Measuring effectiveness – Are overhead ratios becoming a thing of the past?
Abstract: Overhead ratios represent the percentage of funds nonprofits spend on administration and fundraising vs. programs. But this metric has traditionally been used by charity watchdog groups as a proxy for overall effectiveness. This has led some organizations to underreport their nonprogram costs and neglect making critical infrastructure investments. In response to growing discontent with overhead ratios, watchdog groups and nonprofit leaders are beginning to consider broader measures of nonprofit effectiveness.