A nonprofit executive director once said that everyone wants to pay for the social worker, but nobody wants to pay for her desk and telephone.
Donors tend to have an unrealistic expectation that 100% of the money they give to a nonprofit will go directly towards programs. However, it’s important to look at the bigger picture when donating: Like all well-managed businesses, nonprofits have to deal with overhead costs. That doesn’t mean they are being wasteful; it means they are being good business managers.
No System, No Service
Businesses typically provide products or services that cater to a consumer’s need or desire. Nonprofits provide programs and services to solve societal problems, such as poverty or cancer. In this regard, businesses and nonprofits function very similarly: Whether it’s selling coats or giving coats away to homeless people, both need an infrastructure in place to help them reach their goals. That means electricity, rent, computers, telephones, etc. Those aren’t extras; they’re basics.
Paying for a Product Provides Jobs
Corporations are thought of as job-generators. Likewise, while a nonprofit offers helpful services, it also provides jobs. About 10% of the US workforce is employed by the nonprofit sector. Whether you’re for-profit or nonprofit, you are an employer and have to provide for your employees. That means fair wages and benefits.
Money Goes Where It’s Needed
If you buy a pint of ice cream from Ben & Jerry’s, your money may go towards an employee’s health benefits instead of the production of the ice cream. Similarly, if you donate to a nonprofit, your money may fund marketing for a fundraising campaign, and not go directly to programs. In both scenarios, you have to accept the fact that your money is helping the business or organization thrive, no matter how it’s being spent.
Visibility and the Bottom Line
Developing a brand that is recognizable will increase sales or donations. Companies spend millions on commercials, magazine, and social media ads to achieve visibility and improve their sales. Comparably, a nonprofit should also spend money to increase awareness of its cause and boost donor contributions.
Nonprofits need employees, office space, supplies, and recognition. Like any business, there’s a cost to all that. And like any customer, you can’t choose where your money goes once you pay. With businesses, you probably don’t care as much, unless you are concerned about living wages and the environment. For nonprofits, you can and should do a little research, such as checking the organization out on GuideStar or Charity Navigator.
But don’t be adamant about the ratio of “administration” to “program” costs, because it’s ultimately about their impact. After all, that is the bottom line for nonprofits.
By Natalie Glaser, a marketing intern at Red Rooster Group, working with clients on marketing strategies.
