Myth #5: High Ratings on Conventional Metrics.When we looked at traditional measures of nonprofit efficiency, many of these groups didn’t score well, because they don’t adhere to misleading metrics such as overhead ratios.
I remember several years ago when the Red Cross got into a heap of trouble for promising 100% of their fundraising would go to a specific disaster relief situation and then spent some of the money on administration. People were in an uproar and lots of pundits put out information about the importance of reviewing how much administrative costs an organization had before contributing. I don't disagree, you should learn about the organization before you give to them. However, when it comes to policy changes and institutional movement, defining what is "administrative" can be tricky.
I admit, I speak from a place of bias as I currently work for a nonprofit, but I am firmly convinced that one of the most important assets a nonprofit has is its staff. I see the value of my program director, her knowledge of the community, and her deep familiarity with the programs we have in place. Making sure she feels valued, receives consistent developmental feedback, and has the resources necessary to succeed are priorities for me as her manager. More importantly, I think they should be priorities for any organization that has a focus on creating change in our communities.
Turnover in nonprofits, especially smaller organizations, is fairly high. Often times people leave an organization, and leave the work, because they are burned out. We lose leadership, institutional knowledge, and crucial historical context for the work we are doing when this happens. Overhead ratios mean very little when they don't leave room for the people who are doing the work to get it done. And ultimately the goal is to accomplish the mission in the most effective way possible.
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