Why does the private sector tend not to regard nonprofits as equals but like second-class enterprises? Years of listening to derisive comments have led me to the conclusion that the reason is a pervasive misconception about nonprofits: our private sector colleagues believe that nonprofits do not have to compete in the marketplace, that nonprofits do not have to compete to…

In a prior commentary, “Overhead –It’s More Important Than You Think”, I promised a follow-up on the implications of using the term ‘overhead’ versus its predecessor term ‘indirect costs’. This is the promised follow-up. ‘Indirect cost’ was the term in use when I began working in nonprofits in the mid-1960’s. It incorporated three important yet simple concepts: 1. What constituted indirect costs were easily…

‘Sustainability’ appears to have become not only one but the universal objective of much of the charitable nonprofit sector’s attention and effort: nonprofits want it, and funders want those they support to achieve it. The hype would suggest that becoming sustainable is the panacea for our sector. But is it really a good idea or is it just the latest snake oil? Let’s assume…

“Whatever do you mean by that?” You wouldn’t think that nonprofits and politicians would have, or would want to have anything in common. While both may be devoted to serving their respective constituencies, typically that’s the only thing they have – or want to have – in common. But that’s not always the case anymore. Owing to changes in their…

“What exactly is ‘overhead’?” Generally, nonprofits have two types of costs: those that are directly related to its programs (what the nonprofit does in fulfilling its mission) and those which provide leadership to and support for those programs. Examples of the former, aka ‘direct costs’, are the staff who provide the programs along with any other costs directly attributable to…