In Defense of Overhead

As 2009 approaches, it’s high season for annual appeal campaigns, and with the economy in a recession, these donations become absolutely more critical to keeping organizations going. It’s fairly common to see in these appeal letters or in an annual report, a chart or graph that captures and states the amount to which a donor’s contribution goes to direct services. This is usually done in response to the general desire from donors that every dollar go to providing services and not to operational infrastructure.
The question that agencies are compelled to answer is, “How much of my money goes to supporting services?” But the question itself, and answer to it, tells the donor nothing about how effective the organization is in delivering services or the impact it has in meeting social problems. The question also demonizes overhead, as Dan Pallotta, a writer and blogger about nonprofits and philanthropy says, “when in fact ‘overhead’ is what's required to build the infrastructures we'll need if we ever really want to solve the huge social problems.”
As a former program person and funder, you’ve never had to convince me of the need to fund overhead, and I’ve tried to educate others about the importance of it. So, here’s my appeal to donors as they (or even you) consider and respond to annual campaign letters to support overhead.
Dear Sir/Madam,
As you consider the many requests for your support, we want to make sure you’re aware of the significant contributions overhead plays in our organization.
• Overhead helps pay for the rent without which we can’t store those cans and boxes of food to distribute at the food pantry.
• Overhead helps pay for the utilities without which we wouldn’t be able to offer a warm shelter for those abandoned animals.
• Overhead helps pay for transportation costs without which we can’t take seniors to their medical appointments.
• Overhead helps pay for health care benefits without which we wouldn’t be able to hire those people you see ever day teaching and caring for your children.
• Overhead helps pay for phone and internet connections without which we couldn’t offer 24 hour hotline access to victims of domestic violence.
• Overhead helps pay for general repairs without which we wouldn’t have such nurturing classrooms to treat kids with autism.
• Overhead helps pay for those computers we use to track our goals to tell you how many people we served in the past year.
As you can see, funding overhead is critical to us achieving our mission and delivering services because it creates a stable environment in which we can operate programs, plan new activities, and deliver effective services. We hope you will designate your contribution to supporting some portion of our overhead costs. For your donation, what more of a thank you gift can we send you than to be able to continue operating for one more year?
Please know that your donation will be used well and will enable us to provide services to hundreds of people in need. We invite you anytime to come visit us to tour the maintenance room of our facility so you know your contribution is helping to maintain the furnaces so that we’re not losing money due to inefficient machinery, or take a trip up in our van which was recently repaired thanks to generous donors like you.
Thank you greatly for your contribution, especially in these tough economic times.