More good stuff on overhead ratios and “worst charities” – 6-29-13

An actual conversation is going about how to use overhead ratios and what outcome measures might look like. Lots of writers out on the ‘net are involved.

Writers are actually engaging ideas from other writers. All of us working in the NPO community need this conversation to develop ideas on how to move away from the misuse of overhead ratios that has been going on for decades.  I think this conversation is a good thing.

In addition, the feature articles by the Tampa Bay Times, Center for Investigative Reporting, and CNN on “America’s worst charities” is developing legs.

There are so many articles I’d like to discuss in my own post but time doesn’t allow doing so.

Soooo, I’ll start to aggregate a few of the more interesting articles.

My comments usually will be limited to one or three sentences.

Focus will be on two areas:

  • Overhead ratio discussion
  • Developments flowing from the “America’s Worst Charities” articles

Here’s my first list:

Overhead ratio

Dan Pallotta – The way we think about charities is dead wrong – This TED presentation is the best possible starting point for the overhead ratio discussion.

Center for Effective Philanthropy – Phil Buchanan – Getting Clear About Overhead, Part 1 – points out that criticism of over reliance on overhead ratios has been made by many people for many years.

Also gently points out:

This is something of an evolution for Charity Navigator and BBB Wise Giving Alliance, which have historically relied on overhead ratios as a key metric in their assessments of charities and, based on my review of their websites last weekend, seem to continue to do so.

Center for Effective Philanthropy – Phil Buchanan – Getting Clear About Overhead, Part 2: Questionable Fundraising Costs – Points out that salary is not the same as overhead. This is lost in the general discussion.

Not only can salary be program, it is typical that the vast majority of salary is related to the NPO’s program.

Article also points out more background on Mr. Pallotta that I had seen before. There is far more to the story. Doesn’t invalidate the points made in the TED presentation above, but helps provide far more context.

American Institute of Philanthropy – Overhead Ratios are Essential for Informed Giving – Takes exception to the idea that overhead ratios aren’t helpful. Also asserts that the Overhead Myth website furthers the idea that all salaries are overhead.

Counting on Charity – Remember that Evidence that Better Charities Have Higher Administrative Expenses? Turns Out the Reverse Holds in the USWidely cited study that shows well-ranked charities have higher overheads gets some scrutiny. Results indicate study needs more interpretation.

 “Worst Charities”

Dan Pallotta – First Thoughts on “The 50 Worst Charities in America” Initial reactions to the first article.

Phoenix Business Journal – Breast Cancer Society cancels boxing event after fighters back out. Boxing fundraiser cancelled after boxers pulled out. The reason cited in the article is they heard about the Tampa Bay Times articles.

Arizona Republic – Robert AnglenBreast cancer charity cancels boxing event – More details on the today’s cancelled event. Published two days after the Business Journal article above. The promoter as well as boxers want explanations from the charity before they participate. This charity isn’t on the 50 list, but is part of a group of charities linked by family relationships. The article pulls together a lot of information about this charity, World Help, and other published reports. 

Mr. Anglen brings together the broader accounting issues that are already in print but haven’t been read by many people. He understands and can explain the variance authority accounting issues and the impact on NPOs. He is one of a growing number of reporters who ‘gets’ the accounting.

If you thought the media attention on technical nonprofit issues was going to just fade away, think of Mr. Anglen and the Tampa Bay Times when I keep saying there is a growing group of competitive reporters who ‘get it’.

Tampa Bay Times Graphic: The Reynolds family charity network – Sometimes a picture is worth a thousand words. This drawing from the Times is one of those times. Until a few days ago, I had missed their chart showing how the charities interconnect.

Have any suggestions for my next list of More Good Stuff?

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