Making the case for admin costs

In case you missed it, Rachel Emma Silverman and Sally Beatty at The Wall Street Journal had an interesting article two weeks ago on the increasing need for charities to find donors who understand the need for unrestricted flexible donations.

In recent years, many donors have been critical of charities that spend money on themselves, rather than on delivering services to needy beneficiaries. Many givers have chosen to support charities that spend only a tiny fraction of their budget on overhead expenses, such as staff pay and facilities, while others have imposed restrictions on how their gifts could be spent. Such selective giving has been made easier by a host of recent charity-watchdog Web sites that evaluate how leanly and efficiently charities operate.

But now, nonprofits are trying to convince donors that spending money on overhead isn't such a bad thing. Indeed, some charities have begun seeking gifts specifically to help fund overhead expenses. Charities argue that they need to spend significant sums of money on administration and fund raising in order to grow and to attract quality staffers. Costs also are rising: New federal rules require some charities to update their governance and accounting procedures. And philanthropy advisers say finances are only one measure worth watching; donors also must consider how effective a charity is at its purported mission.

Because the truth of the matter is... if you give your donation and demand the 100% be used on programmatic work for children (for example) - the charity is forced to fund the much needed admin and overhead costs with the dollars from another donor's donation. So even with the most efficient and effective nonprofit organizations, this demand for "restricted use" can amount to little more than a financial shell game.

The article concludes with advice for donors:

And once you choose a charity that you trust and that has a mission you agree with, philanthropy advisers recommend allowing the charity to use the money as it sees fit, rather than imposing tight restrictions on how the gift must be spent. That gives the charity maximum flexibility to spend the funds as new needs and challenges arise.

Let me know if you or your group has conducted a successful campaign using a specific ask for the funding of overhead and/or administrative costs.