The Nonprofit Overhead Myth is Dying a Slow (but Steady) Death

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It happened to me again last week…… I was chatting with a friend (who I consider a dynamic business professional) and the topic of nonprofit management came up. I sensed a familiar statement coming, and then, sure enough, he said, “I always make sure that a nonprofit has low overhead before I consider donating to them.”

Yikes….. Despite steady education efforts over the last several years by the likes of The National Council of Nonprofits and Guidestar, our society still has a way to go toward understanding that nonprofits are businesses with the same overhead expenses as most for-profit businesses. The National Council of Nonprofits is doing a great job of promoting the fact that ‘operating a charity is not free (gasp!). It costs something to deliver a nonprofit’s mission.  In their piece, “(Mis)Understanding Overhead,” the National Council of Nonprofits makes the argument that we rarely question a for-profit business’s need to pay for insurance, accounting, utilities, marketing, technology, building maintenance (the list goes on…), so it’s time to stop pretending that nonprofit organizations don’t have these same valid expenses.

I’ve compiled a few of my favorite resources to help as you consider your next charity donations (two powerful videos and a great FAQ sheet):

  • Dan Pallotta’s Ted Talk titled, The Way We Think About Charity is Dead Wrong is well worth 18 minutes of your time. One of the many strong points he makes is that when the focus is on direct vs. indirect costs, nonprofits are rewarded for how little they spend, not for what they get done.
  • The Human Services Council of New York hits the (sad) nail on the head with their video, What If Pizza Shops Were Funded Like Nonprofits?Don’t let the humor in this video mislead you – anyone who has worked in the nonprofit sector has surely experienced some variation of this situation.
  • If reading FAQs is more your style, check out Overhead Myth – FAQs compiled by GuideStar, BBB Wise Giving Alliance, and Charity Navigator for clear and detailed facts about nonprofit overhead.
  • Now you’re ready to join the movement to dispel the overhead myth which has constrained nonprofits for too long. Spread the word!


    Donna Catalano, MS, PMP, with Eastlake Solutions, provides project management consulting and fractional COO services focused on helping nonprofit organizations maximize their results through streamlined operations, successful project management, and ongoing professional development for their teams and leadership.

So Many Projects, So Little Time

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Nonprofit organizations can easily identify an unlimited number of worthwhile projects, but there are many actions the nonprofit leader can take to protect against initiative overload.

The best results come from focus,
not from trying to ‘do it all.’

Focus, in this case, means that new projects and activities aren’t added to the portfolio without regard to priorities or available resources. This doesn’t necessarily mean your nonprofit has to say no when new needs or opportunities arise. Instead, you should use a disciplined process for deciding how new projects get added and have a clear understanding of when it becomes necessary to hit pause or delete on others.

What’s on the Plate and How Did it Get There?

Much of your nonprofit’s day-to-day focus is dictated by the urgent and important needs of its stakeholders. Add in strategic goals, program goals, business goals, plus regular operations, and it’s no wonder that the full scope feels overwhelming.

What is your process for deciding what gets on your nonprofit’s ‘plate?’ For example, you would never leave a strategic planning session agreeing to implement 100 different goals – even if each of them had merit on its own.

If you’ve ever used a Pros & Cons list to help make a decision, you’re familiar with the concept of scoring models. Using a scoring model might seem like a dry textbook exercise, but there is significant value for organizations of all sizes to regularly look at everything they are trying to accomplish side-by-side, at least conceptually, and compare apples to apples.

Possible measures for your scoring model could include:

  • Risk vs. reward
  • Resources needed
  • Reasons in support of the project
  • Return on investment

Your organization’s project portfolio contains both existing and future projects and is constantly evolving – as projects are completed, you are in a better position to make decisions about the next priority projects to begin.

Being Honest About Resource Allocation

One of the leading causes of project failure is under-estimating the resources needed for completion. In the nonprofit sector, where budgets are tight and team members wear many hats, we’re tempted to act as if we have unlimited hours in the week.

When making capacity decisions, there is a big difference
between feeling and knowing what is possible.

Quantifying (in total hours) how long projects and activities take allows us to make better decisions when planning workloads and upcoming initiatives. Time tracking can be cumbersome at first, but gathering real data on how our teams are actually spending their time provides valuable information.

For example, a painting contractor routinely collects data from previous jobs, such as the number of hours and amount of materials needed depending on the size of each home, and makes scheduling decisions for upcoming jobs accordingly.

Consider beginning with tracking (collective) time spent on regular activities such as attending meetings, preparing status reports, and service documentation and billing. Build from there to track total hours spent on bigger projects such as events and program development.

Over time, your organization will have a collection of useful data to not only help with future planning, but you will also be able to identify ways to create everyday efficiencies as well.

Knowing When to Hit Pause or Delete

Making more time for important activities involves deciding when to hit pause or delete on others.

When you look at the full scope of your organization’s work, do you see a large number of unfinished, or languishing, projects?

Redirecting resources (time and energy) away from current projects to address crises or take advantage of new opportunities is a regular part of nonprofit leadership. At the same time, having a process for adjusting the priority levels of existing projects (pause or delete) is necessary to avoid sabotaging the entire portfolio of projects and activities.

Having too many projects in limbo (not officially paused or removed) eventually affects team productivity and morale when everything is expected to be treated as having equal priority.

So Many Projects….. and a Plan for Success

Consider the full scope of your organization’s work.

  • To what extent do you use data to manage workloads and allocate resources?
  • Do you use a defined process for evaluating and adjusting the priority levels of new and existing projects and activities?

By focusing your attention and resources, you’ll protect your organization and its teams from initiative overload and still accomplish its urgent and important work.


This article was originally published in Nonprofit Colorado magazine in March of 2019.


Donna Catalano with Eastlake Solutions provides consulting services focused on helping nonprofit organizations maximize their results with streamlined operations, successful project management, and ongoing professional development for their teams and leadership.

When is a Deadline Not Really a Deadline?

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  • Do deadlines approach and pass at your organization with barely a mention?
  • Do you work hard to meet deadlines and deliver results, only to see that there is no consequence for fellow team members who rarely finish their work on time?
  • How much time and effort do you waste chasing team members to determine if project activities are on schedule or which projects need extra attention because their deadlines are looming?

What is the deadline culture at your organization?

Continue reading “When is a Deadline Not Really a Deadline?”

Mastering The Triple Constraint

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In chaos theory, the Butterfly Effect shows how even the slightest change in an initial set of conditions can have a dramatic impact on future events or conditions. Similarly, in project management, the Triple Constraint refers to the three critical and interrelated factors in any project; Scope, Cost, and Schedule, and how even a small change in one of the factors impacts one or both of the other factors.  triple-constraintBy understanding of the dependency between scope, cost, and schedule, coupled with good upfront planning, you are sure to see an increase in your project success rates!

On any project, you’ll need to keep in mind that your project plan is not static and that change is the only constant.  The goal is not to prevent any changes to the project plan, it is to actively anticipate the variables and manage them as they present themselves.

A good project manager has already identified the risks to scope, cost, and schedule, estimated likelihood of each risk, and identified options ‘just in case.’ To illustrate the dependency between Scope, Cost, and Schedule, let’s look a few familiar scenarios:

  • Scope changes –  it is no surprise that Scope Creep is often cited as the #1 project threat! As various stakeholders want to add more bells and whistles (requirements) you need to understand how to adjust cost (resources) and the schedule accordingly.  When your boss or client says that they want to add some more features to the project, your response, with a smile, is ‘Of course!’ and then you sit with them and review how the expanded scope will in turn affect the cost and/or schedule
  • Cost changes – Sometimes, your project is presented with a change in cost/resources.  How many of us have experienced losing key staff who have either quit or been diverted to another project?  The loss will most likely affect either your project schedule or the project scope.  A good project manager will already have planned for this common risk and will be ready to propose some schedule or scope options to accommodate the resource reduction
  • Schedule changes –  Your boss may call you on Thursday and say that she needs your report on Monday, which is one week early.  Your options, after you stop grumbling to yourself, are to increase resources (by working over the week-end or enlisting a co-worker to help you on Friday) or reduce the scope or quality of the report (which carries some risks).

So, on your next projects, consider the Triple Constraint and commit to some upfront risk planning.  You’ll be better able to anticipate change, manage your options and, in turn, increase your project success rates.


Donna Catalano, owner of Eastlake Solutions, helps nonprofit organizations assess and strengthen their internal capacity and position themselves for future growth.  Services include consulting, speaking, training, facilitation, and publications in the areas of capacity building, project management, change management, strategic planning, and organizational development. Eastlake Solutions is based in Chicago and Denver – eastlakesolutions.com

How to Avoid 3 Common Project Pitfalls

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Stalled projects?  Most of us know the feeling – the stack of files taunting you from the corner of your desk because you haven’t looked at them for weeks.  You fear, correctly, that not only have deadlines passed, but your original work may be so outdated that you’ll need to start over.  On top of this, you’re living with a sense of dread because it is only a matter of time before your _______________ (fill in the blank with boss, client, or board member) will be asking for a status report.

By understanding strategies to avoid the most common project pitfalls; vague or incomplete project plans, poor estimation of the needed resources, and sporadic or insufficient team communications, you’ll be better equipped to keep any project on time, on budget, and within scope.  Consider these solutions:

  • Develop a complete and realistic project plan – time spent planning up-front is NOT wasted time! Resist the urge to jump right in on a project before creating a realistic project plan that considers all of the components and variables.  It is guaranteed that detours will occur so being able to refer back to your solid project plan will help you make adjustments and get back on track without starting over.
  • Accurately estimate the needed (human) resources  – very few small- to medium-sized organizations have the luxury of full-time project managers on staff.  In reality, the same people responsible for day-to-day operations are also responsible for the special projects which invariably get pushed to rare periods of ‘free time.’   Be honest about how much time the project manager will need to devote to the project weekly to finish it on-time.  Then you can decide if he/she has sufficient time available (given other responsibilities), or if the completion date needs to be extended or additional resources will need to be secured.
  • Maximize the use of technology for team communication – avoid wasting time chasing team members for updates on their portions of the project, or worse, experiencing set-backs when some team members are not aware of important changes in the project plan. Take advantage of increasingly common web-based platforms/intranets (such as SharePoint) for collaboration, status reports, file management, and team communications.  Be sure to also set the team ground rules for the expected use of the intranet and the frequency of status reports.

By integrating these three strategies into your assigned projects, not only will you avoid many common project pitfalls, but you’ll also enjoy a reduction in the number of stalled projects taunting you from the corner of your desk.


Donna Catalano is the owner of Eastlake Solutions, certified Project Management Professional, CARF surveyor, and licensed Nursing Home Administrator.  She provides consulting, speaking, training, facilitation, and publications for nonprofit organizations on project management, strategic planning, organizational development, and quality assurance systems.  Eastlake Solutions is based in Chicago and Denver – eastlakesolutions.com

 

Selecting and Managing Multiple Projects – How Many Plates Can You Spin At Once?

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Donna Catalano was honored to speak at the Illinois Association of Rehabilitation Facilities’ annual member conference in Springfield, Illinois.  Attendees, from organizations providing services for people with disabilities across the state, learned valuable techniques for maximizing their resources and increasing their project success rates by ‘doing the right projects and doing the projects right.’

View the full presentation – Selecting and Managing Multiple Projects