A Message From GuideStar President/CEO Jacob Harold

 

Foundation Center and Jacob Harold

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This article originally appeared on PhilanTopic, a Foundation Center blog, on 27 October 2014. The original article can be found here.

In 2013, I joined with partners at the BBB Wise Giving Alliance and Charity Navigator in writing an open letter to the donors of America explaining that “overhead ratios” are a poor way to understand nonprofit performance. We named this campaign “The Overhead Myth.”

I’m glad to report that the response to the campaign, including the original Overhead Myth letter to the donors of America, far exceeded our expectations. More than one hundred articles have been written about the campaign. It comes up every time I hold a meeting or give a talk. For many in the field, it’s been a deep affirmation of something they’ve long known. And, indeed, many leading organizations — the Donors Forum, Bridgespan, the National Council on Nonprofits, and others — have been working on the issue for years.

But we also know we have a long road ahead of us. The myth of overhead as inherently “wasteful” spending is deeply ingrained in the culture and systems of the nonprofit sector, and it will take years of concerted effort for us to move past such a narrow view of nonprofit performance to something that fully reflects the complexity of the world around us. That effort is essential, however, if we want to ensure that we have a nonprofit sector capable of tackling the great challenges of our time.

That’s why last week the CEOs of Charity Navigator and the BBB Wise Giving Alliance and I released a second Overhead Myth letter — this one addressed to the nonprofits of America. In that letter, we suggest a set of steps nonprofits themselves can take to help dispel the Overhead Myth. We all share responsibility for allowing things to have reached this pass. And it will take all of us to fix it.

We direct this letter to nonprofits not because we feel they are the originators of the Overhead Myth but because they are in the best position to communicate with their donors and funders. We want to recruit nonprofits to help us retrain donors and funders to pay attention to what really matters: results. In the end, that means nonprofits have to throw away the pie charts showing overhead versus program — and  step up to the much more important challenge of communicating how they track progress against their mission.

In simple terms, we must — collectively — offer donors an alternative. In the letter, and on the accompanying website, we call on nonprofits to do three things as their part of this evolution:

  1. Demonstrate ethical practice and share data about their performance.
  2. Manage toward results and understand their true costs.
  3. Help educate funders (individuals, foundations, corporations, and government) on the real cost of results.

We have provided a list of tools and resources related to each of these  goals. These tools give nonprofits tangible steps they can take to engage their stakeholders around this critical issue. As the sector develops new resources and tactics, we will add them to the website.

We believe it will take a shared effort to focus donors’ attention on what really matters: nonprofits’ efforts to make the world a better place. It doesn’t matter whether you work at a nonprofit or donate a few dollars to a favorite charity every year, please join us as we seek to move from the Overhead Myth to the Overhead Solution.

For more information, or if you have a resource related to this issue that can help advance the cause, email overhead@guidestar.org.

GuideStar, a 501(c)(3) nonprofit that connects people and organizations with information on the programs, finances, and impact of more than 1.8 million IRS-recognized nonprofits, serves a wide audience inside and outside the nonprofit sector, including individual donors, nonprofit leaders, grantmakers, government officials, academic researchers, and the media.


Comments (1)

David Nelson

To Guidestar: I noticed that for Clinton Health Access Initiative, Guidestar has not posted amended 990's for 2012 and 2013 that were processed by the IRS early in 2016. Why is Guidestar so far behind? The below postings come from the Economic Research Institute. If that organization is typically ahead of Guidestar in its postings, that appears to be a flaw in Guidestar's processes. Or does the IRS provide recent filings first to Economic Research Institute and then to Guidestar? Year IRS Process Date Form Type Assets 2014 02/22/2016 990 Initial Return $85,249,750 2013 02/12/2016 990 Initial Return $83,246,819 2013 10/24/2014 990 Initial Return $83,246,819 2012 01/03/2014 990 Initial Return $68,838,138 2012 01/20/2016 990 Initial Return $68,838,138 2012 12/31/2013 990 Initial Return $68,838,138 2011 01/06/2014 990 Initial Return $52,362,846 2011 12/21/2012 990 Initial Return $53,063,545 2010 03/22/2012 990 Initial Return $113,424,316 2010 12/06/2011 990 Initial Return $113,424,316 2010 12/31/2013 990 Initial Return $113,424,316 ERI Economic Research Institute is constantly updating this Form 990 Library as new images are provided by the IRS. The list of returns above may include ones marked with icon indicating that the image is being converted for viewing and will be available within 2-3 weeks, so please check back. The three most recent Forms 990 are available for viewing on this site for all filing organizations. Forms 990 from 2002 on are available for any organization reporting compensation through a subscription to ERI's Nonprofit Comparables Assessor™ & Tax-Exempt Survey. IRS Business Master File Information EIN: 271414646 Ruling Date: 03/2010


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