The Dysfunctional Metrics for Non-Profit Spending
Non-profits are often measured and rewarded for how little they spend.
In fact, allocating lower budget percentages towards overhead is viewed by many as a weightier metric for success than an organization’s ability to scale impact, sustain growth, and provide impactful services. In my opinion, this common view of non-profit spending is broken and dysfunctional. While it may be noble to get as much funding “to the field”, this business model often works against an organization’s ability to do the very thing that their mission and vision states.
I think donors as well as organizational leaders must rethink non-profit spending. The thoughtful strategy for scaling mission and impact should take precedence over lowering the overhead percentage. In many cases, we will help more people by spending more in the right areas that lead to great ROI.
Please take a moment to watch this insightful TED talk by Dan Pallotta. He challenges us to not equate frugality with morality and start rewarding charities for their big goals and big accomplishments (even if that comes with big expenses).