The Overhead Myth: Moving Toward a Solution

overheadIn 2013, Jacob Harold, President and CEO of GuideStar (www.guidestar.org or @GuideStarUSA) joined with colleagues at BBB Wise Giving Alliance and Charity Navigator to write an open letter to the donors of America explaining that “overhead ratios” are a poor way to understand nonprofit performance.

He states:

As you know, these ratios—the percent of charity expenses that go to administrative and fundraising costs—tell us nothing about an organization’s performance against its mission.

We believed that the nonprofit sector was hungry to dispel this “Overhead Myth.” The field’s extraordinary reaction to the first letter has thunderously affirmed that belief.

Today, we build on that momentum by offering a second letter to you, the nonprofits of America. In this second letter we suggest a set of steps nonprofits can take to help us all move beyond the Overhead Myth. In simple terms, we must offer donors an alternative.

We believe it will take a shared effort to focus donors’ attention on what really matters: your organization’s efforts to make the world a better place. Please join us as we seek to move from the Overhead Myth to the Overhead Solution.

Sincerely,
Jacob Harold, President and CEO, GuideStar

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