Overhead By Any Other Name

FastCoExist recently continued its discussion about how a poor view of non-profit overhead cost is limiting the good such organizations can do by offering some “rebranding” suggestions in order to help change perceptions.

As an illustration of how the concept that non-profits must restrict their overhead cost is a severe impediment toward doing good, they cite a lawsuit against Architecture for Humanity.  The group was experiencing huge program growth, but was limited by donors to only devoting 10% to overhead costs. Because they dipped into program money to fund their growth, they have been taken to court accused of looting the funds.

Many company donations, the suit alleges, were earmarked for project costs. As overhead rose and things got more desperate, those got tapped to cover broader expenses. The plaintiff is calling that looting. The suit shows pretty clearly how groups—even if their rapid growth is woefully mismanaged—can be trapped by antiquated views on things like “overhead” and “indirect costs.”

[Update: Issues like this are why it is good to have Directors and Officers Insurance]

FastCoExist spoke to two brand naming experts who mulled over various concepts for changing how overhead costs are viewed by changing the terminology. The article go through various ideas they discarded to come up with the following suggestions.

From Margaret Wolfson of River + Wolf:

1: Circle funds
2: Encompass funds
3: Vessel funds
4: Core funds

Anthony Shore of Operative Words suggested:

1: Operations costs
2: Operational costs
3: Direct operations costs
4: General operational costs

The author of a Bridgespan report on paying overhead costs noted that this latter set of terms may not be appropriate because “not all operational costs are indirect, and not all indirect costs are operational.”

The naming experts made some additional suggestions that sounded a bit like arts organization donor categories so maybe we are already heading in the right direction and just need to find more sexy language:

Wolfson’s other idea is to award branded titles for budget line items, so folks who cover electrical costs could consider themselves “Illuminators” while those picking up the hardware and software tab would be “Digital Drivers.”

The point is, words definitely do matter. The final expression might end up being a bit unsexy, but only metaphorically. As Shore puts it: “What could be more sexy than dramatically influencing how much money pours into the critical, staying-afloat initiatives within an organization?”

About Joe Patti

I have been writing Butts in the Seats (BitS) on topics of arts and cultural administration since 2004 (yikes!). Given the ever evolving concerns facing the sector, I have yet to exhaust the available subject matter. In addition to BitS, I am a founding contributor to the ArtsHacker (artshacker.com) website where I focus on topics related to boards, law, governance, policy and practice.

I am also an evangelist for the effort to Build Public Will For Arts and Culture being helmed by Arts Midwest and the Metropolitan Group. (http://www.creatingconnection.org/about/)

I am currently the Director of the Grand Opera House in Macon, GA.

Among the things I am most proud are having produced an opera in the Hawaiian language and a dance drama about Hawaii's snow goddess Poli'ahu while working as a Theater Manager in Hawaii. Though there are many more highlights than there is space here to list.

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