Overcoming the Overhead Myth
The “Overhead Myth” is something that has plagued charities for years. It stalls growth, increases staff turnover, and prevents amazing organizations from doing work that could change the world we live in. But what is it? And what can we do to change it?
The Overhead
To understand the Overhead Myth, we have to understand what “overhead” means for many people. In the for-profit world, costs like salaries, database systems, bookkeeping, rent, office supplies, etc. are a foundational part of a business. These are the very structures that the business is built on, and if you take any one of these away, the company will struggle and even fail.
But when you take out the word “company” and replace it with “charity,” suddenly those costs aren’t part of the foundation, they’re part of the overhead. They are considered excess costs that detract from programs and diminish a charity’s effectiveness.
But without these expenses, the charity can’t function at all. Staff wouldn’t get paid. Data would be lost. CRA reports wouldn’t get filed. No one would be able to find a stapler. The very costs that are considered “excess” are actually the ones that make a charity’s work possible.
The Myth
The biggest myth that charities have to overcome is this: Less overhead = More impact.
In reality, the opposite is true. The pressure to reduce spending in critical, foundational areas has seriously damaged the ability of charities to deliver their mission. Low investment in technology means that crisis hotlines are putting people on hold. Stagnant wages mean that charities are burdened with high turnover rates. Lack of funding for storage facilities means that food support organizations are putting families on waitlists.
The only way to measure impact is, well, impact. What has the charity done? What does it plan to do? Who does it help and how? (Side note: You will usually find all this incredibly vital information in a charity’s annual report. Which is usually produced by a communications staff member. A staff member whose salary is considered “overhead.”)
The Change
First, we need to stop referring to these expenses as “overhead” and “administration” costs. We need to refer to them as what they are: infrastructure and foundation costs. These are expenses that benefit every aspect of the organization, and they are needed to help an organization thrive and serve its community.
At WCK, we are trying to make a change by talking about the importance of infrastructure and foundation costs, particularly in an organization that has grown by 130 per cent within two years.
Without investing in our database, we would have had no way to know the food stock at the hospital so we can replenish what’s needed. Without our fundraising and communications staff, we would not have been able to raise the money we needed to grow and meet family’s needs. Without our staplers, our office would be a mess of loose camper registration forms. Every one of these costs has served our mission and driven us forward, with the end result being that we were able to help more families and deliver more programming than ever before in 2023.
If you are considering making a donation to a charity, look at their leadership, their impact, their future dreams. And if you decide to donate and want to really make a difference, let them use your donation to build their foundation.
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