News Summary

• In 2013, three of the largest agencies teamed up to challenge what they called the “overhead myth,” writing an open letter to donors that was followed the next year by a letter to nonprofits..
• For almost twenty years, researchers and nonprofits have warned about the negative consequences of starving nonprofits of general operating expenses, also known as overhead..
• Izzy Smith, chief information officer for All Hands and Hearts, which mobilizes volunteers to respond to natural disasters, called it an “enduring challenge for nonprofits” to explain to donors and the public about the need to invest in operations and shared services..
• The intention of the changes is to help prospective donors focus on whether a nonprofit is achieving its mission, said Michael Thatcher, the organization’s president and CEO.“What does the money do?.
• Similarly, more donors understand the value of granting unearmarked funds, which allow nonprofits to change plans or simply to invest in their staff or improve their infrastructure or technology..
• The agencies urged donors to consider the results and impact of a charity when deciding where to donate, not just the percentage of their revenue spent on administrative costs and fundraising..