4 Bullet-Proof Reasons to Fund Overhead

Last week I obviously hadn’t done my job well. A potential donor and I were having a conversation about his support.  Several minutes into the conversation he said, “So…(long pause)…when I go home to my wife, what am I going to tell her our money went for?”  I was making the case for administrative overhead.  Here’s what I should’ve said…

1. It’s the mature thing to do

Just like the rest of the market economy, in raising support for causes and social efforts, there is a market for everything – different people, companies, foundations and government entities are attracted to different nonprofits, causes and parts of their efforts.  Funding overhead is very attractive to a very small number of people or entities.  It’s usually those people that I think are the most philanthropically mature.  They understand that direct program costs is exciting to the general public, which makes funding overhead extremely difficult and easily the biggest challenge to an organization.  So, that’s what they fund. Instead of going with the norm, they seek to truly meet the most pressing needs of organizations…and fund administrative costs.

2. Leave the sexy opportunities to virgins

What?!?! What I mean is – just like mature philanthropists understand the need and should fund overhead, young philanthropists (in age or experience) are more inclined to fund tangible needs, program-only costs and things that (in their view) directly serve the _____ (insert client type here – children, animals, homeless, trees, patients, etc.).  Leave those opportunities open for the rookie world-changers.

3. You get what you pay for…usually

As I wrote in February, nonprofit boards, donors, executives and decision makers have a choice – and it’s all in the hiring. You can hire for spots paying low-mid 20s and continue to cycle through less-qualified, less-educated, less-prepared folks who (shockingly) produce…less.  OR, you can push the envelope, take calculated risks and bump the salary range in crucial areas and hire a rockstar, who will stay longer, engage more people, improve the organization, and push us all to be better at what we do.  All that awesomeness comes at a cost…and it’s usually worth it.

4. An empty building can’t accomplish much

A hospital without doctors, a school without teachers, a zoo without zoo keepers, a university without professors – won’t change the world.  But you can. People are scared of their donation going into the pocket of a staff person. Or paying for their computer, phone or desk. An empty building, without quality innards just sits there.  The people who’ve committed their lives to ending poverty shouldn’t have to live a life of it themselves. Invest in people and organizational capacity and the returns will be tenfold.

Bring sexy back – make your gift unrestricted, fund overhead, brag about it and encourage your friends to do the same.

4 thoughts on “4 Bullet-Proof Reasons to Fund Overhead

  1. Love this post, Nathan! I think we all need to do a better job of helping donors understand the impact of their giving – especially for unrestricted support. Thanks for these talking points!

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