It’s time to fully fund nonprofits

The conversation around funding nonprofits’ overhead or administrative costs has escalated in recent months, particularly due to an initiative spearheaded by GuideStar, Charity Navigator and BBB Wise Giving Alliance. CEOs of the three organizations penned a letter saying that the amount a nonprofit spends on overhead “is a poor measure of a charity’s performance.” GuideStar then created a campaign to end the overhead myth that has resources and FAQs as well as a sign-on support effort.

The three charity CEOs are not the only ones concerned about the reluctance of funders and donors to fully fund the cost of nonprofits’ programs and projects. A Stanford Social Innovation Review’s article says “The cycle starts with funders’ unrealistic expectations about how much running a nonprofit costs, and results in nonprofits’ misrepresenting their costs while skimping on vital systems—acts that feed funders’ skewed beliefs. To break the nonprofit starvation cycle, funders must take the lead.”

A group of foundations at our colleague organization, Donors Forum in Illinois, has produced a short video on the topic, also.

Since the end of the year is a big fundraising time for charities of all kinds – including our community foundations – this campaign is quite timely. Let’s end the overhead myth, funding nonprofits for sustainability.