Efficiency is doing things right.
Effectiveness is doing the right things. - Peter Drucker
As a consulting firm that focuses on helping organizations become both efficient and effective, we've been very excited to see the country's three leading sources of information on nonprofits--GuideStar, Charity Navigator, and BBB Wise Giving Alliance--denouncing the "overhead ratio" as a valid indicator of nonprofit performance.
In fact, they've launched a campaign to "correct the common misconception that the percentage of a charity's expenses that go to administrative and fundraising costs--commonly referred to as "overhead"--is, on its own, an appropriate metric to evaluate when assessing a charity's worthiness and efficiency."
For way too long, we've been seeing organizations short-change critical, necessary investments in capacity to keep their overhead rate as low as possible so as not to scare away donors. In fact, this issue has come up in almost all of Common Ground's recent organizational change engagements. In framing a set of key recommendations for one of our multi-national clients last year, we wrote this:
"... Your negative perception of overhead expenses as waste or inefficiency, rather than as an investment in people and in organizational resilience, is another holdover of [the organization's] evolution that is inhibiting your next stage of growth."
This TED talk from Dan Pallotta focuses on fundraising in our sector, looking specifically at issues around overhead.
Pallotta was crucified in the media when his AIDS Rides and Breast Cancer Rides came under fire for their fundraising and marketing expenses. I was in that conversation ten years ago and my thinking has really evolved as more and more of our work looks at management and capacity issues with our own clients.
|Pallotta: The Way We Think About Charity is Dead Wrong|
Live Your Dreams!
I'm blessed to be able to spend so many of my days working with amazing people all around the world. Their passion inspires me. Their wisdom teaches me. And their creativity allows me to see the world differently with every new experience.
Over the past few years, in keynote addresses, workshops and seminars, I've shared countless videos to help inspire thousands of people. This video from the Holstee company is one of my favorites.
The words align with our own values and are "a call to action to live a life full of intention, creativity, passion and community." And the LifeCycle Film brings life to the words "through a celebration of gatherings, of diversity, of life, and of the beauty of shared experience."
"There is nothing like a dream to create the future." V. Hugo
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