You’ve probably seen some disappointing news about nonprofit entities over the past few years that may have made you leery of ever donating. Whether it’s the pile of clothes rotting on a beach in a developing country, or outright misuse of funds by staff, all nonprofits feel the negative effects of these unfortunate situations to some degree. It’s always hard to get people to part with their hard-earned money, and it’s harder if a public trust has been violated.
Enter the growth of charity watchdog groups like Charity Navigator and Charity Watch. While it’s good to have more information about how funds are spent, the unintended consequence of this is that donors expect that some large measure of the funds raised should be going directly to programs, making it harder to raise operating costs. Some donors assume that if an organization falls below 90% or 80% spent on programs, then it must be doing something wrong.
We call this the overhead myth, and many nonprofit leaders have been working to bust that myth for years. Now it’s my turn, with the help of a great article in The Chronicle of Philanthropy. We at the Putnam City Schools Foundation are grateful for our partnership with the district that covers a large portion of our overhead expenses through a formal agreement, but we still have overhead. Printing of annual letters, salaries, and room rental for events are all considered overhead. Some of these things don’t help a child directly, but the outcomes from those activities certainly do.
An easy comparison for educators concerns wrap-around services. Yes we need to fund the teacher salary and the materials he uses to teach, but how much better is the educational experience when we have safe buildings, counselors and nurses, and transportation for our students. Those things don’t help the child learn per se, but they are quite important to her getting an education.
We are truly grateful for all the donors we have, some who restrict their gifts to a particular program and others who give without restriction. We need them all, but we would be in dire straits as an organization if all we received were gifts for programs. How would people learn about what we do with their gifts if we don’t write, design and print, and distribute an annual report? How can we ensure that our donors receive tax receipts? These tasks are crucial to the larger mission in every nonprofit.
If you are ever interested in knowing more about our finances, please visit our website. Under the ABOUT US tab is a listing for Financials. There you’ll see recent audits and IRS 990s. You’ll also be able to access our profile on GiveSmartOKC. This is a very robust donor research tool providing you all the information you may want for us and others when making a decision about who is worthy of your gifts.
Check it out, and reach out to me if you have specific questions. We want you to feel confident that you are giving to a strong organization who stewards gifts well.