Charities Urged to Crush Overhead Myth and Take Actions Toward an Overhead Solution

Washington, DC – October 21, 2014 – As Americans donate generously this holiday season, the three CEOs of the leading information sources on nonprofits – GuideStar, Charity Navigator and BBB Wise Giving Alliance – issued a joint letter urging charities to help crush the false notion that overhead ratios serve as the sole basis for trusting a charity and to help move toward an Overhead Solution by demonstrating ethical practices, managing towards results and educating funders. 

The Overhead Myth campaign is a continuing collaboration among the three major nonprofit information providers which distributed a joint letter last year to the donors of America denouncing the overhead ratio as a primary measure of charity performance.  This year’s open letter published on www.overheadmyth.com is addressed to nonprofit organizations – and asks for their help in moving toward an Overhead Solution by:

1)   Demonstrating ethical practice and sharing data about performance by informing donors about their goals, strategies, management and governance.

2)   Managing toward results by using performance-based management systems and understanding the true costs of achieving their mission.

3)   Educating donors, especially in fundraising materials, about how they accomplish their charity work and not spotlighting financial ratios as a major way to confirm trust.

“Based on the overwhelming response to our first letter to the donors of America, we know that the nonprofit sector is hungry to dispel the Overhead Myth,” said Jacob Harold, President and CEO of GuideStar. “Our second letter, addressed directly to nonprofits, builds on that momentum by providing actionable steps so nonprofit leaders can focus on meaningful and measurable results rather than misleading, simplistic overhead ratios.”

The open letter and supporting materials and resources offered at overheadmyth.com is under a Creative Commons license and nonprofit organizations are encouraged to print it for free and use it how they wish.

“For many years BBB Wise Giving Alliance has encouraged donors to verify their trust in charities by considering the full picture of an organization’s performance and not just financial ratios,” said Art Taylor, President & CEO, BBB Wise Giving Alliance, “We also believe that charities have a responsibility to steer donors towards a better understanding of their activities and accomplishments and look forward to helping them share that message.”

“Our campaign to end the Overhead Myth and move toward an Overhead Solution will become a dead end if we don’t encourage, engage, empower and inspire the nonprofit sector to change course and begin to become more results focused,” said Ken Berger, President & CEO of Charity Navigator. “Everyone involved in the sector must join together to do whatever it takes to become adaptive and learning organizations that build the capacity to manage and measure toward better results and to then share that information with the donors of America”

To learn more about the Overhead Myth campaign and get involved, please visit www.overheadmyth.com.   

About BBB Wise Giving Alliance

BBB Wise Giving Alliance (BBB WGA) is a standards-based charity evaluator that seeks to verify the trustworthiness of nationally-soliciting charities by completing rigorous evaluations based on 20 holistic standards that address charity governance, effectiveness reporting, finances, fund raising, appeal accuracy, and other issues. Learn more about the 20 BBB Charity Standards and about local charity review at local Better Business Bureaus at Give.org.

About Charity Navigator

Charity Navigator, www.charitynavigator.org, a non-profit 501 (c) (3) organization itself, works to guide intelligent giving. The organization does this by evaluating dozens of metrics that assess the Financial Health and Accountability & Transparency of 8,000 charities. By guiding intelligent giving, the organization aims to advance a more efficient and responsive philanthropic marketplace, in which givers and the charities they support work in tandem to overcome our nation’s and the world’s most persistent challenges.

About GuideStar

GuideStar, www.guidestar.org, is a 501(c)(3) nonprofit that connects people and organizations with information on the programs, finances, and impact of more than 1.8 million IRS-recognized nonprofits. GuideStar serves a wide audience inside and outside the nonprofit sector, including individual donors, nonprofit leaders, grantmakers, government officials, academic researchers, and the media.