Repost from Stanford Social Innovation Review
Starvation Cycle of Non-Profit Organizations
There is a vicious cycle running on most nonprofit organizations that are leaving them so hungry for decent infrastructure that they would barely function as organizations—let alone serve their beneficiaries.
The cycle starts with Sponsors’ unrealistic expectations about how much running a nonprofit costs, and results in nonprofits’ misrepresenting their costs while skimping on vital systems—acts that feed Sponsors’ skewed beliefs. To break the nonprofit Starvation cycle, Sponsors must take the lead.
Organizations that build strong information technology systems, financial systems, skills training, fundraising processes, and other essential overhead are more likely to succeed than those that do not. This is not news, and nonprofits are no exception to the rule.
It is not surprising that most nonprofits do not spend enough money on overhead. In research, most organizations agree with the idea of improving infrastructure and augmenting their management capacity, yet they are not willing to actually make these changes to limit increase in overhead expenses. But under-funding these expenses can have Continue reading