Tuesday, September 4, 2012

Better Than We Thought?

Have you seen the new study from research firm Grey Matters 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.

Sound familiar?

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 twenty years. Some things never change. We did a lot of work in educating the public about costs back in the 1990’s; 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 nonprofit 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 percent 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.


Conry Lavis said...

Nice effort. Why do poor and middle class people always think the rich guy is the bad guy? Rich people worked hard to get to where they are (most of them, besides people who inherited it or obtained it illegally). A lot of them give to charity and do good with their money yet poor people think rich people need to be taxed to death. These people who don't have jobs and aren't looking for jobs on welfare point the finger at wealthy people as the source of all their problems when they are the ones who didn't study and do well in school to get a respectable jobs. There is nothing at all wrong with welfare for people who really need it. But if you are just using it as a crutch, you are stealing from the American people. These are the real bad guys!
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Bjorn Karlman said...

Great post. Do you think that perhaps talking about ROI - how much a return you get on each dollar spent on fundraising - instead of the cost to raise a dollar would work better in terms of changing public perceptions in this area?

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