Suggestions for Reducing Overhead

Sure, we all think the charity watchdogs are overbearing. They’re so high and mighty telling us nonprofits we spend too much on overhead.

But, occasionally, they have a point. Maybe it's time to check our expenses a little more carefully, to re-evaluate a longstanding contract that just keeps getting renewed, or get rid of fundraising activities that have lost their value.

Just like equipment and resources, our management practices might be a bit worn and tattered. So let’s take this opportunity to see what we can do to address this problem.

1. Conduct a top-to-bottom review of all contracts.  Do this for every vendor, every consultant, every lease. Explain that your audit committee has requested the review, so no one feels singled out. Examine all regular payments. If you’re not the one signing checks or approving every invoice, sit down with the people who are. Ask questions. Are these services still necessary? Can we renegotiate a better rate?

2.  Look for pro bono support from professionals and help from volunteers. Check with professional associations for pro bono help. Post volunteer jobs with VolunteerHub or VolunteerMatch. I once found a correspondence secretary through VolunteerMatch who was willing to generate our major donor thank you's. Every week. For three years. She was like an angel from heaven.

3. Only hire fundraising staff when you absolutely have to. Remember, they need to raise their salary and benefits and pay for their equipment and budget before they produce any net benefit. There are only two conditions under which you should hire a fundraiser.

  • You need someone to manage existing fundraising activities. In this instance, you are either replacing outgoing staff or you need to free up the executive director or program staff from heavy fundraising responsibilities.
  • You are positive -- I mean, absolutely certain beyond a shadow of a doubt -- that there is potential for significant revenue growth. You can quantify it. You have prospects with names and dollar figures. You just need someone to take the next step to help you realize that potential.

4. Eliminate inefficient fundraising practices. That’s you, direct mail acquisition. If the American Cancer Society can do it, so can everyone else. What about special events? Is that gala or golf tourney really raising money -- even when you factor in staff time? If it costs more than it raises, then you’ve got it upside down. (Related to this, make sure you are calculating your own ROI. It’s amazing what other people can do with statistics.)

5. Don’t hire high-priced consultants for advice you can get for free on the Internet. Fundraising is 95 percent implementation. It’s not complicated. You sit down with a donor and ask for a gift. You send out letters and emails. If you need help developing a fundraising plan or convincing your board to help, take advantage of the free resources on the Foundation Center website. Or these other sites which have better advice than you’ll get from your average consultant.

6. Consider bringing some services in-house. It’s easy to get in the mode of thinking that others can do it better. It’s also expensive. Don’t be afraid to stuff a few envelopes now and then. It can be surprisingly therapeutic.

7. Just say no most of the time. You can probably justify spending money on lots of stuff, a new database, a wealth overlay, maybe even a glossy case statement. But as development staff, our job is to get people to give us money, not the other way around. Keep the money flowing in the right direction.

We need to be good stewards of our donors’ dollars. The more we can save on administration and fundraising, the more we can put toward program work. So look at some ideas for getting rid of unproductive activities or unused resources -- not because of the watchdogs, but because it’s the right thing to do.