Overhead isn’t the issue – and it’s not a fundraising tool

Overhead is NOT an effective fundraising appealLast week, in my weekly email to Fundraising Kick subscribers, I told them to stop talking about what percent of their budget goes to "overhead." I won't go into the entire message I sent, but here's a summary.

You need to know the percentage

People are talking about the percentage of a nonprofit's budget that goes to "overhead." Here in the USA, they can easily look at a charities 990 which publicly announces how much came in in donations and how much fundraising cost. The media and some self-proclaimed charity watch dog groups seem to love criticizing charities that have whatever they consider to be “high” overhead. They paint these nonprofits as greedy, lying organizations merely existing to rip off donors.

So as a nonprofit staff member, you need to be ready to explain yours. High or low, be ready to tell the story.

But as you’re talking with donors and prospects, don’t brag about the percentage. You don’t want to be in that conversation. And focusing on percentages cripples your board members' ability to fundraise.

It’s the wrong conversation

Focusing on percentages and budgets make it very difficult for board members and others to make solicitations. It stresses them out, like math tests did to so many of us in school. And that stress is unnecessary.

What really matters: changing the world

You want your conversation to be about:

  • Impact.
  • Change.
  • Making the world a better place.
  • The difference donors are making with their gifts.

It's about stories and impact. And for board members, it's about their story, why they're giving.

Bragging about percentages sets you up to look awful when you need to invest in marketing, advertising, or events. But not investing could end up costing your nonprofit, eventually making it impossible to survive.

Every time you talk about the percentage, you make the nonprofit the center of the conversation. To be effective at fundraising, the donor needs to be at the center. Worse, you should be talking about things the donors can impact. They can’t do a thing about your nonprofit’s budgeting practices.

Review your stories and fundraising letters

I'm not advocating sloppy accounting or bloated expenses. I am advocating sensible budgeting. Ask the business owners who are your board members what they budget in marketing and advertising. Find out how your nonprofit compares.

But keep the conversation on impact and donors changing the world through your organization. That's the kind of story that your board members can get behind and invite others to invest in.

And check your fundraising letters. They may need to be changed.

About Marc A. Pitman

Marc A. Pitman is the author of Ask Without Fear!, director of The Nonprofit Academy, and founder of FundraisingCoach.com. A coach to leaders around the world, Marc's expertise and enthusiasm engages audiences and has caught the attention of media organizations as diverse as Al Jazeera and Fox News. Marc’s experience also includes pastoring a Vineyard church, managing a gubernatorial campaign, and teaching internet marketing and fundraising at colleges and universities. He is the husband to his best friend and the father of three amazing kids. And if you drive by him on the road, he’ll be singing 80’s tunes loud enough to embarrass his family!

Follow him on Google+, on Twitter @marcapitman, and like "Ask Without Fear!" on Facebook.

Comments

  1. Money quote (literally): “Ask the business owners who are your board members what they budget in marketing and advertising. Find out how your nonprofit compares.”

    Love it, Marc. Keep fighting for equal treatment of the nonprofit sector, because the scale of our social challenges demands no less.

  2. Marc, I couldn’t agree more with this. The most effective nonprofit organizations that connect best with their donors and give donors the credit they’re due will always do well. Sharing stories, demonstrating positive impact, and inviting donors to experience how their donation is transforming their community must prevail!

  3. I love this post, Marc, and echo the message in every workshop and development plan. The focus on the organization has to come out of the equation when we talk about filling a need in the community and the world. Nonprofits are the vehicles of change and donors are the engine. Thank you!

  4. Spot on Marc! Have often remarked that if for-profits had the same ROI that nonprofits have when it comes to CPDR they’d be over the moon. We tend to spend too little on fundraising and marketing simply due to the fact that somewhere, somehow the public became used to the idea that overhead over a certain amount was unconscionable for nonprofits. Why? Because that money should be going to services. Never mind the fact that if the charity spent a bit more on fundraising and marketing they might raise a LOT more to so to services. Just too logical I suppose.
    Thanks for helping to enlighten folks.

  5. Thank you all! I’m glad this resonated! :)

  6. Marion Stolte says:

    Absolutely accurate – we must work at changing perspectives – both ours as well as our donors. Thanks Marc!

What would you add?