3 Reasons to Reconsider the Way We Measure Non-Profit Organizations

We recently had a discussion with our non-profit committee, Organizations Serving Arvada, about how too much emphasis is put on a charity’s spending ratio. But does it give the whole picture of the scope of their work?

There has been some talk within the industry about the “Overhead Myth,” the assumption that the percentage a non-profit spends on administration and fundraising costs is the key determination of a charity’s performance. What if we challenge this thought, change your thinking, and move from an overhead-centric metric to an impact based measure?

1. Charities should be allowed to invest in good internal systems and assets in order to be able to operate efficiently. Donors typically want their money to go to the cause and not a new desk or computer for staff, but in order to function employees need equipment and software that will allow them to achieve the organization’s mission. The Arvada Community Food Bank recently invested in a refrigerated truck which required capital, but the expenditure has extended their reach and increased the amount of individuals served. Quality internal systems and equipment are critical to a charity’s work so an investment in this area IS for the cause.
2. Recognize that some things can’t be monetized or measured. Happiness, quality of life and goodwill are products of a charity’s work. It is one of the biggest reasons they were established in the first place. Colorado Homeless Families hosts an annual Christmas party for their residents, which gives the opportunity to connect with fellow residents within the program and helps reinforce a strong community. Imagine the friendships, traditions and sense of belonging that would be lost if this event didn’t take place. Intangible benefits are important and shouldn’t have to be measured to be effective
3. Focus on impact. We believe overhead is only a piece of the puzzle, and in order to truly judge an organization more emphasis should be on their impact within the community. As an example, in 2015 Jefferson Center for Mental Health served 28,700 people through their programs and services (jcmh.org fact sheet 2015). Most non-profit organizations evaluate their effectiveness and reach of services they provide. This information is readily available and serves as a real time measure of how the charity is converting donations into meaningful work.

Now it’s your turn to help change the way we look at a charities worth. Get involved! The best way to know if your money is being put to good use is to see the organization is action. 501(c)3 organizations are always looking for motivated individuals to volunteer for many positions, such as a Board of Directors, to help on the front line. Contact us today at (303) 424-0313 if you need some suggestions.

Organizations Serving Arvada (OSA), a subcommittee of Arvada Chamber of Commerce, is a committed group of non-profit and business professionals who are interested in telling the story of our local non-profit community through collaboration.

For more information on the “Overhead Myth” visit: https://overheadmyth.com/

Or Dan Pollota  on Youtube “The way we think about charity is dead wrong”