For many, overhead is a near profanity.
We all know stories about charities behaving badly with donated funds. Take the American Red Cross. Following the 2011 earthquake and subsequent aid response, researchers at ProPublica assessed the impact of the American Red Cross in Haiti. Their findings showed that although the American Red Cross had raised $500 million to help rebuild Haiti and the plan was to “focus [on] building homes,” four years later they had built just six houses. Much of their expenditures had been wrapped up in overhead to cover legal expenses, salaries, insurance, rent, licensing and government fees…you get the picture.
Well-reported stories like this create the impression that all nonprofits behave in the same fashion. As a result, each year I have countless conversations in which the spotlight shines brightly on overhead ratios.
A recent study published in the Chronicle of Philanthropy showed that 60% of the survey respondents believe nonprofits spend too much on overhead. Six years ago, respondents suggested $.22 per dollar spent was a reasonable amount for nonprofits to spend on overhead. This year, respondents suggested $.19 per dollar was a reasonable amount, a decrease of 14%. Given the trends, there’s no reason to believe the preferred overhead percentages won’t continue to decline. The public wants nonprofits continuously doing more with less.
Now, I am overhead. It would be fair to say this is personal for me. For the past decade, I’ve worked as a salaried, nonprofit fundraiser. In my role, I manage a fundraising team and oversee a $1.3 million budget situated squarely beneath the overhead umbrella. Not only am I overhead, but I recruit and manage a team of overhead employees!With scandalous headlines ringing in my ears, the growing scrutiny about nonprofit overhead spending, and my status as overhead always on my mind, here are five reflections:
- Overhead ratios are squishy. How much of my salary is devoted directly to raising money for HOPE International? …and how much is devoted to educating the public about microfinance, poverty, and our mission? It’s a murky question and there’s no option for “all of the above.” But the answers to these and hundreds of similar questions inform the ratios we report each year. Our auditors weigh-in on how we allocate our expenses, but there’s quite a bit of ambiguity.
- Overhead ratios are important. The squishiness of overhead ratios is not reason enough to ditch the metric entirely. It serves as an important bellwether and a key dimension of the overall picture of nonprofit financial health and stewardship. There’s a reason independent evaluation agencies like Charity Navigator (a founding partner of the “Overhead Myth”) and Excellence in Giving continue to assess the metric.
- Overhead is important. Bridgespan estimates most successful businesses spend 34% of their budget on “overhead.” These businesses invest in fundraising, marketing, people, and systems because they believe they can create great products and services only if they have a firm foundation. Likewise, nonprofit overhead expenses create a healthy base from which these organizations can fulfill their mission. Equally as concerning as nonprofits investing too much in their fundraising and administrative functions are those investing too little.
- Overhead ratios reflect leadership. Almost daily in my role, I engage with my peers in leadership of all sorts of nonprofit organizations. There isn’t enough space to name them all, but these men and women lead well. They have rightfully earned the trust of the public and are capable caretakers of their budgets and missions. They are the most concerned about ensuring their overhead spending is appropriate. For every story of one nonprofit behaving badly, there are five or ten (non)stories of nonprofits like these behaving admirably.
- Overhead is leveraged giving. This year, for the first time in my tenure, a foundation designated their donation specifically toward fundraising expenses. They restricted their donations to overhead costs, funding the most-difficult expenses to fund. Likewise, many of our supporters today give unrestricted donations, trusting HOPE’s board and management to spend where resources are most needed. Remarkably, even as HOPE’s total budget has grown each year, the percentage of total unrestricted giving has grown as well. This unglamorous giving is one way donors can make a leveraged impact on the financial health of the organizations they most trust. Investing in things like fundraisers, updated software, and marketing campaigns allow nonprofit organizations to reach more people in more places.
Bible translation would seem a likely place for generosity and open-handed collaboration. Getting all of Scripture into every language is a clear goal shared by the global Church and multiple organizations. But like every sector, it’s also a place of fragmentation.
One foundation executive in Tennessee recently shared how one year, three different agencies approached him for funding to translate the Bible into the same language for the same people group. Literally, the impact was going to be a third of what it could have been if each organization focused on a different language. This type of redundancy is all too common within the nonprofit sector.
But a new example of generous Kingdom partnership is emerging.
Many translation agencies have looked up from their own efforts to realize their organization-centric pursuits were thwarting the collective mission of eradicating Bible poverty in our generation and making disciples of all nations. Together with humility and open-handedness, they focused on a shared mission of translating the Scriptures into every remaining language in the world.
Mart Green, founder of Mardel Christian & Education and chairman of the Hobby Lobby board, was perhaps the first to articulate a broader vision. In both professional and philanthropic pursuits, Green was committed to helping more people access the Bible. He reasoned that rather than having Scripture translations housed in separate systems within the various translation agencies, organizations and unreached populations alike would be better served by a digital Bible library, accessible to all.
He brought together three translation agencies and several significant philanthropists to mobilize this vision. The library launched in 2010 and now encompasses more than eleven hundred Scripture portions and versions.
Meanwhile, Todd Peterson, chairman emeritus and interim CEO at the time of Seed Company (a Wycliffe Bible Translators affiliate), was focused on the organization’s mission to see all languages have Scripture by 2025. To do so, he was beginning to communicate to supporters not simply the needs of Seed Company but rather the greater needs of the remaining Bible-less people groups.
Captivated by the larger vision, donors gave more generously than Seed Company had ever seen before. The organization shared this outcome with Green and then invited other translation agencies to collaborate on how best to invite donors to give to ensure every tribe and every nation would get Scripture in their heart language in our lifetime. They contended givers might allocate greater funds to an overall area of interest rather than a specific organization.
It was a radical idea, as collaborative fundraising usually experiences strong headwinds and donor events are not typically the place to find organizations praising their “competitors.” But with an attitude of abundance and an unwavering focus on the Kingdom, Seed Company viewed these other organizations as allies. They invited others in, and those invited came.
Individual agencies surrendered exclusivity and competition. “It means that you’re trying to make someone else successful,” said David Wills, president emeritus of the National Christian Foundation. “Our primary responsibility is to not get in the way of what God is doing.”
In 2017 ten Bible translation agencies, involved in more than ninety percent of global translation work, banded together to drive visitors to a single website titled illumiNations. In just one visit to the site, supporters can see Bible translation progress across the globe and be matched to translation projects based on interest rather than organization. This collaboration enables the Bible to be translated with better quality, efficiency, and affordability.
Leaders of these ten distinct translation organizations agree that the goal of making their organizations famous is subservient to the goal of making Christ known. Rather than compete for website visits or donors, these agencies have pooled their resources to accelerate their goal, accomplishing faster what would have taken vastly more time and resources to achieve independently. Knowing they needed to build relationships, they committed to meeting every month in person at the airport in Dallas.
Bible translators initially predicted that they would begin translation into the last language by 2150, but by working collaboratively, illumiNations believes they will have translated at least the New Testament for 99.9 percent of the world’s population by 2033. Through translation partnership, they plan to reach their goal 117 years ahead of schedule.
117 years faster.
Working together across organizational boundaries is complex and messy and laborious. It is also powerful.
In this beautiful example of rooting for “rivals,” Peterson and other Bible translation leaders who once competed for market share have allied against their common enemy of Bible poverty. In joining together, they have learned to say, “Thy kingdom come” instead of “my kingdom come.”
This excerpt is adapted from Rooting for Rivals, available now for preorder.
I began 2017 with a confession about 2016: I was a grump that year. And, I entered 2017 committed to being less consumed by the scandal du jour and more consumed by the people and places closest to me. And, I’m happy to report 2017 was a much better year. Though 2017 was difficult, of course, it was filled with untold joys, adventures, new places, and books. It was replete with making new memories with people I love and shaped by new habits and routines.
Here are a few of my favorites from the past year:
Best new book: Tech-Wise Family by Andy Crouch. No book shaped our family more this year. Crouch helped us “put technology in its proper place.” We haven’t torched our phones and laptops, but we have established much better boundaries. Because of this book, we watch far less television, keep our phones in their “parking spots” when we are at home and are much more cognizant of technology’s insidiousness.
Best not new book: The Chronicles of Narnia. We read this series aloud to our kids before bed. And, we all loved it. Eustace, Reepicheep, and Jill Pole captivated our imaginations and pointed us to the big story unfolding all around us.
Best articles: In 2018 and beyond, parental advisory warnings may need to preface news broadcasts. Vulgarity dominated 2017. From politicians to celebrities, each day brought new ugliness about men abusing their power. These stories create an environment for Christians to reimagine how we might practice our faith and serve our neighbors. Two articles I read in early 2017 framed the moment. The first, a New Yorker profile on Russell Moore by Kelefah Sanneh, painted the opportunity for the church to embrace the posture of a prophetic minority. The second, an essay written by Wesley Hill in Comment, offered a challenging invitation for Christians to rediscover our call to hospitality.
Best new habit: I read Deep Work this year with my coworkers. And, Newport’s research struck just the right tone for our modern work environment. He names the ways our always-available work culture drives us toward shallow and unfulfilling hamster wheeling and away from deep, meaningful work. Because of the book, my team has instituted “deep work Fridays” where email, instant messaging, meetings, and social media are strongly discouraged, allowing us the space to think and work deeply.
Best movie: Hidden Figures hit all the right notes. It beautifully wove together themes of vocation, race, virtue, and faith. And, it featured a killer soundtrack. The character who made me laugh hardest this year was the affable narcissist, Batman (Will Arnett), who starred in Lego Batman.
Best story you haven’t heard: One of the best parts of my job is reading the annual “Thurman Award” nominees. These stories–submitted by our staff from the 900,000+ men and women we serve across the world–remind me of all the things that are going right in the world. This year’s winner, Savera, is one of those heroes who won’t make news headlines but should. Formerly homeless, Savera now employs 50 people in farming, construction, and real estate businesses. With her success, she’s adopted eight orphans, she pays for her vulnerable neighbors’ school fees, and has built clean water wells for her neighbors.
Several times over the past few years, I have visited the Rwandan genocide memorial in Kigali. The first exhibit in the memorial displays an ominous image. At first glance, the picture is innocuous enough. It is far less grisly than many of the pictures throughout the rest of the memorial. But it is far more haunting.
In the picture, a Rwandan man sits in an examination room. A Belgian examiner measures the width and length of the man’s nose with a metal caliper. He then measures the eyes of the Rwandan man, contrasting and comparing the shape and size of the man’s eyes to a chart of various cultural eye shapes.
We now know that the Belgians sent scientists to Rwanda, wielding “scales and measuring tapes and calipers, and they went about weighing Rwandans, measuring Rwandan cranial capacities, and conducting comparative analyses of the relative protuberance of Rwandan noses.”
These tools, though far less violent than the machetes and guns used to perpetrate the genocide, are far more barbaric. When walking through the genocide memorial, jarring images of soldiers and militants line the walls. But it is this seemingly benign activity—a scientist wielding a caliper—that created division and preceded the slaughter of nearly one in ten Rwandan people.
First the calipers and scales were dispensed. Soon, the common physical appearances of the Hutus and Tutsis codified. Then, government officials mandated Rwandans record these divisions and differentiations between Hutus and Tutsis on identification cards. As the genocide unfolded, the perpetrators used these cards and physical differentiations to separate neighbors from each other. To separate friends and groups of students from their peers. To determine who lived and who died.
At the memorial, the second floor exhibits the terrible realities of genocides committed across the world and across history. In each case, division precedes violence. The Nazis forced Jewish men, women, and children to adorn their clothing or an armband with the Star of David. Turkish military and government officials organized the genocide against hundreds of thousands of Armenians who were identified as Christians on their national identification cards.
Earlier this year, we lived in the Dominican Republic for a few months. There, we learned about the history of Hispaniola and some of the horrific massacres carried out against ethnic groups on the island. In 1804, Haitian dictator Jean-Jacques Dessalines murdered all French residents who were unable to sing a Haitian nursery rhyme in Creole.
In a horrific turnabout, in 1937, Dominican dictator Rafael Trujillo commanded his troops to round up dark-skinned people living near the Haitian border. Once they did so, journalist Michele Wucker recounts that the soldiers held up sprigs of parsley and asked, “‘What is this thing called?’ The terrified victim’s fate lay in the pronunciation of the answer.”
If the victims were unable to get the Spanish just right, they were killed and thrown into the Dajabón River, known commonly as the Massacre River in commemoration of the thousands of people who were killed because of their inability to say perejil—parsley—correctly.
Massacre River flows between the Dominican Republic and Haiti. This geographic divide is emblematic of the many symbolic divides we create between ourselves. Caliper or nursery rhyme. Badge or identification card. These create borders between us, separating men and women from each other, signifying those who have more (and less) worth. These are of course heinous examples, but this evocative history gives us a glimpse into the human heart. And Christians are anything but immune.
Jesus says our oneness is the way that others will identify us as his followers: “By this all people will know that you are my disciples, if you have love for one another.” Yet as clearly as Jesus prioritized unity among his followers, we are quick to disregard it. Our natural inclination is to splinter. For Protestants, protest is in our very name. In our tribe, when disagreements emerge, we split.
“Very soon we will find it difficult to sustain the metaphor of the ‘body of Christ,’” said Ajith Fernando, author and Youth for Christ teaching director. “We believe in ‘a lot of bodies’ of Christ … [but] there is one body of Christ.”
There is either one body or there is not. For followers of Christ, “Winning is when we are united, not when one has won and the other has lost,” Fernando argues.
As the culture around us in this country grows increasingly suspicious of and unfamiliar with our faith, it provides a new opportunity for Christians to share and show what we are for. To lead and serve differently. To focus on our unified mission and tenaciously pursue it. To do more together than we ever could do alone.
There is no better time of year than Christmas to model and extol this type of unity. The world around us sings our songs and tells and retells our favorite story. As we surge into Advent, might we eschew every temptation to castigate and embrace every opportunity to love.
John Mackey was a self-described hippie. Living in Austin, Texas, in the 1970s, Mackey looked the part. He sported a shaggy, curly mop of a hairdo and adorned his face with a horseshoe mustache. After dropping out of college, Mackey decided he wanted to take on corporate America, specifically targeting the tycoons controlling the food industry.
To do so, he launched a nonprofit, health food co-op, called SaferWay (a not-so-subtle jab at Kroger’s Safeway grocery chain). But over time, Mackey grew convinced his tiny co-op could not make a dent in how Americans eat. So Mackey began to think beyond the walls of his co-op. To change the industry, he’d need to launch a full-on grocery store.
Craig Weller, Renee Lawson Hardy, and John Mackey | Photo source: CNBC
In 1980, Mackey decided to approach his top rivals to gauge their interest in collaborating. He met with Craig Weller and Mark Skiles, owners of SaferWay’s competitor, Clarksville Natural Grocers.
“I pitched them, ‘Look, we’re going to open this first natural foods supermarket, one of the first natural foods supermarkets anywhere in the world, why don’t you do it with us?’”
Mackey saw his competitors as his potential allies. Mackey saw an opportunity for them not just to operate autonomously together but to actually cofound a bigger and better endeavor entirely.
So they did. They merged their stores under one roof and chose a new name—Whole Foods Market. The natural foods movement was born. Over the next 37 years, Whole Foods Market expanded to 460 stores across the United States, Canada, and the United Kingdom.
A few months ago, Amazon bought Whole Foods for $13.7 billion, marking the beginning of a new chapter. Love Whole Foods or hate it, in just a few decades, the healthy food movement graduated from tiny cooperatives catering primarily to young, hippie enclaves in Austin to the most innovative force in the food industry in the West. John Mackey’s healthy food vision is today officially mainstream thanks to his belief in collaboration.
John Mackey understood the power of thinking beyond. His philosophy is different from simply thinking big. Building great companies intrigued this industry pioneer but building something beyond his organizational boundaries intrigued him far more.
Jesus reminds us in clear language to “seek first the kingdom of God and his righteousness, and all these things will be added to you.”
To seek first as leaders of faith-based organizations is not easy. Because of how deeply entrenched we are in cultural values of winning, competition, and ownership, we regularly lose sight of how radical our organizations would be if we were truly to seek first the Kingdom of God. For many of us, we may tip our proverbial hats to working together with our rival nonprofits, but do very little in practice.
But if it is possible for a hippie-turned-mogul to link arms with his direct competitors; perhaps faith-based organizations can as well?
Founded by my friends, Josh Kwan and Dave Blanchard, Praxis is an innovative organization which exists to equip and resource faith-motivated entrepreneurs “who have committed their lives to cultural and social impact, renewing the spirit of our age one organization at a time.”
Rather than aiming to serve all organizations everywhere, Praxis works within very defined constraints: They serve 12 nonprofits and 12 businesses each year. And not just any business or nonprofit. Even within that broad definition, Praxis holds high levels of specificity of entrepreneurs who thrive within the Praxis community. Kwan and Blanchard believe they can add the most value at particular stages of the organization’s lifecycle.
Each year, the number of quality applications exceeds the number of available slots they have open. More than once, candidly, Praxis has declined to pursue an opportunity I’ve proposed to them. Be it new partners they could work with or nominees we think they should consider for the program, we’ve regularly been denied. At times it’s been frustrating. I’m a mentor with Praxis, after all, and wonder why I don’t have more sway!
But, Praxis is a temperance-practicing organization. Nobody who knows Praxis’ team and vision would accuse them of having their sights set too low or of being risk-averse. They’re growing and expanding in unique ways each year.
But their growth is within the boundaries of their vision and guided by clear constraints. This posture of temperance creates the opportunity for them to invest deeply in the lives of the entrepreneurs, staff members, donors, and investors they serve. One way this manifests is in how they celebrate.
Part of what makes Praxis events unique is their “pitch night,” where the 12 entrepreneurs share the vision of their organizations in five minutes or less. Even in this setting, they’re challenging these entrepreneurs to distill their organization into five minutes or less. They’ve seen this constraint generate creativity and punchiness simply not realistic in an hourlong address.
Praxis pitch night (photo credit: Praxis web site)
In these pitch sessions, they’re sharing their vision with potential high-impact donors and investors. And, Praxis appropriately celebrates the courage it takes to do so. Without fail, when the pitch night concludes, the pizza arrives. And, the cohort of entrepreneurs and mentors heartily celebrate this key milestone in the Praxis journey. In a surprising way, instilling clear constraints and limits seems to allow the celebration to hold more meaning. When every meal is a feast, no meal is. Likewise, when an organization practices temperance, it makes indulgence all the more special.
Their first cohorts began in 2010. Since then, their fundraising revenue, staff size, and organizational reach have grown steadily and surely.
Who knows? Praxis might double their constraints this year, expanding to serve 48 entrepreneurs. They might stop holding pizza parties. They might begin enacting all of our wonderful ideas for how they can expand. But they won’t do it because they can, but because they should.
Leaders like Dave Blanchard and Josh Kwan practice temperance. And, they provide examples of how we can too.