Alexis and Yoni are a part of The Honeycomb Youth Ambassador Council and wrote this piece as part of their final project for the 2021 year. Launched in 2016, the Youth Ambassador Council was created to connect Honeycomb directly with teens in the field, and learn together. Meeting virtually throughout the school year, the Youth Ambassador council empowers the teen voice by fostering relationships with representatives from the field of Jewish teen philanthropy.
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Don’t Let Overhead Get Over Your Head: A Different Approach to Jewish Youth Philanthropy
By Alexis Guberman and Yoni Livstone
Have you ever wondered who presses the “send” button on the emails from nonprofits asking for money? Emails are an important way of communicating with the general public about the new and exciting things that are happening within an organization and asking for support for funding; but those emails do not write themselves. Instead, organizations rely on unrestricted donations, among other forms of revenue, to pay for staff, computers, internet, lights, and various other expenses. It is rare to find philanthropists who are excited to donate towards covering the costs that lead up to pressing the “send” button. Instead, nonprofits ask for unrestricted donations that are used for miscellaneous costs that the organization bears.
As Jewish teen philanthropists, we often like to fund the cool and exciting projects run by an organization. Of course, these projects are important to fund, and perhaps some would not be possible without our support; but there is perhaps a different approach that could be a better use of our philanthropic resources and may have a larger impact on the organization’s mission as a whole. We should be funding the overhead costs of an organization. This will help amplify our giving power as philanthropists creating a greater overall impact.
In general, overhead costs are the expenses associated with operating a nonprofit or corporation. They can be fixed costs, such as rent, or variable costs, like supplies or shipping costs. All organizations, whether it is a nonprofit, corporation, or governmental organization, have overhead costs. They are a necessary expenditure for the successful operation of an organization’s mission.
There is no doubt that receiving support towards overhead costs is beneficial to charities. When forced to keep their spending low, nonprofits face slow growth and unsustainability in their projects, as well as insufficient administrative support, inadequate technology and office space, and staff who are not trained properly to best do their job (National Council of Nonprofits Report and The More Than Giving Co). [1]
Despite the fact that overhead costs are a vital part of funding nonprofits, they are consistently underfunded by donors. As NonProfitHub, an online community dedicated to educating nonprofits, bluntly puts it, “Paying for overhead isn’t the sexy side of donations.” When people donate, they do it to help others, and they want their money to directly support those in need. Donors tend to prefer to donate directly to a cause to feel like they are truly making a difference.
According to a study by Uri Gneezy, an economist at the Rady School of Management at the University of California San Diego, people who heard that overhead costs had already been funded gave 64% more than groups who were not told that. [2] We should fund the areas of a nonprofit that are not as glamorous so that we can maximize their potential with our donations. Our impact can give nonprofits the ability to encourage and incur outside donations from individual donors by marketing the donations as funding initiatives directly.
Another part of the reason that people often don’t fund overhead costs is because they don’t believe overhead costs should exist at all. Although private companies allocate and use money for overhead costs, that view does not apply to nonprofits, where the general public believes that the best nonprofits are ones that spend the least on indirect costs (Council of Nonprofits).[3] In private companies, it is generally accepted that these overhead costs were vital for creating a more effective business that can produce better work, yet this does not hold true for nonprofits; when they do apply funding towards overhead, people often think that they are diverting funds that could be used elsewhere. This double standard is typically not noticed by individual do-gooders, through no fault of their own of course. It is our job to use what we have learned in our philanthropy programs to recognize the double standard and apply the same practices that for-profit companies do when budgeting. Even though independent donors may have preconceived notions about nonprofits using money for overhead costs, we should recognize its importance and, therefore, donate to counterbalance these expenses for organizations.
As Jewish philanthropists, we can fill the financial gaps organizations need and fund the most “boring” and “tedious” parts of a nonprofit. These donations may not be as high profile as specifically allocated donations, but collectively, our giving power will allow many more donors who are not affiliated with a particular group to feel the same satisfaction in their heart as when we fund specific projects and programs.
During these challenging times, it is even more important that overhead costs are supported to account for additional expenses nonprofits have incurred during the pandemic, such as computers, wifi, software, and PPE for their workers. These changes must be made to the budget while maintaining their effectiveness as an organization. Without money to get employees and volunteers these necessary resources, the organization will not be able to be as successful as possible, and help the possibly increasing number of those who need assistance during this time.
Through our philanthropy programs we have been able to learn about the needs of organizations in great depth. Together, we can build the future of philanthropy by investing in the most essential needs of these nonprofits.
Sources:
[1] Burkhart, Vicki. “Some Overhead Costs in Nonprofits Can Be a Good Thing.” The More Than Giving Co., The More Than Giving Co., 21 July 2020, www.morethangiving.co/blog/some-overhead-costs-in-nonprofits-can-be-a-good-thing.
“Investing for Impact: Indirect Costs Are Essential for Success.” National Council of Nonprofits, 12 Jan. 2015, www.councilofnonprofits.org/trends-policy-issues/investing-impact-indirect-costs-are-essential-success.
[2] “How Removing Overhead Can Improve Donation Rates.” Nonprofit Hub, 17 Nov. 2014, nonprofithub.org/fundraising/removing-overhead-can-improve-donation-rates/.
[3] “Investing for Impact: Indirect Costs Are Essential for Success.” National Council of Nonprofits, 12 Jan. 2015, www.councilofnonprofits.org/trends-policy-issues/investing-impact-indirect-costs-are-essential-success.
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YONI LIVSTONE
Yoni Livstone is a senior at the Mercer County STEM Academy in New Jersey. He has participated in the Jewish Community Youth Foundation (JCYF) since the eighth grade, and he is also a member of the JCYF Youth Advisory Board. Outside of JCYF, Yoni is very active in his youth group, USY, where he has held numerous positions on the chapter and regional levels. He is currently serving as Vice President of Membership and Programming of the Hagalil region. A Jewish hero he looks up to is Sacha Baron Cohen.
ALEXIS GUBERMAN
Alexis Guberman is a senior in high school who has been a part of UJA’s Philanthropic Advisory Council for Teens for the past four years. She has spent two years raising and allocating funds, and two years volunteering directly at organizations UJA funds. Her favorite Jewish hero is Daveed Diggs, who has thrived in an area she is passionate about while diversifying the idea of what Jews can look like.