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May 13, 2013 By Nell Edgington 2 Comments

Getting Real About Nonprofit Overhead Costs

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Getting Real About Nonprofit Overhead CostsThere is something pretty interesting going on in Illinois around nonprofit overhead costs. I have written many times (here and here for example) about how the distinction between “overhead” and “program” costs in the nonprofit sector is meaningless at best, and destructive at worst.

I’m really excited to see that the Donors Forum in Illinois is starting to host real conversations between nonprofits and philanthropists about the Real Costs (including administrative costs) necessary to create effective social change.

With the help of the Bridgespan Group, in March the Donors Forum brought nonprofits and philanthropists together for a one-day discussion about real costs in the nonprofit sector. They want funders to understand that it is not enough to fund only nonprofit programs. In order to create effective social change, nonprofits must also be able to fund the infrastructure, staffing, space, tools, and research costs of their work.

The image above is a graphic facilitation of the March session. The Donors Forum has also developed a great website with resources for nonprofits and philanthropists about real costs, including Ann Goggins Gregory and Don Howard’s seminal article in the 2009 Stanford Social Innovation Review “The Nonprofit Starvation Cycle,” reports and resources about nonprofit fiscal fitness, Grantmakers for Effective Organization’s study on how philanthropy is changing, and much more.

As part of their efforts, the Donors Forum has also put together this video that helps to explain, in very clear terms, the critical importance of funding ALL of a nonprofit’s costs:

I’m excited to see where this conversation goes and whether more nonprofits and philanthropists start having open, honest conversations about what it really takes to create lasting social change. I’m hoping to interview Valerie Lies, President and CEO of the Donors Forum, later this year about this initiative and where they hope to go from here. So stay tuned.

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  • Creating Honest Conversations Between Nonprofits and Funders: An Interview With Eric WeinheimerCreating Honest Conversations Between Nonprofits and…
  • 3 Things I Wish Funders Would Ask Nonprofits3 Things I Wish Funders Would Ask Nonprofits
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Filed Under: Capacity Building, capacity capital, Financing, Foundations, Fundraising, Individual donors, Innovators, Inspiration, Leadership, Nonprofits, outcomes, Philanthropy, Planning, Roadblocks, scale, Social change, Strategy Tagged With: Ann Goggins Gregory, Don Howard, Donors Forum, Grantmakers for Effective Organizations, honest conversations with funders, nonprofit capacity, nonprofit fundraising, nonprofit overhead costs, overcoming fundraising hurdles, overcoming nonprofit overhead, Philanthropy, raising money for nonprofit infrastructure, Real Costs, Stanford Social Innovation Review, Valerie Lies

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