Why people believe it
Overhead is one of the few numbers a donor can find, and it sounds like it answers the right question: how much of my gift reaches the cause?
What’s true
Very high spending on fundraising or management can be a warning sign worth asking about. And the question behind the myth, whether my money is doing good, is exactly the right one.
What’s misleading
The ratio can’t answer that question. It says how costs are split, not what they buy. Staff, data systems and evaluation are often what makes a program work, and charities that starve them to keep ratios low can end up less effective. In 2013 the leaders of GuideStar, Charity Navigator and the BBB Wise Giving Alliance, three groups that had popularized overhead ratios, published an open letter asking donors to stop treating overhead as a measure of performance.
What to ask instead
What does this charity achieve per dollar, and how does it know? See the Giver’s Checklist and the Overhead Myth.