According to a recent study by Grey Matters Research, a consumer insights company, donors may not be as concerned about an organization's overhead ratio as is widely assumed. While most donors in the study indicated that they do believe the typical nonprofit spends too much on overhead, that belief does not seem to change their attitudes toward giving.
Of the donors surveyed, 40% believe that their favorite nonprofit spends more on overhead than is necessary, but they continue to support that organization. Further, only 12% indicated that they choose an organization because they use their money very efficiently.
Donors also showed little awareness of actual charitable overhead ratios. Two-thirds indicated they couldn’t give a “reasonably accurate” estimate of their favorite organization’s overhead spending, and of the donors who felt very confident in giving an estimate, seven of ten were off by at least 50%.
Ron Sellers, president of Grey Matter Research, notes “In a variety of ways, our research demonstrates that overhead ratios are not as important to donor decisions as many people believe. Placing too much focus on keeping expenses very low can restrict available resources and harm an organization’s ability to attract and retain talent, take reasonable risks, and invest in systems and infrastructure that will aid future growth and efficiency.”
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