Have you seen the new study from research firm Grey Matter about how Americans perceive charity overhead costs? Participants were asked what level of overhead costs should be considered ‘reasonable’ and then how much they thought most charities spent on overhead costs.
Twenty-three cents per dollar was the average level of ‘reasonableness’ that participants thought charities should spend on overhead costs – that is, fundraising and administrative expenses. In contrast, the average participant in the study thought that most charities actually spend about 37 cents on overhead costs.
I’ve worked for fundraisers for 20 years. Some things never change. We did a lot of work in educating the public about costs back in the 1990s; to our shame, we still have that work to do.
The Nonprofit Overhead Cost Project actually found that average fundraising and administrative costs for most non-profit subsectors was less than 30 cents. Most charities understand what it takes to keep the show on the road. What we fail to do is to communicate that to the public.
But I’m encouraged by some of the report’s findings. After all, we read headlines denouncing any cost in fundraising, and we read about donors saying they won’t give to a charity unless all of their contribution is used on programs. This report reflects an understanding on the part of the public that charities do need to invest in order to deliver. And that’s a step forward.
It’s clear from the report that some donors have more nuanced perspectives. Nearly 20 per cent of respondents felt that overhead costs of 40 cents on the dollar—or more!—were reasonable, depending on the circumstances of the organization concerned.
We have an opportunity to focus this conversation in a way that helps the causes and the beneficiaries we serve. Our supporters want us to achieve impact – so let’s help them understand what we have to do to do just that.
Andrew Watt is president and CEO of the Association of Fundraising Professionals. This article was first published on the AFP blog.