achieved. Though the majority of the public acknowledge that most organizations require paid staff to function, some have the inaccurate impression that charity employees take home exorbitant renumeration and benefits packages. In reality, many earn little more than a living wage. Poor wages can result in low staff morale, high turnover rates and stiff severance payouts which can cost charities more in the long-term. Worst of all, program outcomes are not realized and client needs go unfulfilled.
3) How Can Charities Help People When Nobody Knows They Exist?
Marketing and branding is an overhead expense of gargantuan importance for non-profits to inform those affected by the issues they address of the help they can provide. Charities that are “the best kept secret in the community” are of no use to anyone. People in need must be aware that these programs and services tare available to assist, empower and transform them. Obscurity is the enemy and guarding against it frequently involves allocating significant funds to amplifying social media advertising, erecting visible signage and launching ambitious public outreach initiatives.
4) Accountability Isn’t Cheap
Transparency, integrity and accountability are three values that every charity must espouse. Just as my friend asserts, establishing and maintaining trust with donors and the general public must be a priority for all non-profits. Yet building and sustaining trust is unavoidably expensive. Preparing and publishing financial statements, legal fees, insurance and filing T3010s can cost organizations tens of thousands of dollars annually. Despite such a stratospheric expense, these are arguably every charity’s most critical group of budgetary items.
5) Space Can Determine The Quality Of Service Delivery
The state and condition of the venues and facilities where charity activities take place commonly defines levels of program effectiveness. Poorly ventilated, cold, decrepit and inaccessible places that host peer counselling, social inclusion or performing arts initiatives likely will yield miserable experiences for participants. Securing bright, comfortable and vibrant spaces where people can enjoy optimal social, psychological, educational and recreational endeavours is a non-negotiable expense for charities of all types.
Although tedious, constructive and respectful discussions with friends and colleagues where we introduce them to some of these important details can help to dispel the “overhead myth. The more we reduce the stigma of operating spending by non-profits, the stronger positioned the sector is to solve society’s challenges.
