When asking philanthropists “how and where do you want to help?” many respond with “where it is most needed.”
However, despite this initial and well-meaning sentiment from donors, when we asked our nonprofit partners “where is funding most needed?” 48% responded with an answer that isn’t much to many philanthropists’ liking:
Operations and Overhead.
These costs include utilities, supplies and rent however almost half of the most requested area of operations funding (48%) is for salaries and staffing (see left).
These costs are not tangible, not “Instagramable”, not something where you can see a clear before and after. As a result, many donors don’t get the same “buzz” out of funding these essential costs in comparison with, for example, handing over school books to 100 smiling kids.
This article wants to urge philanthropists to seriously think about directing their contributions towards this crucial area of much needed funding if they are serious about making a long-lasting, meaningful and sustainable impact.
It’s time to get real and accept that overheads and operations are the foundation for nonprofit (NPO) success and a funding area donors should be proud to support.
So why contribute towards Operations funding, and more specifically, staffing?
People Power is everything in small nonprofits
The lifeblood of nonprofits is its people. During our NPO evaluation visits here in Guatemala, Pionero staff travelled up and down the country and met individuals who hold together whole nonprofit operations on a shoestring.
These heroes are fueled solely by exquisite Guatemalan coffee and their unwavering belief in their work despite the obstacles and weight of responsibility in their communities. They need investment, support and capacity building, without which the NPO would become inefficient, unstable and ultimately unsustainable.
We at Pionero believe that in order for NPOs to perform well in all 5 key pillars of sustainability, impact, efficiency, transparency and relevance, investment in additional, better trained or specialist staff is the foundation that needs fundamental maintenance in order for everything else to fall into place within the organization.
This may mean that Pionero makes it a condition of funding that philanthropists invest in nonprofit training in areas such as Strategic Planning, Monitoring and Evaluation and other key skills that the NPO fundamentally needs in order to give it a fighting chance at long-term stability and sustainability.
It may also mean that Pionero strongly urges recruitment. Too often, Pionero staff encountered overstretched staff heroically holding things together whose nonprofit would benefit most just from another person sharing the load.
2.) Just because Operations isn’t visibly satisfying, doesn’t mean it isn’t important
Just because philanthropists may not physically see their contribution to Operations and staffing, doesn’t mean that the impact doesn’t exist or cannot be measured or expressed.
In this regard, it is the responsibility of those measuring and evaluating impact to convincingly express it in compelling ways. This reporting service is something that Pionero can provide to donors should the nonprofit not have the resources to do so.
To give a simple example, one animal welfare/rescue nonprofit we partner with desperately needs an administrator so that the directors can escape the back office and focus on their mission of raising awareness about animal welfare issues in the local community. In reflecting this impact, many quantitative and qualitative measures can be installed to fully reflect the sizable impact made to the donor.
For example, a time and opportunity cost analysis using attractive graphics could reflect how the directors were spending their time before and after employing the administrator. The directors would for example be able to increase the number of community education campaigns, neutering clinics and numbers of rescued animals. Mix these figures with photo evidence and you have a compelling impact report for the donor - and all this impact because they invested in an Operational cost.
3.) Many funds are “Restricted” and Operations Grants are extremely limited
Many NPOs reported that a large proportion of their funds are restricted to very specific areas. For example, if an NPO runs a campaign to raise money for medication, any excess raised cannot legally go towards anything other than medication. Similarly and more importantly, Grant-making foundations prefer to fund specific projects and capital expenditures, rather than general overhead and operating expenses.
To give another example, one NPO education partner said they relatively easily found funding for large scale school construction projects. The problem they now face however, is how to sustainably employ staff to run the schools themselves. We challenge you to find a grant or donor that solely wants to fund day to day ongoing operational costs!
We at Pionero feel we have the responsibility to shed light on the findings of our NPO evaluation visits and to clearly communicate what our nonprofit partners truly need. Donor education and awareness raising regarding the importance of funding Operations is imperative if Pionero is to also stay true to its values.
So let's break the old fashioned notion that overhead is bad. Let’s be PROUD to fund essential bread and butter NPO operations that make nonprofits better fulfil their missions.