Rethinking Overhead: A New Narrative for Essential Nonprofit Expenses

In a recent edition of the Community Foundation of the Ozarks’ The Philanthropist newsletter, outgoing CFO President and CFO Brian Fogle explored a pervasive misconception known as “the overhead myth”. In the nonprofit world, there has long been a misguided belief suggesting that the effectiveness of a charitable organization can be accurately measured by its low administrative and fundraising costs. However, this oversimplification fails to capture the true impact of nonprofits and hinders their ability to thrive. Mr. Fogle’s wonderful take got us at Habitat for Humanity of Springfield, Missouri (HFHS), talking about the overhead myth and how this perception is harmful to nonprofit organizations.

The Overhead Myth:
HFHS, like many nonprofits, has grappled with the challenge of being judged solely on overhead costs rather than the outcomes and impact of its homebuying, home repair, and neighborhood revitalization programs. The overhead myth assumes that the lower the administrative and fundraising expenses, the more effective and efficient the organization.

Shifting Perspectives:
The overhead myth fails to recognize that investing in infrastructure, staff development, and technology is crucial for long-term success and sustainable growth. HFHS understands that investing in skilled staff, robust technology, and effective fundraising strategies is essential to achieving its mission of providing affordable housing. Nonprofits must embrace the real impact of these investments on future success and long-term growth.

Embrace Planned Giving:
One powerful way to support nonprofits and embrace this new perspective is through planned giving. Planned giving involves making thoughtful and intentional decisions about charitable donations, often as part of an individual’s estate planning. It allows donors to leave a lasting legacy while providing nonprofits with the financial stability needed to plan for the future.

Why Planned Giving Matters:
HFHS recognizes the significance of planned giving in securing the organization’s future. By encouraging supporters to include the organization in their estate plans or make donations of stocks, IRA, donor-advised funds, or cryptocurrency, HFHS can build a sustainable source of funding that goes beyond traditional fundraising efforts. This forward-thinking approach allows us to continue our vital work in the community, providing affordable housing and transforming lives for generations to come.

It’s time to move beyond the overhead myth and recognize the true value of nonprofits like HFHS. We encourage a more holistic understanding of nonprofit success and invite you to consider the impact of your support. By including planned giving in your philanthropic strategy, you can contribute to the long-term viability and success of nonprofits, ensuring that their missions continue to make a difference in the world. Together, we can create a more sustainable and effective model for nonprofit success.

Learn more about smart ways to give.