FACT: Donors want to know that their gifts are making a difference.
FACT: Overhead rates or ratios are a common way donors seek to measure impact.
FACT: Charities aren’t too happy about this.
All of us have been asked by donors what our charity’s overhead rate is.
Donors latch onto overhead rates as a way of determining if the charity is “wasting money” because they’ve been conditioned to do so and it’s an easy number to find. This proxy measure of a charity’s value is not ideal, but if other measures of a charity’s impact aren’t readily available, it may be the ONLY thing donors can latch on to.
Executive directors of charities can rail against their donors’ obsession with overhead rates all they want, but the fact is that this fixation isn’t going away any time soon. It shows that donors increasingly want transparency and a clear picture of how their gifts are changing the world.
So how can your charity tell its story and show its impact more effectively?
Three US organizations — The BBB Wise Giving Alliance, GuideStar, and Independent Sector — have created a free Charting Impact tool to help nonprofits explain their impact.
Charting Impact’s five simple questions will help you identify the information you need in order to tell the full story of your organization.
The goal of these 5 questions is to help charities find the clearest and most succinct way to articulate what they do and how they do it.
1. What is your organization aiming to accomplish?
2. What are your strategies for making this happen?
3. What are your organization’s capabilities for doing this?
4. How will your organization know if you are making progress?
5. What have and haven’t you accomplished so far?
These questions are deceptively simple. Often we are too close to our causes to see them clearly. Jargon and automatic patterns of speaking about our work can creep in and obscure our story. We may forget our creation story and the bright vision of the future that the charity’s founders dreamed of when they poured all their energy into starting the charity. Sometimes we can benefit from a fresh look from an outside advisor.
For more information on how you can communicate more effectively to raise more funds, see More Money for More Good by Bob Ottenhoff and Greg Ulrich. It can be downloaded for free.