Sunday, November 23, 2014

The problem with evaluating charities on overhead percentage

Like most NGOs, we bragged to our donors that we had low overhead, that their dollars and euros and kroner and francs went to “the cause” and not to our rent or our heating bills. And this was, at least on the Excel sheets, true. ...

The problem is, those overhead tasks don’t disappear just because you don’t spend money on them. Someone has to monitor the accounts, find new donors, calculate taxes, organize the holiday party. Centralizing these tasks in dedicated departments, hiring specialists, getting good at them, that would have looked like bureaucracy. So instead, we spun them out to the entire staff: We assigned researchers and project managers—anthropology majors mostly, some law school dropouts—to do our H.R., accounting, fund-raising, and project evaluations.

The outcome was as chaotic as it sounds. Want to hire someone? You’ll need to write your own job ad, find job boards to post it to, and, in some cases, update the standard employment contract yourself. Want to issue a press release about the results of the study you just performed? Write it yourself and start sending it to journalists. Hopefully you know a few. ...

Every staff meeting, one or two people announced they were leaving. “I wasn’t hired to spend my day fund-raising” were the most common eight words at farewell parties.

My experience wasn’t unique. Stern cites the example of the American Red Cross, which sent confused volunteers, clueless employees, and, bafflingly, perishable Danish pastries to the Gulf Coast after Hurricane Katrina because it hadn’t invested in training its U.S. staff in actual crisis response. A buddy of mine works at an NGO with 150 staff where the H.R. department is exactly one person, and she’s also the receptionist.
--Michael Hobbes, New Republic, on charitable response to incentives. HT: ACT