Overhead vs. Impact

The “O” Word

There has been a steady increase in private financial giving over the last decade. More than ever, individuals are trying to make a difference in the lives of others. Technology has made us aware of the needs in our communities and has equipped us with new ways to address them. It’s easier than ever for an individual to find and donate to a cause they care about. 

However, with over a million non-profits in the U.S. alone, individuals have begun approaching the non-profit sector with a consumer mindset. They filter and sort non-profits using the criteria they consider most important. Overhead costs have become one of the single most important factors people consider when choosing a non-profit partner. It has become fashionable to support charities with zero overhead costs.

In the public’s eye, any money that does not go directly to the cause they support is considered “wasted”. While most professionals would agree that overhead costs should not exceed 35% a certain amount of overhead is necessary to provide quality services. A more important factor to consider is a nonprofit's impact.

What is Impact?

Impact is more than just a handful of stories about how nonprofits affected the lives of individuals positively. Impact is about the intentional ways an organization sets goals to support their mission and measures long term growth. 

Short Term vs. Long Term Impact 

Every nonprofit organization sets out to have some type of impact. To figure out what kind of impact an organization is trying to make, simply look at its vision statement. For example. Adopt a Love Story wants to "help families overcome financial obstacles to adoption". They want to make adoption easier for families. While their impact is not sustainable without their programs, that is the intent of their organization. Their focus is on meeting immediate needs rather than creating systemic change. 

This is an important distinction to make. Not every organization is designed to generate long-term systemic change. Some organizations focus on meeting an immediate need. These are not inherently less valuable than those striving to change the overall system. However, there must be an overall balance between these organizations in the social sector.

In business it is recommended that you spend about 70% of your resources towards making incremental improvements in the short term (Hubspot). The remaining 30% of your resources are spent bridging the gap between where you are and your desired long term impact.

People looking to donate to organizations should support organizations with an eye on long-term systemic change. However, they should not overlook those who are measuring impact on a much smaller scale. It takes many small steps to reach a destination.

Community-Driven is Key

One critical component to consider regarding impact is community ownership. To reach our destination, we must go together. Individuals must participate in impacting their own lives. Let’s take a look at how Adopt a Love Story incorporates this into their organization. Adopt a Love Story's mission is to provide the resources and platform to empower families to raise funds for their adoption and engage their community with the powerful story of why they are choosing adoption. 

The families are the primary agent of change. Adopt a Love Story simply provides them with additional resources and a platform to help them better connect with community partners. This component of impact is crucial. If the individual or community does not play a large role in achieving the impact, change is often not sustainable. 

How Do You Measure Impact?

The most common measurement tool is to tally up the "quantity" of programs and services. Donors are used to hearing how many malaria nets were distributed or how many scholarships were granted. This is a good baseline of data to collect. 

The other critical way for nonprofits to measure their impact is the "quality" of services and programs. A key way to determine this is through feedback loops. This is an intentional process by which nonprofits listen to their clients and improve their programs and services based upon suggestions. This might be as simple as a suggestion box, or it could be a series of automated surveys that track more intangible changes in quality of life. 

So How Do I Find a Good Organization to Support?

Take a look at organizations’ vision and mission statements and see if you can spot an intentionality towards impact. Look at annual reports to see what kinds of data they are collecting and sharing. Note if organizations seem transparent with operations costs and results.

Consider how organizations choose to partner with communities or clients in order to achieve their goals. While no organization will fall perfectly in these categories, we can support those who are striving to do so.