Can anyone point me in the direction of additional resources – especially having to do with what resources/vendors are most in need (in other words what % of nonprofit money is spent on *what*) but also who out there provides a suite of services under one umbrella (donor management, event management, tech services, PR)?

any help is appreciated!
Mel

I have worked in both profit and non-profit organizations for over 25 years with fifteen years in non-profit health organizations and four years in a non-profit animal welfare organization in which I am currently employed.

We too have those who believe that non-profits can live without cost centers or run the organization on purely volunteer help with the minimum of paid staff making far less than market wages. Further, is the belief that goods, supplies and materials to run the organization can be had through the kindness and compassion of donors.

These are misconceptions that hinder the growth of the organization and become obstacles to achievement of the organization’s mission. The non-profit organization must be run as if it were a serious business if it is to be successful and continue to exist in a competitive market. In order to do this, the notion that a non-profit should not make a profit needs to be disspelled.

First: The difference between the profit and non-profit is the treatment of equity. The profit organizations re-invest and return equity to principles and shareholder or owners. The non-profit is obligated to retain equity for re-investment in the organization and/or use equity for charitable purposes. None of the profit can be returned to shareholders, owners or principles.

Second: The non-profit must act as a business and target a rate of return or profit for reinvestment in plant, equipment and future operations. Not to do so is irresponsible and imprudent.

Third: Dependable and knowledgeable staff must be paid livable salaries and benefits. Our organization provides low cost and charitable veterinary and animal welfare services. Low paid, unskilled or volunteer labor cannot perform such tasks. Low paid staff without competitive benefits results in high employee turnover which is costly in terms of staffing and reputation.

Fourth: Money must be spent on resources that help meet the organization’s mission. This means investing in computers, public relations, decent work environments, financial systems, etc. Not to do so will limit growth and result in organizational stagnation.

Fifth: The organization must be supported by a forward thinking Board that is oriented toward policy, planning and growth. Operations should be under the direction of experienced and professional administrative staff.

Sorry, but the days of supporting non-profit and charitable organizations via bake sales are over….

Fred Saunders, MA, CMPE, FACMPE

And about “slick” promotions – again that’s what some people need to pay attention, to decide to act (that is, give), so be open-minded enough to know that just because you might respond to an unpersonalized letter, others need more.

The gold standard for comparison is the Salvation Army. They squeeze every nickel dry. Their good works, as evidenced by press coverage, are their best advertisement, and press coverage advertises their needs for funding.

That is the sort of organization I support, not the ones with CEO’s that make half a million dollars a year and send me piles of glossy promo pieces each year.

This attitude spills over to the Arts. I never order a ticket for a concert or play without asking that my name be left off their mailing list. I keep track of these affairs by reading the paper. I’d far rather they cut down on the slick promotion and drop ticket prices. One or two attractive mailings a year are fine, but not three per event, and these mailings don’t have to be gallery quality to get my attention.

If you want my money, show me you’ll use it responsibly.

The very interesting point you make in the peice, is truly how much overhead is appropriate. Why would anyone think that there ought to be an “acceptable level” of overhead. How can the overhead for running a shelter be the same as for running a literacy program, or a boys and girls club the same as the United Way? Perhaps the public just isn’t thinking about any of these issues when they are being polled about “acceptable levels”.

More importantly, since the boom of NP organizations post WWII, why have we not as sector been able not only to educate the public on the reasonableness of overhead expenses, but also educate our own funders?

Perhaps the problem is this word: Overhead. In its current commonly accepted definition, “monies not directly expended to provide programs and services: aka unrelated expenses”, it doesn’t actually exist (except for rare cases) . In order to serve the constituents/ meet the mission of nonprofit X, you must be able to sustain nonprofit X and all its functions. Therefore, fundraising is a programmatic function, as without funds there would be no program. Marketing is a programmatic function, as without people(or issues) to serve there would be no use for a program. Administration is a programmatic function, as without logistical planning/organization, there would be no program implementation, etc. etc.

Overhead as the name implies, should be defined as expense outside that necessary to implement successful, sustaining, and improving, quality programs which meet the needs of a societal challenge as set forth in one’s mission statement.

Can any of us think of a nonprofit organization (with the exception of the rare corrupt NP ala New Era Philanthropy etc.: very rare cases indeed) that is not expending all of its resources to either barely sustain or slightly improve its programs and services?

We of course can argue about whether the money used is being used as effectively as possible (thus the glut of NP learning programs and services), but any operating organization is going to have some successes and some oportunities for improvement.

I am baffled by this word “overhead” because I can’t see how any nonprofit expenses are over and above the “head” of its programs. Two major myths seem to surround this term as it relates to the nonprofit sector.

Myth #1: There are seperate funds for programs and their administration.

The general public’s (and by similar association FASB 116 117) current abuse of the word overhead implies that somehow one can seperate monies used for implementation of programs from monies used for the programs themselves. Where is the distinction? Any program’s existence is inextrably linked to its planning, marketing, development, funding and implementation. Take any of these away, and you don’t in fact have a PROGRAM: you have only an IDEA. Now how would this same public like to find out that we are spending 75-85% of their donation on an IDEA? It is in fact a miracle that with only 15-25% of our budgets we can actually conceive, develop, fund, create and market our “products.” Show me anyone in the forprofit world who can claim such stellar efficency!

Myth #2: Expendatures on “overhead” can lead to waste, if not forcebly limited by public pressure or funder restriction.

How many of us, working in the sector, would say that we spend even 1 penny more than necessary to meet our mission?

Forget about lavish expenses like business class instead of coach: we won’t even buy two-ply for our bathrooms, we water down our hand soap to make it go farther, we bring in our own coffeemakers for the breakroom and on an on, because we understand that any savings could be the difference between serving one more constituent and not.

Have you ever brought your own box of Klenex to the office, bought your own backpack for your laptop, or expected one of your board members to pay for their own travel to a retreat? Of course you have!

We need to redefine the words overhead and waste as they relate to nonprofits. We must work to raise the level of public understanding of the requirements of making programs and services happen.

The funder community (both individual and organizational) already understands the importance of the services and programs we provide, that’s why they fund our work. However, we must continue to seek ways to help them understand that there is no such thing as “unrelated” expenses. All of our expenses are related to achieving our mission.

Thankfully several well-respected folks (both funders and service-providers) are beginning to publicly make this arguement, at least indirectly, in the form of recent calls for greater access to general opperating grants and monies. Let us hope that the message gets through.

No matter…it is the job of the board or directors to understand what is really going on at the organization. And how many really do? And perhaps it should be the job of non-profits to know more what is going on at other non-profits. Perhaps having some kind of industry seal of approval, and not just media top ten lists and funder-driven evaluations, would help public perception and take some of the pressure off non-profits to prove themselves worthy.

I think this is part of the reason nonprofits get very creative at burying overhead in program costs. Each book requires light; therefore the cost of the light can be reasonably added into or considered part of the cost for the book. Think of the cost to purchase something from a for-profit business–all the costs of development, management, production, etc. associated with that product are factored in (along with market issues of course) to create a price. It seems reasonable to me to do the same for nonprofits–to factor in all the costs of providing a service into the cost for that service. So it is not only doing a disservice to the nonprofit and those it serves, but it is also simply inaccurate and false to consider that the cost for the book is only the price a nonprofit may get from a publisher. The costs for the nonprofit to obtain, hold onto, account for, and distribute that book are real costs that are in fact part of the cost of the book.

I agree that we must think carefully about what the message is. I don’t have an immediate answer to this question. It will take thought and deliberation.

It seems we have an opportunity here to educate people on these issues. As the previous commenter indicated, people do need to understand these issues. But I think that we as nonprofit folks need to modulate our tone from one of indignation bordering on outrage to one of sincerity and passion for our cause(s). If people already have negative perceptions of nonprofits, we do not need to add to them with the way we express our messages.

Think of any other campaign to educate and change people’s knowledge, perceptions and attitudes toward anything. This is the sort of campaign that could let people know just what the real challenges are. Of course the question is, who will pay for it? I do not have an answer, but I think there are opportunities out there that we are missing. I am open to ideas and truly believe that when people become aware of the true challenges facing nonprofits, they will think differently about the spending that nonprofits do.