Jitasa Nonprofit Blog

Nonprofit Overhead

There is a growing, but small, movement within nonprofits to de-emphasize the importance of the admin to program ratio.  In the past, organizations like Charity Navigator helped reinforce the emphasis that overhead is bad through their rating systems.  Funders didn’t help either, with their limited and restricted funding for capacity building or overhead.  In the past 10 years, more and more funders are recognizing that this emphasis is not necessarily healthy, or tied directly to outcomes.  Charity Navigator has come out with their 2.0 ratings tool which is far more balanced.

In the past, with less data and only 990s to look at, it was a simple and easy ratio to observe.  Sometimes, just because the data exists, doesn’t mean it is what you should emphasize.  There is an old saying, “what gets measured gets done.”  And unfortunately, this has been measured for quite some time.  Another reason this has been monitored is for the truly fraudulent nonprofits that spend 80-95% of their funding on fundraising – and virtually nothing on programs.  The recent list of the “worst 50 charities” had program spending as low as a few percentage points.  This is an important alarm.

But this doesn’t mean that an organization that spends 30% on overhead has less impact than an organization that spends 15% on overhead.  The future is truly measuring program impact, and joining that with financial spend for a comprehensive picture.

For more on the Topic of Nonprofit Overhead visit:

Nonprofit Quarterly – ‘Why Can’t We Get Over Overhead

Jeff Russell, CEO/Founder, Jitasa

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