And “Whoomp, there it is,” to quote the Tag Team song from the ’90s.
The question came from an audience member in the back row. I can count on it nearly every time I speak to a group about charitable giving: “What is your overhead ratio?”
People give for their own reasons. It’s their money, and they bring their own unique value set to that decision. Numerous surveys have been done over the years researching donor motivation. Although declining steadily over the past several decades, faith remains the primary motivator. In terms of giving by percentage of income, Utah is the most generous state, followed by the poorest state in the U.S., Mississippi. Both have strong religious ties.
The research also shows that state and local tax policy is the second biggest contributor. Some states philosophically and historically have relied more on charities providing human services; others think of that as more of a governmental role.
There are also generational differences in motivations. Older donors are more trusting of institutions and traditional charities, while younger donors want the immediate gratification of direct giving via GoFundMe or similar platforms. Research also shows that donors have preferences for nonprofits and causes that have directly impacted them, or they prefer charitable groups with connections to friends, family or acquaintances.
How we give and who we give to is a very personal choice. Financial stewardship of the organization is a legitimate consideration. Trust in all institutions is declining, and charities are not exempt. A recent poll I saw had trust in nonprofits at 58%, and a few bad actors in the field who were not good stewards contributed to that decline.
In recent years, the nonprofit segment has pushed back on the practice of focusing on overhead though public letters calling out “The Overhead Myth.” Even Charity Navigator, a site that provides financial information and ratings for nonprofits, states that the Overhead Myth letter is correct that “focusing on overhead without considering other critical dimensions of a charity’s financial and organizational performance does more damage than good.”
To me, the main questions we should be asking ourselves as donors are “What do I care most about?” and then, “How can my gift make the most impact?” Some nonprofits might have the lowest overhead, but also not make much of an impact … and the converse is true.
Bart Brown, a friend and longtime CEO of the Ozarks Food Harvest, tells this story of volunteering at a charity thrift store with his mother when he was in elementary school:
A customer once purchased every pair of children’s underwear in the store. As she left, another volunteer said in an aside to my mom, “You know, if she’d do laundry more often, she’d have to buy fewer clothes.”
My mother turned to her and said, “What you don’t know is that the woman you just spoke about is raising her four grandchildren on her own, and she lives in a house with no running water. She washes her grandchildren’s clothing in the creek behind her house, and she is determined, above all else, that her grandchildren go to school every day with clean clothes.”
Then my mother swept a cool blue-eyed gaze over her fellow volunteer and sweetly asked, “Besides, what the hell do you care what she buys anyway?” When I got in the car with my mom to leave, she turned to me and said, “When you serve, you don’t get to judge!”
In this season of giving, let’s give freely, openly and without judgment to those causes and organizations we care about, and focus more on impact than accounting ratios.
