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Busting the Overhead Myth

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Written by Tyler Adams, MNLM CNP
September 15, 2021 | 4 min. 30 sec. read

How can nonprofits convince stakeholders to invest in capacity building?

“Capacity building is whatever is needed to bring a nonprofit to the next level of operational, programmatic, financial, or organizational maturity, so it may more effectively and efficiently advance its mission into the future. Capacity building is not a one-time effort to improve short-term effectiveness, but a continuous improvement strategy toward the creation of a sustainable and effective organization” (National Council of Nonprofits, 2017). For many organizations, capacity building would fall into the “overhead” category. Unfortunately for the nonprofit sector, higher overhead costs are correlated to an organization being irresponsible with its finances, ineffective, unable to carry out its mission, and even unethical.

Overhead is defined as a “percentage of a charity’s expenses that goes to administrative and fundraising costs” (Guidestar, 2014). The Overhead Myth is created when donors believe that nonprofits should keep these overhead expenses below a certain percentage of the nonprofit’s total expenditures – usually no more than 15 to 20 percent. In Dan Pallotta’s TED Talk, he discusses the Overhead Myth and how it can negatively affect nonprofits by hindering their ability to create long-term sustainable growth. Both internal and external stakeholders need to be better informed about why it is okay for overhead costs to be higher when the organization is trying to grow, become sustainable, and ultimately achieve its mission more effectively. Looking at overhead alone is a poor way to measure a nonprofit organization’s overall performance (Letter to the Donors of America, 2014). Therefore, other factors such as program performance, governance structure, staff professionalism, fundraising efficiency, and other practices should be considered as part of the bigger picture.

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Inspire Your Volunteers: 4 Tips for Advocacy Leaders

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September 2, 2021 | 3 min. read

Passionate volunteers power your advocacy campaigns. Between contacting their elected officials, attending your events, and providing donations to your cause, advocacy campaigns succeed because of volunteers. However, while a few volunteers may be able to fully motivate themselves, most will look to your nonprofit’s leadership for inspiration.

Nonprofit advocacy campaigns allow your organization to mobilize your supporters and advance your cause through grassroots action. These campaigns will require your nonprofit to direct volunteers to take several specific actions over multiple months, making strong leadership a necessity for retaining volunteers and giving your advocacy campaign its best chance at success.

Strong leadership will look different based on the individual and the type of advocacy campaign they are running. Fortunately, there are a few proven practices that most nonprofit professionals can use to improve their leadership and motivate their volunteers. Leaders running successful advocacy campaigns should:

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