Overhead on non-profits

Summary of study from GreyMatter: New research shows the average American believes it is reasonable for non-profit organizations to spend 23 cents out of every dollar on overhead expenses such as fundraising or administration.  However, 62% believe non-profits typically spend more than is reasonable for overhead, and the average American estimates spending on overhead at 37 cents on the dollar for the typical non-profit organization.  Over a third of Americans believe non-profits typically spend at least half of their money on overhead. More

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Andrew

Andrew Jones has been blogging since 1997. He is based in San Francisco with his two daughters but also travels the globe to find compelling stories of early stage entrepreneurs changing their world. Sometimes he talks in the third person. Sometimes he even talks to himself and has been heard uttering the name “Precious” :-)

6 Comments

  • Andrew,
    I stumbled across Grey Matter’s study yesterday and found it to be a little disconcerting. While it is great that people want to give generously, it is rather sad that they seem to care very little as whether the funds that they give actually go towards helping with the issue/need or bloated overhead costs. The whole thing made me think that people are far more concerned about feeling as if they gave and made a difference than actually making a difference.

  • Makes for interesting consideration, It costs money to raise money. IF you could give to one of two things, causality A’s admin fund, or their far more attractive help the staving children fund, where would your money go.
    Yet our donations can only get over seas because of the admin work done around it.
    I work with a charity and this is a major issue, we are working on a two point action, 100% donation targeting, not random words to hide fees, but a$100 donations to Philippians radio broadcasting goes all to the target. But this means that we need mindful donors to our admin costs.
    What do kiwis think an admin office costs per$ of donation?

  • Tony, administrative costs are unavoidable. However, 20% or more being spent on administrative costs is exceptionally high, and would likely keep me from making a donation. If I resonate with an organization and its values, and said organization is up front about its administrative costs and the fact that it needs its current level of administration, then I would still consider giving. Thanks for providing an alternative perspective.
    As the pastor of a church in the US (I’m not a kiwi) this is something that I have been mindful of as I’ve thought about our church budget. I’m trying to find ways to make a living so that I will no longer have to derive my salary and benefits from the church, thus reducing our administrative costs significantly.

  • Just a quick thought Andrew…
    First, most charities that I’m aware of “game” these numbers to some degree. Of course, they don’t see it that way, they’re just being prudent in how they allocate their expenses.
    Secondly, we need to keep scale in mind. Ignoring my first point for a moment, some large, well connected charities may be able to effectively do more with 75% of your donation than another could possibly do with 90% of that same dollar.
    Expenses deserve scrutiny, but in my opinion they’re not the most important issue. Do your homework, and if you’re onside with the mission of the organization (both the stated one and the one you can see when you look at their work) then support them.

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