Are you an overheadhole? Why we need to just stop talking about overhead

[Image description: A black rottweiler puppy, looking slightly bashful. Maybe it’s because they’ve been bragging about their nonprofit’s overhead ratio on their website.]

One of the points Unicorns Unite (the book that I co-authored with Jessamyn Shams-Lau and Jane Leu; you can order it here) is “Don’t be an overheadhole.” An #Overheadhole is a person, nonprofit, or foundation who is obsessed with low overhead. They reinforce the idea that any organization that has “high” overhead is terrible and ineffective, with immoral staff who hoard money for themselves and who have bad personal hygiene and never call their mothers. Oh yeah, overheadholes?! Take a look in the mirror! YOU’RE the ones who never floss! Is that a piece of spinach stuck in your teeth, or just your blatant ignorance?!

Though we have constant battles with overheadholes, this idea of overhead is still an obsession in society. The holiday season is starting, which means we’re going to see memes about how you should not donate to so-and-so orgs because only three cents of every dollar go to the people they serve, and 97 cents go to pay for the CEO’s third mansion and pet snow leopard or something (I only have one mansion and a pet otter, you overheadholes!). I wrote about it here in “How to deal with uninformed nonprofit watchdogs around the holidays.”

Despite reminders that for-profits have an average overhead rate of 25%, with some industries such as technology and household goods at 40 to 50%, despite the fact that there is no standardized metrics for evaluating overhead rates so everyone just basically makes up their own rates, funders and donors are still obsessed. Overhead is a zombie red herring, constantly rising up to distract, torment, and keep us from doing important work.

Unfortunately, y’all, we may be our own worst enemies. Without meaning to, we’ve been reinforcing the idea of overhead and giving it credibility. By talking about overhead, even to correct misconceptions, we further the obsession. This is because of human psychology. Many of the strategies we think are effective are actually pretty terrible. For instance, some of us run campaigns to raise awareness about various issues. A tactic is “mythbusting,” where we debunk misinformation. Like this:

MYTH: People who regularly wear infinity scarves are twice more likely than average to litter. FACT: There is NO correlation WHATSOEVER between littering and the wearing of these sartorial abominations!

Shockingly, studies show that people unconsciously latch on to the MYTHS, not the facts. Which means that by trying to debunk these myths, we’re actually perpetuating them! See, just with the paragraph above, I have unconsciously planted a seed in your mind. Whereas before you never thought about infinity scarves and littering, now you can’t get it out of your mind. Can you? It’ll haunt you forever, whether you know it or not.

This has real-world implications. (RVC’s Managing Director Ananda Valenzuela reminds me that this goes for True or False awareness campaigns too). Not to veer off into politics, but we did this in the 2016 elections, when we pointed out and laughed at some of the ridiculous and horrifying ideas and candidates, which only served to amplify them. And we continue to do this, giving trolls and bigots, anti-vaxxers and flat-earthers, attention and power when we really should just ignore them.

With all this in mind, it may be time for us to completely stop talking about overhead. Even when we have good intentions, we still may be furthering the problem. Let’s say you published a study that shows that the low-performing orgs have an average overhead rate of 10%, and the higher-performing ones have rates of 16%. That’s great data to support the fact that orgs with higher overhead perform better, right? Well, that still reinforces the idea that overhead rate for high-performing orgs should be at 16% or less. And now, by citing this example, I myself just further reinforced it. See what I mean?

Overhead is an outdated concept, like lobotomies and racist Halloween costumes. Let’s agree to never voluntarily bring it up. Do you ever hear for-profits talking about their low overhead rate? No, they talk about their quarterly earnings or diversity efforts or chicken sandwiches or whatever; they usually DON’T TALK ABOUT OVERHEAD. Let’s do the same. Let’s talk about our outcomes and how we’re achieving them, not about the ridiculous concept of overhead. Don’t list it on your website. Don’t brag about how 94 cents of every dollar to your org goes to direct service. Don’t bring it up on donor or funder visits. Don’t mention it when making the ask at your gala or luncheon. Don’t emphasize it in your annual report. Remove all instances of it when possible.

Funders, some of you have been trying to be thoughtful, increasing the allowable overhead/indirect rates grantees can have or whatever. That sounds generous, but you are still focused on this inane concept instead of what actually matters. It’s ineffective. Move on. If you’re that stuck on the past, there are other equally archaic but less harmful things you can fixate on, like bringing back bell bottoms or Garbage Pail Kids.

Researchers and evaluators, stop studying overhead. We have plenty of data that the most effective type of funding is Multi-Year General Operating Dollars (MYGOD). The more you seek to debunk the overhead myth, the more you are just reinforcing it in people’s minds. There are plenty of other things to do research on, such as how high-performing organizations divide up office chores.

From now on, let’s try to avoid talking about overhead as much as possible. Don’t talk about overhead in a boat. Don’t talk about overhead with a goat. I know, there are still people who are obsessed with it. Bless their hearts. Think of them as well-meaning individuals who just don’t yet know better, like babies, eccentric uncles, or people who don’t like the Oxford Comma. But we should only talk about “overhead” in the context of directly countering these folks’ ignorance, and that’s it. We need to leave this concept in the dust bin of nonprofit history. We’ve spent enough time and energy on it over the past several decades. Let’s all #GetOverOverhead. Especially right now, when we have way more important things to do and think about.

Such as how to reduce littering rates among people who wear infinity scarves.

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