I recently had a frustrating experience. It all started during a casual conversation with one of my mother’s friends. After hearing a bit about my role as CFO of the World Resources Institute, my mother’s friend informed me that she regularly contributes to charities. In fact, she stated proudly, she only donates to organizations with “low overhead”-- that is, to groups that spend the lion’s share of their funding on program expenses and only a small amount on fundraising and administrative costs. I couldn’t help but shake my head--not only because I disagreed with her, but because it’s a sentiment we hear all too often in the non-profit world.
Activist and fundraiser Dan Pallotta articulated this problem well in his March TED Talk, “The way we think about charity is dead wrong.” Pallotta explained that there are separate rulebooks for for-profit and non-profit companies in the United States. For-profits are judged on their growth and the quality of their products—which have the cost of necessary infrastructure or overhead baked into the cost of each product. Non-profits are evaluated on how little they invest in infrastructure rather than the quality of their work.
At WRI--and at all non-profits, for that matter--scrimping on essential infrastructure is short-sighted. This practice negatively impacts our work, our growth, and ultimately, our ability to change the world.