Foundations’ Pledge to Pay Overhead: Some Say Yay, Some Say It’s About Time

This week, five of the nation’s wealthiest foundations announced a plan to help grantees pay for rent, decent wages, technology, and other overhead expenses.

The leaders involved in the effort were Patrick Gaspard of the Open Society Foundations; Julia Stasch, who until last week was president of the MacArthur Foundation; Larry Kramer of Hewlett; Carol Larson of Packard; and Darren Walker of Ford.

Many in the charity world welcomed the announcement, which Stasch said was an attempt to “destigmatize” overhead expenses “and make sure everybody understands that they are an essential cost not only of doing business but of growing a business and making investments in infrastructure and increasing impact.”

Here are some reactions:

This is progress. And I hate to be the mold in the hummus, but all funding should just be general operating. “Overhead” should not even be a thing we discuss anymore https://t.co/OQX172oCew via @Philanthropy

— Vu (@NonprofitAF) September 5, 2019

I cannot overemphasize how important, and how game-changing, this would be to small and mid-sized museums and our operating budgets. It would make possible projects that would influence the entire sector and enable systemic change in terms of who works in the museum field https://t.co/OTDkgnabuy

— masha turchinsky (@masha_tee) September 5, 2019

A change in foundation thinking will impact some charities more than others. However, for many others, they would be wise to focus on indivdual giving (including planned giving). (2/2)

— Michael Rosen (@MLInnovations) September 4, 2019

Kudos to 5 major fdns working to destigmatize “overhead” & support true costs of nonprofit impact, incl. living wages (maybe even competitive wages!): https://t.co/Q5TDLQXymp via @mdimento_cop @Philanthropy cc @FordFoundation @Hewlett_Found @macfound @OpenSociety @PackardFdn

— Trevor Pollack (@twpollack) September 5, 2019

FINALLY! As one who worked almost exclusively for nonprofits, I observed that it was relatively easy to get someone to donate to a building fund, esp if their name would be slapped on it. But getting someone to slap their name on the ass of a worker was near impossible.

— True Blue Patriot (@ketagoesglobal) September 5, 2019

Good news! Hope this helps shift the culture around supporting these costs—they are not “overheads” but essential operating costs and investments nonprofits need to make. And changes how #nonprofits are evaluated by charity watchdog groups.

— Puja Sangar (@puja_sangar) September 5, 2019

*GASP* 5 CEOs of Big Foundations Pledge to Do More to Help Charities Pay Overhead https://t.co/HJI2ZvFpY9 via @Philanthropy // maybe, just maybe, just maybe someday there will be support for small nonprofits to grow into big nonprofits. Ya I know, I’m a dreamer.

— Mark Horvath (@hardlynormal) September 5, 2019

Herein lies the problem as quoted in the article itself: “The five leaders didn’t come away from their research and deliberations with an agreement on a common approach to helping nonprofits shoulder their overhead costs, said Michael Etzel, a partner at Bridgespan...” 2/5

— Gwen Walden (@WaldenPhil) September 5, 2019

This is important. I’ve seen firsthand how general operating investments from forward thinking foundations like @JimJosephFdn @SchustermanFoun allow orgs to grow, be nimble, & stay relevant. https://t.co/9Zb7zXrtsy

— elizabeth fisher (@liz_fisher) September 4, 2019

Can I get an amen? 10% doesn’t cut it. Proud that ⁦@darrenwalker⁩ & @FordFoundation⁩ are part of this effort: 5 CEOs of Big Foundations Pledge to Do More to Help Charities Pay Overhead https://t.co/FYuEzMOLux

— Vivek Malhotra (@vmalhotra_) September 5, 2019

Ariella Phillips is a web producer at the Chronicle. She often writes the monthly Face of Philanthropy column, which focuses on small nonprofits around the world. In July, she wrote about an organization tackling deforestation by providing healthcare to locals. Email Ariella or follow her on Twitter.