Does your board struggle with the concept of overhead and do you have a hard time talking about it with them and other constituents? In terms of your budget and programs are you in a cycle where it’s challenging to get stakeholders to invest in your mission because they’re focused on costs?
What are some ways we can talk about overhead that help to change perception of what overhead is and what we should be spending? Here are a few tips and tricks:
- Make sure you can define your costs clearly. What is overhead and what are fundraising costs? What are program delivery costs that may have little to do with overhead and fundraising costs? Having clear definitions and dividing these costs up can go a long ways to ensuring that stakeholders understand what you’re really spending on overhead.
- Understand your margins on key activities. Re-acquiring lost donors costs more than current donors but if you’re going to grow your donor counts you need to re-engage previous donors. It may cost more to provide a particular service. If programs have different cost structures, separate the program revenues and expenses on your reporting.
- Benchmark with your competitors and include this in your board reporting. You may find that peer organizations have very similar cost structures and reporting on peers can help reinforce your own differential performance.
- Understand the sector dialog and use it with your board. Be able to articulate this dialog and investigate industry certification. Sector dialog and certification can provide additional evidence that what you are doing is in line with the sector you’re working in.
- Don’t underestimate the importance of telling your story and using a well understood metaphor to do this. Think of a food label. Food labels are understood by millions of people. Is your reporting and financial information as easily understood and consumed? If not, it’s time to re-design.
- Focus on results and outcomes. Most of us don’t do this well and quite frankly some of these are hard to measure. Nevertheless, this is an area of improvement and growth for more organizations – and quite frankly – many of our funders are now demanding more measures and accountability.
- Relationship of what we’re doing to government and public policy. This is an important dialog to engage in with your board. If you’re a health care charity for example, part of this dialog might be how your major gift fundraising is helping to demonstrate public interest in health care, and how could, for example, a government match donations for a key project?
Overhead is tough. We’re constantly tarred and feathered with whatever we seem to spend in this category. While it’s frustrating, and quite frankly tedious to keep telling the same story over and over, enhancing and being more creative with your dialog goes a long way to continuing the education.