Could Spending More Money on Overhead be a Non Profits Biggest Strength?

There’s a lot of conversation happening around re-defining how we view the current structure of a non profit. Generally speaking, currently we view a ‘healthy’ non-profit as one that spends no more than 20% of it’s (donated) income on ‘overhead’; things like administration, marketing, or keeping the lights on. Which means that 80% should be going towards ‘programs’ or what people usually interpret to mean’the work that actually matters’.

But this conversation is changing as more and more people begin to compare the non-profit model to the corporate model, asking why non-profits grow at such a slower rate, why we’re losing our best staff to the corporate world, etc.

First, watch this video:

I mean, he brings up a lot of good points. Why are non profits discouraged to think like a corporation? How do we measure ROI in a non profit structure?

I know for SOLD, we stumbled in to the complexity of this model by starting off as a film, not a non-profit. We had investors who believed in our film, and raised nearly $100,000 over the course of 2 years to complete it. Today, that would be nearly 40% of our entire annual budget. And YET, that $100,000 has brought a return on investment of 5 years of operation and nearly $1 million raised, 140 students sponsored, a resource center in Thailand, and a model of prevention that works. I’d say that, for us, investing in story and marketing (while expensive) was priceless.

All in all, I sense that the conversation that Dan is having won’t stop here. I’m excited to see where it goes, and I’m excited to participate.

What do you think?

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