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📍What we're talking about this issue: 
Should you educate donors about nonprofit overhead? Let's explore...

Photo by Mark Fletcher-Brown on Unsplash

Dear defender of good,

If ever there was a perpetual fly in your fundraising ointment, it’s overhead. How everyone else is talking about it... how your nonprofit should talk about it... how to answer donors when they ask about it.
 
This issue of The Loyalty Letter is dedicated to helping you address one of fundraising’s most awkward questions, so you can get on with keeping more donors and doing more good:

How to Write About Nonprofit Overhead 
(One of the most awkward fundraising topics)

✍️ By Lisa Sargent
Fundraising copywriter

August 2024

Say the name charity:water to any fundraiser with a pulse, and you’re likely to get one of two responses: a hard eye roll or an enthusiastic smile.

You probably know c:w. Or you know of them, for sure. 

They’re the folks crushing the 100% model: in a nutshell a group of benefactors (they call them “private donors”) cover all their overhead. 

Which means they can truthfully say every dollar donors give goes 100% to programs – funding clean water projects.

Opponents say it's gimmicky, and promotes the idea that overhead is ‘bad,’ as something not worth supporting. 

 

Proponents say it’s an offer that works, a tactic, and fine to replicate.

I say for the vast majority of nonprofits out there in the real world, the 100% model just isn't realistic – which means sooner or later, you’ll probably have to address overhead. And honestly? If you do it right, your donors will come to see overhead as a smart investment that's part of a donation to the work like any other. 

Let’s explore 4 Rules for you to address 
overhead and build trust in a way that’s transparent, human, and authentic:

Rule 1. You don’t have to educate. 

Despite the amount of discussion around overhead, most donors don’t fixate on it, or even think much about it. 

They just want to help you solve the problems you solve, because they believe in the solution, too. 

This means – hooray! – you don’t need to embark on a campaign to educate everyone. (In fact “educating” will almost always suppress donations. It’s emotional stories, gratitude, and report-back, such as newsletters, your donors respond to: two decades of fundraising copywriting results tell me this time and again. See Rule 2.) 

Rule 2. Your ‘overhead’ problem... probably isn’t. 

If you have supporters wondering if their gift is effective, or if your retention rates are lackluster*, your real issue is far more likely a lack of consistent, quality thanking and authentic report-back. 

What do I mean about consistent thanking and report-back? 

Last Loyalty Letter we looked a few field-tested donor communications calendars that cover how often you should be mailing newsletters and appeals... it’s a good place to start if you’re overwhelmed by experts telling you that you need 27.5 touchpoints every year or all hope is lost. (It's not.)

I also have a couple of case studies on high-performing donor newsletters in my portfolio, with tons more we can unpack together in a future issue – email me if you’d like that. 

The larger point here is, when donors are getting consistent feedback about how their donations are working, they don’t obsess over overhead: they can see their donation working through the stories you share. 

*Don’t know how to calculate your retention rates? Get this free 47-page report, and go to page 6 for calculating retention and other key fundraising metrics. No sign-up needed.  

Rule 3:  You can build trust around overhead in human ways.

Put differently: You can write about overhead in human ways, and connect it to the work your donors are supporting.

Three short and sweet examples:

Thank you for keeping the lights on and the kettle warm. 
[Nonprofit that helps women and men who are homeless.]

Thank you for helping attract and retain top medical experts and support staff, and equipping them with the tools and technology they need to keep healing medicine close to home. 
[Hospital foundation -- Toothier, yes, but gets the point across.]

Thank you for putting teams on the ground every day where people need help most. 
[Nonprofit helping people caught in poverty and crisis.]

If you only get a certain amount of your funding from grants or the government, you can absolutely say that in your donor communications. 

Again, in a human way... this one’s in a Christmas appeal:

And here’s another, for the same organization, woven right into the story:

Rule 4. For overhead questions, have overhead answers... ahead of time.

Some donors do want to know about overhead. And for those donors, you want to be ready and honest and open. 

You can have answers to overhead and effectiveness questions ready, and publish trust-builder pages online and – once a year or so – in your newsletter.

Keep talking points by the phone. 
How much funding you receive from the government, or grants, for example, and how supporters help fund all the rest. Include details such as an all-volunteer board. Consider a ‘how your money is spent’ graphic for your website.

Keep your audited financial statements up-to-date and online. 
Refer people who call to those statements, and let them know they can view 24/7 – and request copies mailed to them. Same goes for your annual report. 
 

Consider a once-annual newsletter insert or feature.
Such as, “What Makes An Effective Charity? X Things to Look for in Any Nonprofit You Support.” 

Then put that on your website, too – and invite supporters to call you with their questions about donating, even if it’s not about giving to you. 
 

Here’s an excerpt from a trust-builder piece we included in a mailing:
 

The above insert went on to give the organization's website and ways to contact staff with questions.

Moral of the overhead story?

As long as your nonprofit’s overhead isn’t some kind of runaway train, you don’t have to be ashamed to talk about it. 

And you don’t need a 100% model to do good fundraising and keep your donors happy and connected. 

In fact, when appropriate, clear and compelling talk about how your organization is run is so much more transparent in the long run. So:

Establish a quality, consistent, authentic donor communications schedule of asking, thanking, and reporting back to donors.

Address overhead in human ways – keeping the lights on, keeping staff on the ground, keeping the phone lines open, etc.

Prepare for supporters that inquire about overhead with additional details – and have your financials up to date and at the ready. Online and offline.

Especially with year-end fundraising season inching closer (we started project kick-off calls with clients last week, so technically, it's here :-))... you want to be ready for every inquiry that comes.

 Hope this helps – see you in September, and until then, may your words work always for good!

Thank you so much for reading today,

PS. Got a question? Comment? Funny fundraising story? Weird writing dilemma? Just hit 'reply' to this email: I always answer. 
PPS. Forever hat tip to AWeber, greatest newsletter provider of all time. Love you folks. xx 

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