So What Exactly Is Normal?Ī 15 percent fundraising expense ratio is often cited as the “expected average.” So let’s start with the most elementary of analyses.
#WHAT IS THE IDEAL ADMINISTRATION PERCENTAGE FOR NON PROFITS HOW TO#
But few donors and board members really understand how to evaluate fundraising for these expenditures. The money to pay the bills has to come from somewhere.įortunately, most donors understand that spending is sometimes needed in order to achieve long-term results. Without “overhead,” the charity would cease to exist.
But we also recognize that this is often a right-pocket/left-pocket game that sidesteps the real issue. A well-meaning contributor may state that “100 percent of my funds must go to the children,” and of course, we must respect these wishes. The conversation is driven by fear of disapproval rather than by transparent and honest discussion. The perception is that donors want to see their donations impact those in need and that other expenditures are wasteful.Īs a result, the concept of effectively investing funds in salaries, marketing, and operations, or “overhead,” is rarely addressed. But in the nonprofit world, the rule book is somehow different. The benefits of ethical capitalism are obvious: Investment leads to efficient organizations that meet growing demands. But what if they had a 17 percent expense ratio with $2 million raised and a steady growth curve? What if twice the number of people could have been served through more aggressive investment? Unfortunately, these discussions rarely happen within the nonprofit board environment. We can understand that a board may celebrate a 12 percent expense ratio that raised $1 million. Or rather, the result is that thousands of people who could be served by our fabulous nonprofits and generous donors are not!
The result is that organizations routinely use incomplete measures to assess impact, leading to stunted growth. Misinformation is more prevalent than facts. Most advice is based on word-of-mouth discussions between well-meaning volunteers. Nonprofit boards are in a constant struggle to define the correct level of fundraising expenses.
0 kommentar(er)
