Are you a charitable person? If yes, there are a few things you should know about nonprofit overhead. What you think it financially takes to run a nonprofit is probably incorrect. If you plan to continue investing in charity, you may want to learn more about the overhead myth.

In a study by The Chronicle of Philanthropy, a survey of 1,000 donors indicated that the majority of people still believe in the overhead myth, where nonprofits who keep overhead low are the same nonprofits with higher effectiveness and larger impact outcomes.

It doesn’t make sense

This has led to an unrealistic mentality among givers. The average person really knows next to nothing about what their favorite organization is spending on overhead. In fact, most argue that it’s significantly more than what is appropriate. That mentality means would-be great organizations may be getting judged by the wrong criteria. This misjudgment is causing them to either miss out on needed funding or not expand in a way that raises their overhead ratios. Impact is not directly related to the amount of overhead in which a nonprofit utilizes.

In the nonprofit sector survey, called “Elephant In The Room: Charitable Overhead Ratios And Donor Decisions,” researchers asked charitable contributors to indicate what they thought was an appropriate level for overhead and what they thought groups might really be spending. Turns out, donors’ expectations have gotten more rigid in recent years. Overall, 60% of respondents felt organizations are overspending.

When the last survey was done in 2012, respondents indicated that 22 cents per dollar was a feasible allowance for overhead. In a recent study, they indicated that 19 cents are now expected. At that same time, disapproving donors estimated that today’s organizations are more likely to spend around 28% on these expenses.

It’s hard to assign a fixed number on what charities should be spending, but Bridgespan has found that for sustainable businesses, the back-end number is more like 34%, and often that will double for tech companies. In contrast, many foundations cap this line item in grant requests at 15%, which may be contributing to the perception problem.

Here’s the reality

Researchers asked respondents to name their favorite charity and what they thought it was spending overhead. Then, they went and pulled data on those organizations. Half of the donors named organizations that were spending above the donor-imposed limit of what was supposedly responsible. At least a quarter of respondents favored organizations spending at least twice that threshold. What people say they approve of, is not necessarily in line with what they truly support.

The perception problem is real. Nonprofits feel obligated to try and keep their overhead unrealistically low and it’s hurting the bottom line. The problem is when you have this unrealistically set number, you neglect opportunities like training staff and investing in infrastructure or systems that will help you become better at your job and better at serving your cause. It’s important that organizations don’t place all their focus on keeping the overhead number too low that they end up hurting themselves and therefore hurting their mission in the long run. Nonprofits are trying to better define what overhead looks like within their organization as they communicate with donors, but the reason for overhead spending is still misunderstood.

Start seeing overhead as an investment

Nonprofits must invest in their overhead if they want to continue to be effective. Placing dollars into infrastructure, people, systems, etc., is essential for growth. Nonprofits need boots on the ground and visibility. Without the overhead, without the talented individuals, without the correct systems in place, the mission lies dormant and remains a dream.

Stop comparing apples to oranges. Overhead does NOT equal impact.

As we work hard to find ways to stay in control as our lives change right in front of our eyes, it’s important to remember to focus on the core of what we do. As Marketers, our roles require us to amplify the brands we love and keep them front and center in the marketplace. We leverage the tools in our marketing toolbox to accomplish this and with a bit of strategy, timing and creativity, we often hit the mark, engaging a valued audience and telling an impactful story.

But today, as we deal with both personal and professional challenges to find the balance between sensitivity and transitioning into a voice of hope, we must remember to leverage our creativity for good. We must still find ways to share what our brand is doing to fulfill its mission, while uplifting others to let them know, everything will be okay, as long as we work together. In many ways, business has become personal. 

In times like these, Marketers have an opportunity to create a “ministry” that will help people remain hopeful in better days to come. Creativity is a gift that should never be taken for granted, and we should always remember, where there are roadblocks, there are solutions. Let’s challenge ourselves to be a positive voice in a world that is changing at rapid speed. Let’s use our marketing and storytelling gifts for good because creativity reigns in times of despair.

– Kim Williams, UNL VP of Marketing

It wasn’t long ago that I remember heading to Hobby Lobby with just under $20.00 to purchase decorations for my graduation cap. Although a natural hat lover, this hat was different than any other hat I had ever worn. This hat looked different, it felt different and most importantly it was EARNED different. For many first-generation college students, the idea of finally getting to suit up and walk across what felt like the red carpet at the Grammy’s to celebrate our accomplishments and the many barriers we overcame was something we looked forward to for years! Unfortunately, millions of college students will not get this opportunity. 

The thought of this milestone being stripped away with just one cough is devastating for us all and especially our youth. However, I want to encourage you all to have a “New Look” on graduation. Your hard work and dedication will not go unnoticed. This is a time to celebrate yourselves and be proud of what you’ve done. I challenge you all to think about where you started as a first-year college student, with no idea how you were going to navigate a place so unfamiliar. Give yourselves a pat on the back for making it to the finish line. YOU DID IT!!!

My grandmother once told me, “always bring your own sunshine”, as some things are beyond our control. Go forth and prosper, we are rooting for you! Although you may not have the opportunity to walk across the stage, you are celebrated. Wear your hat with pride and dignity. Your family, friends, and followers are all so proud! Always remember, your greatness is not on you, it is in you and what’s in you can NEVER be taken away! 

-Nicole White, Moguls in Training (MIT) Program Manager 

As we are faced with this new normal, our organization went from filling our youth spaces with the chatter and energy of high school students to connecting via Zoom (a virtual communication platform) in a matter of days. Coronavirus (COVID-19) challenged our team in ways we did not expect but we were ready to stay true to our mission of transforming the lives of teens who will change the world. Despite these challenges, I’m happy to report, our students have not missed one scheduled session! This is a big achievement for us because isolating quarantine measures, our youth have been able to stay connected with their Usher’s New Look family.

As we were on a staff call discussing our plans for the upcoming weeks, I began to think about students who don’t have an Usher’s New Look. Students who were told they had completed their last day of school for what could possibly be the remainder of the school year, who will sit home isolated where learning could be on pause.

I pondered many questions related to our young people whose normal lives came to an abrupt halt. What happens when Summer Slide is preceded by the Spring Slump because of a pandemic? Would these students rebound? Would they get connected with an organization like Usher’s New Look that would continue to guide, develop and keep them on the path to success?

We all know there are a certain group of young people who will be fine and will continue to be exposed to learnings that will keep them on track, meet with tutors and other indicia of privilege. But what about those whose socio-economic level won’t allow them access to additional educational support amid this national emergency? I shudder to think what they will be met with when we emerge from this state of emergency and begin to carry on with our lives.

We must all agree to be the guardians of those who will be left behind, taking the actionable steps to give those youth an extra dose of motivation to get back into the rhythm of life and find their way back to their success plan. Usher’s New Look can help mitigate the gap that will inevitably widen, but we need your help. As we come together to fulfill the physical needs of those affected by the state of our world, do not forget organizations like ours that are investing in the educational needs of our future leaders. You can support us by donating or virtual volunteering so that we can continue in our mission of serving our young people. This work does not stop, even in times like these.

Remember, isolation does not mean we lose touch with humanity. Check on the young people in your life. Send them an inspiring YouTube video or a free virtual self-development course. Offer to help review their resume or conduct a mock interview over the phone or FaceTime. There are many ways to engage safely, just find one that suits you so that when we get back to business as usual, our most vulnerable youth won’t be left behind.

Let’s remember that developing our leaders of tomorrow takes a holistic approach. We must invest in their intellectual and emotional needs as well as their physical needs in order to ensure their futures are bright!

Usher’s New Look (UNL) hosted its inaugural “Follow the Money Tour” in Washington, DC, during the February 18th-21st mid-winter recess school break.  The tour, made possible by a grant from SunTrust Foundation, is part of UNL’s Financial Literacy training infused into the organization’s Powered By Service (8th grade), Leadership Academy (grades 9-12) and Moguls-In-Training (college/postsecondary) programs.  The 25 10th- and 11th-grade Leadership Academy youth from the Atlanta and New York chapters of the organization learned about financial principles by visiting a variety of stops.  The Office of Financial Education at the Consumer Finance Protection Bureau presented a workshop on budgeting and credit fundamentals. The students had the opportunity to tour the Bureau of Engraving and Printing and learn some of the history of our currency.  Students visited the original location and indulged their taste buds at one of the historic DC family-owned restaurants, Ben’s Chili Bowl. They learned the story of the family’s journey from starting a small business to earning national recognition. They discussed the impact a business, no matter the size, can have in building a strong community.  Students also participated in a Networking Social where they heard from community leaders and entrepreneurs, Nikki Howard and Jaqi Wright, also known as The Furlough Cheesecake Sisters. The “Sisters” shared their story of how they used their sparks (talents) to launch a business during the recent government shutdown. The students were able to take advantage of the proximity to another historic landmark, taking a tour of Howard University and learning about financial aid processes and student life on campus.

 

“With only 16 percent of Americans ages 18-26 being optimistic about their financial future, it is important that the youth we serve in Usher’s New Look begin to develop financial well-being habits early.  This trip presented a tremendous opportunity for them to understand the impact of financial decisions in various aspects of their lives. We are confident that the SunTrust Foundation investment in our youth will transform their futures as they prepare to become leaders of the next generation,” said Careshia Moore, CEO, Usher’s New Look.

 

Youth also had an opportunity to take in the sights including a visit to the National Museum for African American History and Culture, the Dr. Martin Luther King, Jr. Memorial, and Lincoln Memorial.

 

“This trip gave me a lot of financial wisdom that enabled me to be aware of credit cards, budgeting, and knowing how to spend money for the right situations,” said Neil, an 11th-grade Leadership Academy youth.  “This trip also gave me the opportunity to be more of an explorer. It allowed me to step out of my comfort zone. It also gave me the wonderful opportunity to try new food and meet new people.”

 

Through a grant from the SunTrust Foundation, UNL has been able to add the financial literacy component to other programs offered. The new curriculum focuses on helping students identify core life values, gain practical experience in making wise financial decisions, and real-life application to improve their quality of life. The “Follow the Money Tour” is the first of two financial-focused trips this year.  The next will be in New York and will focus on investing.

 

“My mission for this trip was to give the students another perspective on how money works, to go beyond the classroom and see how money is used in our government, in the lives of entrepreneurs and the world around us. It is my hope that as a result of this experience, these students will apply the wealth building principles they were exposed to and take full responsibility of their financial futures,” shared Jessica Washington, director of financial literacy who spearheads the program.