Why NOT to use overhead ratios as a way to compare NGOs

29/03/2012 at 2:16 pm 3 comments

We in Dóchas are very keen to promote Good NGOs, and to discourage funders to keep supporting Bad NGOs.

And in doing so, we obviously need to have clear standards of what a “Good NGO” is. And that is not easy. But we are working on that!

For starters, have a look at these resources:

But the list is longer than this. Please bear with us while we develop it further.

In the mean time, however, we thought that it would be helpful if we tell you how NOT to judge an NGO.

One of the most widely used criteria to assess NGOs is their overheads ratio: the percentage of the organisation’s income that is used on administration, salaries and other “overhead” costs.

We hope that, when you have read the articles below, you will agree: OVERHEAD COSTS ARE NOT A GOOD WAY TO JUDGE THE QUALITY OF A NOT-FOR-PROFIT ORGANISATION.

The Overheads Myth

Have a look for yourself:

Also have a look at this article, called “The Non-Profit Starvation Cycle

And finally, this article: Might it be time to stop talking about NGO administration costs?

What do YOU think?

How can ordinary people know which NGO is best?

Please let us have your views by leaving a comment below.

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Entry filed under: NGOs. Tags: , , , , , , , , , , , , , , , , , , .

How do we communicate global poverty? Might it be time to stop talking about NGO Administration Costs?

3 Comments Add your own

  • […] Why NOT to use overheads ratios as a way to compare NGOs (March 2010) […]

    Reply
  • 2. Robbie Gilligan  |  06/01/2014 at 1:32 pm

    It depends on the context to some extent. But here are a few suggestions: accountability to service users; appointing people with service user experience to Boards; external review processes; demonstrating compliance with international conventions, best practice models etc

    Reply
  • 3. Bakoena Chele  |  23/01/2014 at 11:01 am

    Good NGOs are those that rate high in the folowing: Governance; Management Practices; Human Resource Management; Financial Resource Management; External Relations; And in Sustainability!

    Reply

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