Phil Buchanan, President of the Center for Effective Philanthropy, issued a rather scathing review of Dan Pallotta’s new book, Charity Case.

This is the latest in what is an ongoing debate about overhead.

What is overhead anyway? We throw this term around but are we clear on what it means?

According to Wikipedia, the “term overhead is usually used when grouping expenses that are necessary to the continued functioning of the business but cannot be immediately associated with the products or services being offered (e.g., do not directly generate profits)…Overhead expenses include accounting fees, advertising, depreciation,insurance, interest, legal fees, rent, repairs, supplies, taxes, telephone bills, travel expenditures, and utilities.”

You can see why donors really want you to make the case for contributing to boring stuff like insurance and supplies. Who wants their donation going to yawners like that?

We can educate donors until we’re blue in the face about why the lights, staples and post-it notes are all necessary parts of meeting our mission. But why not spend that time talking about impact instead of expenses? Tell a story of impact and then connect that impact back to the light switches, hosting fees, and telephones. Not the other way around.

Overhead is important. It’s necessary. We can’t operate without it. But don’t let it hijack your story. 

Your story is about impact. Not your income statement.

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