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How to Answer the Question, "How Much of This Will Go to Overhead?"

Greg Warner is CEO and Founder of MarketSmart, a revolutionary marketing software and services firm that helps nonprofits raise more for less. In 2012 Greg coined the phrase “Engagement Fundraising” to encapsulate his breakthrough fundraising formula for achieving extraordinary results. Using their own innovative strategies and technologies, MarketSmart helps fundraisers around the world zero in on the donors most ready to support their organizations and institutions with major and legacy gifts.

Seeking answerPeter Drury of Splash.org tells us how to answer this challenging question.
 
He says to tell ’em, “Overhead is like cholesterol.  There’s good overhead and bad overhead.”
 

Good overhead = Lights, phones, hard-working staff that produces results, etc.

Bad overhead = Waste

 
The MarketSmart take on this: Be thoroughly transparent about what you believe is good overhead and what’s needed. Tell stories about why and how your organization spends the donations it receives.  Relate the stories to the mission you know your donors support.  And, remember to tell folks what you are doing to cut bad overhead— waste. Be open, honest, and real about it. Everyone has waste. Acknowledge that you do too. But point out what you are doing to cut it and you’ll draw more big gifts from major donors.
 
The trick is to engage further and be transparent, not to skirt the issue or twist the numbers so you can get 4 stars from Charity Navigator.
 
You can take control of this issue if you remember that people who ask about your overhead are actually “leaning in”.  They want to engage with you and learn more.  So give them what they want…  information. Tell them your story about overhead. Remind that that it’s necessary. Just like good cholesterol. And, finally, allay their concerns by telling them that their money is “going to the right places to have the greatest impact.”
 

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6 responses to “How to Answer the Question, "How Much of This Will Go to Overhead?"”

  1. Becky Carter says:

    I love this answer! I also like to teach donors to think of how much people in need would lose if, for example, we just didn’t pay the light bill. Having dealt with waste transparently the way is cleared to think of every bit of progress in lives as connected directly to the whole budget. Not just the “program” budget.

  2. love this analogy! studies are showing donors of all kinds are willing to pay for overhead as they understand it is necessary. it is up to us as nonprofits to tell our story – this is a great way to do it and one all can relate to easily.

  3. Jim Weber says:

    Terrific outline by Market Smart. We need to get out of the culture of being apologetic for investing in overheads, acquisition campaigns etc. The overwhelming downplaying of costs historically has led to false expectations by some donors that there are no costs or they are minimal, which of course is just plain wrong. Agree we need to be more active and positive about outlining investments and why it is necessary with the ultimate goal to grow dollars that make more of a difference to the cause. Bravo Market Smart, a cultural change is required here!
    Jim Weber’
    Director Fundraising Fixers
    Melbourne Australia

  4. Greg Warner says:

    Thanks Betty, Becky and Jim! Wow… Jim… all the way from Australia!! Glad to have you aboard and thank you for sharing your insights!!

  5. Great analogy which I will be using. Do you have an example of an organization who communicates this well? None of us think we waste resources but it’s all a matter of opinion. Is investing in fundraising or marketing materials to get your message out a waste of resources? Some think so –

  6. Greg Warner says:

    Honestly, I haven’t seen any I can think of off the top of my head (sadly). That’s why I wrote the post.

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