Most Recent Nonprofit Advocacy Matters

The most recent issue of Nonprofit Advocacy Matters, published by the National Council of Nonprofits, is out. Stories include discussions of what is on the table in the lame duck session of Congress, the spending reduction pressures facing several state and local governments, statewide ballot measures and constitutional amendments that were passed by voters earlier this month and that affect nonprofits, and tax & fee proposals in Oregon and Hawaii of relevance to nonprofits.

In addition, in its “Worth Quoting” section, the issue highlights an interesting observation of Ann Goggins Gregory, COO of the Greater San Francisco Habitat for Humanity:

Overhead in the for-profit world—sales, general and administrative costs as a percentage of total sales—is 25% across all industries and 34% for service industries. The cruel irony of holding nonprofits to a much tougher standard is that donors often say that they do this because nonprofits ought to ‘run more efficiently, like a business.’ Most people don’t know the overhead of businesses because profitability matters more.

The point is rather thought-provoking, and prompts some questions.  The following come quickly to mind: At what point does too much emphasis on reducing overhead lead to work environments that hinder the productivity of nonprofits’ employees?  How much of for-profit firms’ overhead is better viewed as a form of disguised compensation to employees?  Can we devise better metrics of social value produced by nonprofits and examine correlations between social output and overhead?  Who receives the primary, direct benefit of various types of overhead?  Is there a way to analyze whether nonprofits in certain fields should have higher overhead than others by studying differences in overhead incurred by for-profit firms in different industries?

JRB