Friday, May 27, 2016

Failure to Fund Overhead Penalizes Nonprofits, Study Finds

Philanthropy News Digest
May 23, 2016

Funders' reluctance to fully fund overhead costs prevents many nonprofits from maximizing their impact, a report from the Bridgespan Group finds.

According to the report, Pay-What-It-Takes Philanthropy, the typical 15 percent cap on reimbursement for nonprofit overhead falls short, in many cases, of the actual indirect costs associated with the delivery of a service or services. In response to the finding, the report, which appears in the Stanford Social Innovation Review, urges grantmakers to re-think the 15 percent cap on nonprofit overhead reimbursement and calls for an approach that takes into account the actual costs associated with providing a given type of service, or what it calls "pay what it takes" philanthropy.