Getting Our Heads Around Overhead: What Is It and Why Does It Matter?

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Do you judge nonprofit performance by an “overhead ratio?” – that is, how much they spend on programs versus administrative costs? Have you heard of the Overhead Myth – the concept that the financial ratios are a proxy for nonprofit worthiness? Times are changing, with Charity Navigator no longer touting overhead ratios as a proxy for nonprofit performance and even the federal government stepping in to support overhead costs. How funders understand and Overheadapproach overhead can make a significant difference in supporting the true costs and effectiveness of nonprofits and their programs.

AGF members and their trustees participated in this very important session about the Overhead Myth and overhead costs where they explored:

  • What is overhead?
  • New governmental regulations from the White House Office of Management and Budget (OMB) about overhead.
  • What all of this means to funders and the sector as a whole.

Program Materials:

PatrickMcWhortor         Fred Ali

Alliance of Arizona Nonprofits CEO Patrick McWhorter provided an overview of the OMB ruling and what it means to the sector. Fred Ali, President and CEO of the Weingart Foundation and a leader in tackling the Overhead Myth in California, shared what California funders and state associations are doing to address overhead funding. Participants also had an opportunity to explore current practices and challenges that they, as local funders, have when considering funding overhead costs.