“Wait, You Want To Pay Your Employees?”… A Response to The Overhead Myth

Before I went off to grad school, I spent a lot (LOT) of time reading, researching, and planning what my post-Google life in international development would look like….while looking back on all of that work and build-up makes me laugh a bit now at how naive I was (for the record, nowhere in any of that reading, researching, and planning did “spend 3+ years back in Boston” come up….ahem….), that pre-work done was not entirely wasted. During that wide-eyed time I came across a number of people and organizations working in the development space, many of which I still follow (thank you Mr. Twitter). Of those organizations I stumbled across in my early days, the one that stuck with me the most was FORGE, a non-profit started by Kjerstin Erickson whose career, ambition, and success I was at the time (ok fine, now too) both jealous and in awe of.  FORGE was an organization working in refugee’s camps in conflict areas in Africa, focusing on creating programs and structures (think libraries, computer labs, and microfinance) to support self-sufficiency for refugees. It was the exact kind of work I wanted to do when I left NYC for graduate school, and I even reached out to FORGE a number of times during my first year of school, hoping to secure a position with them while I conducted research for my 2nd year masters project.

Unfortunately, I wasn’t ever going to get that chance. FORGE, sadly, is no more.

The full story of what happened to FORGE was told in an open and honest piece Erickson wrote for GuideStar under its initiative, “The Overhead Myth”, and which has since been widely circulated, “Nonprofit Emaciation: Confessions of a Do-Gooder Who Starved an Organization”. In the current non-profit/donor climate of  “no mistakes allowed”, where the tiniest admission of a project error or goal not achieved could mean the end of major donor support, the piece is a refreshing and honest look at why FORGE failed. I have no doubt Erickson’s words are identical to those spoken by many (MANY) non-profit founders before her who also fell into the misguided belief that being a “lean, mean, save-the-world machine” – aka spending as few donor dollars as possible on anything related to overhead – is the right, and the only, way to run a non-profit.  This belief is prevalent in the non-profit/global development sectors, and FORGE is only one of many organizations choked to death by the constraints it bears.

While not exactly the same message, Erickson’s piece reminds of me a piece in the Wall Street Journal from last September, “Why Can’t We Sell Charity Like We Sell Perfume?” (which I responded to here) – the core message I took from that piece was the idea that we as a society look to non-profits to address some of the biggest social issues we face (poverty, disease, homelessness, hunger…) and yet we expect them to do it with staff (from CEOs on downward) making as little money as possible, in the cheapest ways possible (Starbucks being the Office Space of Choice for the do-gooder world where spending money on a desk is frowned upon, let alone an actual work space)….The typical thinking is either you’re a heartless, greedy corporate type working in a for-profit business, or a bleeding heart, totally selfless, Mother Theresa type working in a non-profit organization. This kind of black-and-white thinking is not only short-sighted (hello, social entrepreneurs) but also wildly unfair on all sides. For-profit businesses, and the people who run them, are not inherently bad, and non-profit businesses, and the people who run them, are not inherently good.

The connection between all of this and the Overhead Myth Erickson writes about is that had she – and her donors – understood this, FORGE may still be a viable organization. If she had been allowed to use her funds to hire skilled management and staff, and purchase basic operating systems and other key management tools and resources, who knows where FORGE could have grown to by today, or how many more people it could have helped. But had Erickson hired as she wished she could, and paid for the infrastructures she wanted to, she would have run the risk of being labeled as an organization that “mismanaged” or was “wasteful” with funds – and that reputation is enough to sink any small (or large) non-profit, no matter the justification for it, or the quality and scale of the work that could be produced if they were allowed to operate this way.

“Overhead” is a dirty word in the non-profit world, there is no getting around that. At the end of the day, if I as a donor am going to turn my hard-earned dollar over to a non-profit, I feel much more warm and fuzzy inside knowing that $0.95 of that $1.00 is going directly to that school in rural Malawi, instead of being told $0.50 of the $1.00 is going to pay for (oh, lets just pull a random name of out the air) Project Manager Stephanie Finigan’s salary….But then again, if Stephanie Finigan has the skills to make sure that school is built soundly, is filled the age and skill-level appropriate materials, is staffed by skilled teachers , and is supported in partnership with the local community so that it will be functioning and beneficial for years to come – isn’t that worth half my donation? (as a side note: Wow, Stephanie Finigan sounds like a spectacular Project Manager, doesn’t she? I also hear she is currently job-hunting….)

The bottom line is we need to re-brand “overhead”, or at the very least change the perception of it. It may seem like too big a challenge, but if Angelina Jolie can go from being a blood-vile-wearing-Hollywood-wild-child to world-saving-earth-mother in just a few short years then, well, changing perception about anything is possible. Look, as a development worker, and a donor myself (albeit a modest one…see the note above about my current employment status) I do understand the desire to see as much money as possible go directly to the people and programs that need it most. And I do understand that waste happens. But the reality is that the work we ask non-profits to do is real, is big, and is challenging – and this work does not get done by Do-Gooder Fairies with no rent or groceries or health insurance to pay for. It gets done by real people who have real lives, and real bills. It gets done by organizations that need basic operating systems and resources in order to operate with the kind of efficiency that donors desire in the first place. Overhead is not a dirty word – or it shouldn’t be – and the sooner non-profits stop running scared from it, and donors stop shunning it, the sooner leaders of organizations like FORGE can stop worrying about fighting for a seat next to an outlet at Starbucks in order to dig into their 12 hour workday, and instead get back to actually doing the work they set out to do in the first place.


You can do your part to end the Overhead Myth and learn more here: Pledge to End the Overhead Myth!