Insights and Opportunities to Make Better Social Impact

Insights and Opportunities to Make Better Social Impact

October 25, 2019
October 25, 2019

Share

Evaluating Nonprofit Overhead, Getting into the Data tells a Better Story

For anyone involved in, or supporting nonprofits, here are a few of my takeaways and action steps after reading some of the great research and articles by friends at Bridgespan, developed in partnership with five leading foundations. In “Ending the Nonprofit Starvation Cycle,” the authors provide a range of excellent analyses that one could consider as an activity-based costing approach for nonprofits. They dive into the true costs of running a nonprofit compared to the expectations of funders.


The results highlight critical insights and opportunities for people who want to deliver social impact:


• The true cost of overhead, operations, and restricted grants are far higher than traditional nonprofit counting captures, much the same way you find in for-profit companies where many an effort costs more than expected when you dive into the data.


• Many nonprofits try to manage expense allocations to meet a cost-effectiveness expectation that is a misrepresentation based on a few outliers and a lot of data and reporting that does not capture the true overhead of most nonprofits' operations.


• Those with well-heeled and connected boards have more access to funding and the free labor of connected fundraisers (their board), than lesser-heeled boards. Great, grassroots organizations without a well-connected board may have a disadvantage on raising funds and therefore will need higher development budgets and mechanisms to raise funds; resulting in the need to be more creative about getting resources or establishing more moderate goals. This is not a critique of either type of organization or their funders, I have experienced all these scenarios in my personal efforts. The same thing happens in business.


Action Steps

• If you are a nonprofit leader, volunteer, or on a board, work to help the organization understands its true costs, so that you can ask funders to support the true cost of operations. Ensure that funders who want to fund special programs are also asked to support the organization’s overhead.


• If you or your nonprofit does not know the answer to its true costs, it is a great opportunity to lend a hand or recruit an analytically-driven volunteer or resource to help. Nonprofits have a great opportunity to get more resources by the way of interested talent, not just money. It is also the opportunity to consider whether adding resources for analysis could be valuable for the long haul.


• If you are looking for nonprofits that may be lesser-known, without a well-heeled board, good for you and but make sure to manage your expectations as to what they will need in funds and your support. It could be that their programs are dollar-for-dollar far more productive than better-known organizations, but their fundraising expense may need to be higher.


• When thinking about the end goals and resource needs, it is good to occasionally re-think your needs, costs, and benefits to those the nonprofit serves. Maybe the organization can get more creative about getting resources, cash, or otherwise, or fee-for-service models enabling the organization to scale while still providing social impact.


Just like for-profit businesses where there is constant work to be done to improve operations and effectively raise and deploy capital, the nonprofit world has the same need. In summary: Bring your skills, brains, compassion, bandwidth – and your funding if you can, or any combination. They’ll all contribute to covering the overhead.


Rafi Musher is Founder and CEO of Stax

Read More

The Investment Case for Experiential Marketing Agencies: Growing Mission Criticality of Live Events
By David Lindsay • October 15, 2026
Experiential marketing agencies are transforming into strategic partners, and enterprise clients are valuing agencies that create relationships built on trust and operational excellence. Read more.
Featured by Bezinga: Health Care PE Is ‘No Longer An Easy Source Of Returns'
October 8, 2026
Rob Larson was featured by Bezinga, offering his expert insights on the current state of healthcare within PE and why investments continue to be made in the industry, Read more.
What Local Governments Need from GovTech Right Now: Lessons from CivStart
By Chen Liu • October 1, 2026
Partner Chen Liu attended CivStart's GovTech conference, sharing his insights and key takeaways on what GovTech providers and investors should know. Read more.
Grant Thornton Stax Top 20 2025
By Florent Jarry & David Lindsay • September 17, 2026
Grant Thornton Stax has released its annual Top 20 Ranking of Exhibition Organizers. Click here to explore the full list.
Feat. by Pitchbook: The future of diligence is not integration. It is conviction.
By Paul Edwards • September 15, 2026
Global Practice Leader Paul Edwards explains how diligence is changing and how confidence and conviction are adding exit value. Read the full article here.
Featured by Carta: PE is trying to figure out where AI fits into the future of healthcare
By Rob Larson • September 8, 2026
Rob Larson met with Carta to discuss the growing problem of supply and demand in the US healthcare system, and how a technological revamp could be necessary. Read the full feature here.
Show More