Page 12 - Spring 2018 Digital inLEAGUE Volume 41 Number 02

Another Nonsensical Story about Nonprofits: Media Laziness
on Coverage of our Sector Persists

By Ruth McCambridge
Nonprofit Quarterly sees a lot of silly articles about nonprofits, but some stand out as particularly absurd.
A recent article appearing in the March 6, 2018 edition of Lehigh Valley Express Times starts by asking
the nonsensical but leading and provocative question, “When you contribute to a charity or a nonprofit
organization, do you ever wonder how much of your contribution goes to help the beneficiaries of the charity
and how much goes to the employees who manage the charity or the professional fund raisers who solicit
donations?”
Then, after pointing people to the database at the secretary of state’s office in Pennsylvania, the Lehigh
Valley Express Times goes on to list some presumably stellar nonprofits that “spent the equivalent of less than
10 percent of their total assets on management expenses in the most recent fiscal year of data available.”
Why that particular ratio should matter is not made clear. Likely, the author has confused total assets with
total budget, which is how the now-outmoded overhead ratio would have been figured (proportion of total
expenses spent on management and fundraising combined). Of course, it also makes the mistake of thinking
that such a straight comparison between various types of organizations means anything. And to top it off, the
10 percent standard ties to nothing in even the most retrograde standards of charity management.

And to make matters worse, it then contrasts various financial models against one another indiscriminately—
service provision groups, for instance, which survive largely on contracts and look like this example from The
Third Street Alliance for Women and Children:
• Gross contributions: $658,000
• Net assets: $3.5 million
• Program services expenses: $1.3 million
• Management and general expenses: $302,000
• Fundraising expenses: $65,000
with the United Way of the Greater Lehigh Valley, which fundraises all of its revenues and looks like this:
• Gross contributions: $11.6 million
• Net assets: $8.8 million
• Program services expenses: $10.3 million
• Management and general expenses: $850,000
• Fundraising expenses: $1.3 million
But is that sufficient in terms of what nonsense can be advanced as information? Not at all. The article then
goes on to call out the organizations that show management expenses that are (horrors!) more than 10 percent
of their assets, thus reinforcing a raft of ancient notions that have little to do with ethical or competent or even
efficient nonprofit management.
This kind of clickbait should be below any serious journalist at this point. More than a year ago, three of
the sector’s most well-respected watchdogs issued a letter urging people to abandon the ratio as virtually
meaningless without a good deal of other information. They wrote, “The percent of charity expenses that go
to administrative and fundraising costs—commonly referred to as ‘overhead’—is a poor measure of a charity’s
performance,” adding that undue focus on the measure “does more damage than good.”
But beyond that, the false focus on these kinds of misdirected “issues” detract from a serious public
understanding of the nonprofit sector. We deserve and should demand better.

Ruth McCambridge is Editor in Chief of the Nonprofit Quarterly. Her background includes forty-five years of
experience in nonprofits, primarily in organizations that mix grassroots community work with policy change.
Beginning in the mid-1980s, Ruth spent a decade at the Boston Foundation, developing and implementing
capacity building programs and advocating for grantmaking attention to constituent involvement.

PAGE 10 | Spring 2018 INLEAGUE