Donors are Against Nonprofit Overhead? Why?

Wishing Well by scott-tanis on Flickr
Wishing Well by scott-tanis on Flickr

I’ve been thinking a lot lately about overhead in nonprofits.  All credit to Dan Pallotta at Harvard Business Review for getting me to really consider it.

It seems like the magic ticket for getting donors large and small to trust their money to your cause is to promise low overhead.

Even Seth Godin, a thinker and writer I respect and enjoy, asked for donations to a cause he believed in and touted “zero overhead.”  I bet that this was a deal-maker for many donors – all their money could go directly to building a well instead of disappearing into the underworld of overhead.

Is overhead in nonprofit and charity work really so horrible?  Do donors prefer to not have knock-out accounting professionals running nonprofit finances?  Do they wake up in cold sweats after nightmares of their money going toward rent for an organization that could dig more wells after Seth and his crew of one-time donors move on?

Unlikely. “Overhead” probably just sounds like wasted money. It’s easy to not realize what “administrative costs” actually are until you stop and think about them: accounting, an office manager, internet access, rent, and electricity.

Are these unreasonable ways for an organization to spend money? Does having these roles and services increase or decrease output? What about quality of output? What about capacity for continued output?

Maybe we can think about the purpose of nonprofit overhead before determining that it’s not worthy of our $50 one-time donation.