Business Commons^™

2017 Two-Legged Stool: New Findings From California On Nonprofits And Overhead, Nancy Berlin, Jan Masaoka, Mary Jo Schumann

Nonprofit Sector Issues and Trends

Nonprofit overhead is a prevalent and controversial topic in the non- profit and philanthropic sector. Online raters (such as Charity Navigator) point to the overhead rate as a key indicator of nonprofit worthiness. Different govern- ment entities use wildly different indirect cost rates when contracting with nonprofits, which translate into billions of dollars of funding being gained or lost. Foundations rarely have explicit guidelines, but most have informal rules of thumb that affect how a nonprofit can use grant funds. Meanwhile, nonprofit executives struggle to make sense of it all as they manage their operations amidst the conflicting requirements of …