Resourcing our nonprofits appropriately

The business man was angry.  He had just met with the executive director of a small nonprofit in his area, and he was appalled at how poorly the nonprofit was run.

“What was wrong?”  I asked.  It was an organization I have always thought of as well-run.

“Twenty-eight percent for administration,” he spewed.  “These nonprofits think that is acceptable.”

I stared at him.  “And what seems reasonable to you?” I finally ventured to ask.

“In the corporate world, 7-8% is what we spend on admin.”

Well, ok, but do the math.

His for profit company has annual expenses of $800 million dollar.  Eight percent is $640,000.  You can buy a lot of administration for that amount.

The nonprofit he was discussing, however, has annual operating expenses of $700,000.  Eight percent of that is $56,000.  Barely enough to hire an administrative assistant, especially if you want the assistant to have a phone, a computer…a desk!

Twenty-eight percent gives you $196,000.  That allows you to hire staff, pay rent, utilities, postage….

As with so much in life, size actually does count.  Ironically, the larger your operation, the small the percentage you need to spend on simply running the operations.  We need to stop comparing kumquats to grapefruits.  We need to be realistic about what we expect from our nonprofits and what we will get if we don’t resource them appropriately.

Janet Levine Consulting works with nonprofits, moving them from mired to inspired.  Learn how we can help increase your fundraising capacity at http://janetlevineconsulting.com.  While there, sign up for the newsletter and contact us for a free 30-minute consultation.

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About janetlevineconsulting

For over 20 years, Janet Levine has worked for and with nonprofit and educational organizations, helping to grow their advancement programs. Her consulting company, Janet Levine Consulting, serves a wide range of organizations from small, all-volunteer agencies to major national organizations. She regularly teaches courses in non-profit management, fundraising and grant development, both face-to-face and online at http://courses.lmlearningstation.com/. In addition to her nonprofit work, Janet brings years of experience as a business and sales manager in the for-profit sector. She has an MBA from the Graziadio School of Business at Pepperdine University.
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