Overhead Ratios

 Overhead ratios for non-profits can be a sensitive subject.  People often assume that the agency with the lowest overhead is the one they should be supporting.  Keeping administrative costs low is a good goal, but not a worthy one by itself.  The effectiveness of an agency (or funding partner as we like to say at United Way) in meeting its mission is just as important if not more so.  

Think about this hypothetical question:  If we could actually eliminate homlessness in the county but United Way's overhead increased to 40% would that be acceptable to you?  

We care about both effectivenss and low overhead - in our case defined as below 25% (the Better Business Bureau defines low overhead as below 35%).  We measure the results of each of our 49 programs we fund and that is the driving factor behind how much funding we provide to a partner. 

This past year at Middleses United Way we increased funding to community services by $110,000 and reduced actual expenses yet our overhead still went up slightly.  The reason?  Overhead is a combination of both income and expenses.  Almost all non-profits, including us, are raising less money in this particularly challenging economic environment.  Thus, most partners are seeing overhead ratios rise.  Does this mean they are less effective?  No.  In our case we continue to deliver on our promise to advance the common good by providing the building blocks for a good quality of life – education, income, health and housing.   

I encourage you to consider supporting  agencies  that are both effective and efficient.  Supporting United Way and our funding partners is a good start because that's what we do.