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.

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