It’s Time To Start Judging Nonprofits Like For-Profits

Written by: Alexa Clay and Jon Camfield

When considering donations, people often make harsh assumptions about nonprofits that spend on marketing and overhead. But maybe those expenses means the organization is doing a good job.

Every year around this time, a batch of articles comes out talking about how to maximize your year-end giving by focusing on nonprofits with super-low overhead, so you can rest assured that every cent you donate goes directly to the cause.

But I’ve spent the better part of my career as a nonprofit tech warrior, from volunteering in the Peace Corps to a variety of domestic and internationally focused NGOs and nonprofits–small and large. I’ve had contract, full-time, pro-bono, and board positions, and have been on both the grant-requesting and grant-reviewing/giving sides of the equation, and I can tell you that this isn’t entirely fair. The problem is this overhead supports the cause, and zeroing it out means that the 99% non-overhead may be spent poorly or non-strategically, especially in smaller organizations. Programmatic costs may pay for the work, but overhead pays for the tools to do the work well.

Most year-end-giving articles point potential donors at sites like Guidestar or CharityNavigator, which track overhead and fundraising effectiveness. These sites are great for digging in to an organization’s financials, as well as providing a first pass to look at any anomalies in their numbers. If you’re simply crunching the numbers and looking for the nonprofit with the lowest overhead, though, things have gone horribly wrong. It’s a bad way to judge an organization.

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