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The 2011 InsideNGO Annual Member Meeting was kick started with a challenge to the more than 700 operational staff in attendance – STOP using overhead as a bad word and START creating a dialogue with the donating public about what overhead means and how it is part of the cause.
A simple step. But if you believe the words of keynote speaker Dan Pallotta, author of Uncharitable: How Restraints on Nonprofits Undermine Their Potential, it is a step that has the potential to create big change. Thinking big was a recurring theme throughout the Meeting's opening session. According to Pallotta, big change, rather than incremental change, is possible but it will require a transformation in how our society views charity.
The basis of Pallotta’s thesis is the assertion that there are separate rulebooks for nonprofits and for the rest of the economic world. While the for-profit sector is encouraged to make vast profits while creating and innovating markets, the nonprofit sector is restricted from using many best practices that work, such as using competitive salaries to attract the best talent, advertising to create a demand for philanthropy, taking risks in pursuit of new donors and making a profit to secure growth capital. In short, the nonprofit sector is dealing with problems on a huge scale but is restricted from acting, and thus achieving, on a huge scale.
For Pallotta, much of this mindset is culminated in one “dangerous and simplistic” yet often asked question: What percentage of my donation goes to the cause versus overhead? It is this question that has driven him to call for change. Because that one question says a lot about how our donors and how we ourselves view charity – that overhead is separate from the cause we donate to - maybe even takes away resources from the cause, and is the single most important indicator to the quality and effectiveness of a nonprofit organization. The result of such a mindset? Keeping short term overheads low at the expense of solving problems.
And so it is time to take the step. To introduce ourselves to the donating public as the faces of overhead, to explain how we are part of the cause, and to start the dialogue. To start changing the questions being asked.
According to Pallotta, it is time to “stand up for our wildest dreams. Set daring goals. Do everything we need to do to achieve those goals. Overhead be damned.”