If one were to do a survey among nonprofit's funders and even the public in general, probably the results will indicate that the majority (perhaps 98%) would agree for non-profits to improve their technological capacity for example, but how to do all that without increasing overhead costs? Thinking on this, unavoidably I thought on the difference between Output and outcome. The reasoning is very simple: little overhead hampers nonprofits’ impact! If we think on delivering meals to the homeless, perhaps a very skillful manager could success in making good outputs by delivering a large number of meals with few employees on the payroll, however, are the recipients being fed well? How is their nutrition? These are crucial information to assess the level of outcome of the organization's activity... specially nowadays when donors are very pending on the impact and feedback of their donations; however, to have this information the manager will need to do some field-research examining the health of the homeless or at least hire a nutritionist . But, how to do that if donors are pressuring for reduced overhead expenses? It's a paradox, doesn't it?
Richard,
ReplyDeleteRemember back to the first chapter of the Forces for Good. An important element to an effective non-profit is having dedicated volunteers. Volunteers are a great way to reduce overhead expenses.
Further, you raise a good point regarding outputs and outcomes. Spending extra money on ensuring the clients served are being fed will is probably well worth it when it comes to assessing the outcome. Again though, the key to your outputs is volunteer service. Increasing money spent on the food quality, yet decreasing the money on paid employees will create the best outcome. Thus, more effective service would give donors a better feeling when signing over another check to the organization.
Richard, I think that the problem of whether a nonprofit should cut its overhead cost depends on the way those money are spent. Of course many nonprofits are doing a good job on using its money in a most efficient and effecitive way. However, there are also some organizations with redundant procedures, just like what Ying has mentioned in her blog. So do you think it's a good idea to cut the overhead cost of those organizations to force them to improve their running system?
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