Well, the timing could be a little better.
Part of the big news today is that GuideStar, Charity Navigator, and BBB Wise Giving Alliance joined together to sign an open letter to all donors asking them not to use overhead as a primary criteria for giving.
The letter does a pretty good job in a short space of discussing how inaccurate the ratio is and the consequences for non-profits when they feel they have to hobble themselves to maintain a low number.
The letter specific cites Stanford Social Innovation Review‘s article, The Non-Profit Starvation Cycle which does a good job explaining the problem in detail.
The reason why I said the timing could be better is because it comes on the heels of a weekend where CNN has been majorly featuring a story about charities that have been fleecing donors with the causes only getting 4% in some cases.
Now make no mistake, I am not defending a 96% overhead by any means. There are a lot of scams out there and it appears pretty clear that the organizations featured in the story set out to deceive right from the moment they generated names that sound very close to nationally recognized charities.
My concern is that to people unfamiliar with charities, the timing of the letter’s release makes it almost appear to be an apologist for the high overhead ratios these dishonest groups had. Especially since a picture of the website of the one of the groups CNN damns contains a claim that Charity Navigator gave them a 3 star rating.
The proximity of these two announcements aside, the public recognition that charities should not be judged on overhead alone is a real advance in the effort to get non-profits evaluated on less superficial criteria. It will likely still happen for some time to come, but it is an encouraging sign.