This blog is part of a series, in Part 1 I discussed a high level overview of The Non-Profit Starvation Cycle, and in Part 2, Part 3, Part 4 and Part 5, I discussed Step 1: Unrealistic Expectations of Overhead Costs, Step 2: Pressure to Conform to Expectations of the Non-Profit Starvation Cycle, Step 3: Cut Overhead Costs and/or Under-report Expenditures and Step 4: Reiterate Funders Unrealistic Expectations to do more with less. In this post, I’ll discuss Step 5: The cycle repeats and slowly starves non-profits and what grantees can do about the non-profit starvation cycle.
From the previous posts you’ve come to understand that this cycle is difficult to stop and often causes a lot of stress for the leaders of non-profit organizations. What happens in Step 5 is that non-profit leaders and board members don’t express the necessity for change to their funders – so nothing changes. This leads the non-profit back to step 1 where they must meet unrealistic expectations about overhead costs.
So what can grantees do about the non-profit starvation cycle? How can non-profit leaders, board members, and funders come together to help alleviate some of the skewed perceptions about overhead costs?
Well, as a basic step non-profit leaders should have a full understanding of their real overhead costs and infrastructure needs. This may take time but a thorough understanding will then allow them to create strategies to present their findings to the board. Non-profit leaders need to go to the board with an explicit strategy and an outline of what needs to happen and why.
From the board members’ perspective, when a non-profit leader comes to you with a strategic plan outlining real numbers, case studies, etc. – be supportive. Go the extra step by trying to communicate with other hesitant board members about the importance of a well-structured organization. Non-profit leaders and board members need to emphasize that investments in infrastructure have great potential to reduce the costs of serving the ultimate benefactors of the organizations and its programs.
Lastly, funders need to understand that a non-profit will run more successfully with proper funding allocated to overhead costs. No one likes to pay for the organizations rent, paper, or bills – but it needs to be done! Proper overhead cost allocation will improve inefficiencies, resulting in a more successful non-profit organization, which means more community change for the better!
Both funders and grantees have an opportunity to address a long standing stigma of the operational ways of non-profits. Through proper communication, planning and education, there is real opportunity to put an end to this harmful cycle.