Reframe Overhead

Why are overhead costs such a hot topic? Well, let’s break it down for you… Without adequate overheads, we get a “non-profit starvation cycle” where charities don’t have enough funds to sustain their work – reducing their ability to create social change. Part of this is because NFPs are afraid to speak to the need for overhead. 🙊 ❗But our research points out that donors WANT to know about the outcomes of their investments ❗ 📊 They want to see a detailed breakdown of substantiated costs 📊 💸 They want to know the impact of fundraising and the return for beneficiaries 💸 This video shares why discussing overhead costs is important, but also gives tangible examples of how organisations can begin to shift their narrative. 1️⃣ Instead of talking about “administration”, speak about accountability and investment. 2️⃣ Instead of “capacity building”, share your effectiveness and impact. 3️⃣ Instead of visuals that show “helping people” vs “overheads”... break things down further and give donors the detail they crave. ♻ Share this video with your team or maybe even send it to a friend who approaches charity with just a little too much cynicism! ♻ And if you haven't signed up yet, join over 500 fundraisers from over 200 organisations that have committed to reframe overheads (link in comments)

The Smith Family understands how investing in overhead costs helps to create an efficient and effective organisation. In being open about this, shows supporters how such investments contribute to the organisation’s sustainability and it's progress. They’re also emphasising their commitment to investing where it matters most: in what is making a difference to their capacity to help more children and young people experiencing disadvantage. These are the kinds of conversations our initiative is opening up - about the real costs of delivering long-term, sustainable outcomes in our communities. Here's why this matters: 📊 94% of fundraisers agree that there's a problem with how charities are funded for their overhead costs, and yet, we continue to perpetuate the starvation cycle that leaves so many nonprofits without the resources they need to thrive. 🔄 The Smith Family is breaking the cycle by advocating for an impact-first evaluation approach, not just a focus on program percentages. They’re showing that investing in strong governance, IT, evaluation and fundraising isn't just "admin"—it's mission-critical. Let’s collectively ensure every dollar donated has the greatest impact—not by minimising overhead, but by investing in what makes nonprofits effective. #reframeoverhead #paywhatittakes

⏰A systemic problem calls for a system wide change!⏰ It’s going to take the ALL Not-for-Profits working together to reframe how we speak about (and the importance of) overhead costs. A staggering 94% of fundraisers agree there is a problem with how Not-For-Profits represent and/or are funded for their overhead costs – so let’s change our practices together, as no one should try to do this on their own. 🏢Boards… 🧑💼CEOs… 🤗Fundraisers… 💰Finance… It can be easy to think we can’t make change without buy in from all of these different groups. But by backing everything with tangible data, we’ve come up with a simple 4 step guide with recommendations. All that need to be done is review the suggestions, start having the conversations and make these small changes. Together WE HAVE started to create change across the industry. Join us! Invite colleagues!

The language we use to discuss overhead costs matters! According to our research, these terms aren’t preferred by donors ❌ CAPACITY BUILDING ❌ INFRASTRUCTURE ❌ INNOVATION ❌ ORGANISATIONAL DEVELOPMENT ❌ ADMINISTRATION Why do they perform so poorly? Most likely because they jargony, unclear and... a little boring. Instead, these terms were preferred by over 1,200 donors: ✅ ACCOUNTABILITY ✅ ORGANISATIONAL EFFECTIVENESS ✅ GOVERNANCE ✅ FUNDRAISING ✅ SUSTAINABILITY Data shows these terms performed much better. Additionally donor preference increases when you provide more information on how your organisation is investing, why it’s important, and what that investment is returning, So update your website and tweak your annual report! Let’s reframe the important role that overheads play in effectively delivering the great work of every not-for-profit.

What if tech giants like Apple, Amazon, or Google boasted about how little they spend on R&D, marketing, or their workforce? It sounds absurd, right? These investments are recognized as crucial for innovation, growth, and overall impact. So, why should it be any different for not-for-profits (NFPs) ?! In the NFP sector, some charities try to prove they have the lowest overhead costs. It’s an unusual situation, considering how crucial these investments are to achieving a charity's mission to help society. This practice is harmful, leading to underfunded staff, outdated technology, lack of measurement, and ultimately, diminished impact. That’s why we’re working to help guide a reframe in the narrative. Follow the link on our page to download the research and read the full guide. By tackling misconceptions and articulating the need for investment, we can help stop the "starvation cycle" and ensure NFPs have the resources they need to meet their mission.

Donors believe in the power of fundraising! In our research of over 1200 donors, 75% of respondents said they preferred when a pie chart was complimented with a fundraising multiplier. See this great example from Cancer Council SA from their Impact Report. Why does it work? 💸 It demonstrates you’re maximising donations to provide returns 🪟It’s forthright and clear that you are an effective organisation 💥The multiplier shows donors the impact of every dollar they give This data flies in the face of the assumption* that donors don’t want to pay for anything that doesn’t go directly to service delivery. *But our research disproves that too! Read more at www.reframeoverhead.org

Thrilled to share our Donor Research and Communications Guide at the Philanthropy Australia conference last week, where over 80 people attended a Pay What it Takes masterclass! Many institutional funders and charities in the room took part in important conversations around what it practically means to “pay what it takes” including the need to have transparent conversations on funding needs, dial up impact and outcome reporting, acknowledge and navigate power dynamics, and address perceptions of “Getting the biggest bang for buck” especially if a project does not include funding for overhead. Love the way this sector is embracing these opportunities (and challenges!) collaboratively, aiming to work smarter to achieve our common goal of delivering the best outcomes for the people and causes we support! #PhilanthropyAustralia #SocialImpact #NonprofitLeadership #PAConference2024

Tomorrow the Reframe Overhead team will be at the Philanthropy Australia conference, sharing insights and resources including NEW resources released by Pay What it Takes. See below for a sneak peak!

The reframe overhead movement is growing! Our data shows: 📢 86% said they had already started conversations or would do so in the next financial year. 😤 94% of fundraisers agree there is a problem with how Not-For-Profits represent and/or are funded for their overhead costs. 63% of fundraisers believe they can make change through altering strategy communications ❗ Only 20% of donors consider overhead costs when making donation decisions ❗ Are you open to sharing the changes your organisation is making to reframe overhead? We would love to hear from you! Contact Lisa Allan, FFIA and GAICD or Richenda Vermeulen via LinkedIn DM. Our community has said live examples of how other organisations are reframing overhead costs is incredibly helpful for inspiration, learning and making a case for change. Together, we can shift the narrative from "talking about overhead" to "talking about impact" to ensure our organizations have the resources they need to create social change.

The Not For Profit starvation cycle is crippling!  In the Pay What it Takes Report, analysis of the financial health of over 16,000 charities revealed many Australian Not-For-Profits (NFP) are struggling due to a “starvation cycle” that limits their ability to grow. In February Victor Keddis published an article (see comments) that reported on the vulnerability of the NFP sector in Australia, with 30% of NFPs registered with the Australian Charities and Not-For-Profit Commission failing to return any operating surplus.  The “Non profit starvation cycle” is a term first coined by the Stanford Social Innovation Review who highlighted that inaccurate views of what overhead is needed to run a charity has forced organisations to underrepresent these costs due to the belief or experience that funders won’t pay for them. This leads to continued minimisation on organisational infrastructure to ensure there is enough funding for programs to remain viable. This leads to a sector starved of the necessary core funding required to create resilient not-for-profits delivering long-term impact on complex social issues. We need to break the starvation cycle to ensure the NFP sector can continue to thrive. Visit www.reframeoverhead.org for practical, research informed  steps and tutorials on how to create change.