(1) The Way We Think About Charity Is Dead Wrong, by Dan Palotta
Perhaps most visible in the debate is Dan Palotta, whose TedTalk, “The Way We Think About Charity Is Dead Wrong,” has been viewed over 2.1 million times.Recap: Palotta has been arguing forcefully for years now (including at our 2010 Texas Nonprofit Summit) that too many nonprofits are rewarded for how little they spend — not for the impact they make. We’ve got to change the way we “discriminate” against the nonprofit sector, he says, if large scale social change is ever going to occur.Nonprofits are competitively disadvantaged and subject to undue “policing” that hinges on the assumption that overhead isn’t a critical part of the “cause” we care about – which is “dead wrong.” Action item: Check out this TedTalk and be inspired (or at least agitated). Then share it with senior leaders at your organization, and carve out time to discuss what you might attain if you could remove barriers in one or more of the areas he highlights.
(2) The Overhead Myth, by GuideStar, CharityNavigator, and BBB Wise Giving Alliance
Greenlights recently joined GuideStar, CharityNavigator, and the BBB Wise Giving Alliance in calling for an end to the obsession with nonprofit overhead costs as the be all and end all measure of nonprofit worth.Recap: In this letter to the “Donors of America,” the authors stress that there are better measures – measures more clearly linked to performance and outcomes – than just overhead. They cite specific research studies showing the inaccuracy of overhead ratios and a range of negative consequences that can result from underinvesting in infrastructure.Action item: Is your board still focused on the percentage of your costs that go to administrative and fundraising expenses? Take some time at an upcoming meeting or retreat to review this letter and these statistics and discuss how you should measure and talk about your organization’s successes with stakeholders.
(3) The Nonprofit Starvation Cycle, by Stanford Social Innovation Review
Another oft-cited article, this time from the Stanford Social Innovation Review, vividly describes a nonprofit starvation cycle that is undermining our efforts in the sector. Recap: The starvation cycle starts with “funders’ unrealistic expectations about how much running a nonprofit costs,” the authors note. Nonprofits feel the need to conform to these expectations to get funded, which in turn leads to nonprofits’ “misrepresenting their costs while skimping on vital systems.” Sound familiar? Action item: In your next conversation with a trusted donor or funder of your nonprofit, consider engaging in a conversation about this common starvation cycle, the impact it may be having on your efforts, and steps you could take together to break out of it.
(4) We Just Don’t Have the Money and Other Fibs We Tell Ourselves, by Bill Shore
Share Our Strength CEO Bill Shore argues in a recent Chronicle of Philanthropy blog post that it is our own failure to dream big that holds nonprofits back.Recap: We nonprofit leaders tend to suffer from “a failure of imagination and a crisis of confidence when it comes to investments that won’t pay off until the long term,” he asserts. Shore, who will keynote the 2013 Texas Nonprofit Summit, describes the hard choice that Share our Strength recently made to serve fewer people in the shorter term so that investments in internal systems and infrastructure could lead to greater ultimate impact over the long haul. Action item: At your next leadership team or staff meeting, consider brainstorming what investments you might be able to make now that could lead to exponential impact down the road. What short-term consequences might be worth bearing in order to get to that bigger pay-off in meeting your mission?If you’re ready to move beyond overhead to measuring what matters, our Resource Library has an entire section on Planning and Evaluation full of free downloads, and our recent Measuring Nonprofit Impact research report summarizes what other Central Texas nonprofits are doing when it comes to evaluating results.