Giving Compass’ Take:
• Nell Edgington at Social Velocity uses a policy change in overtime rules as an entry point to a discussion about “full/real costs” in nonprofits — and why more transparency is needed.
• Are funders devoting enough resources to infrastructure and operations to grantees? How did the overtime rules (which went into effect in 2016) change the way we discuss staffing budgets?
Nonprofit leaders are wary of calculating and articulating the full costs (including all staff costs) of their programs, and government and philanthropic funders are unaware of and unwilling to pay those full costs. But with growing demands on a nonprofit sector already stretched to the brink, something has to give. Perhaps this new reality will force a conversation about what it really costs to address the social challenges we face, and how we must effectively and adequately support the nonprofit sector we have charged with addressing many of those challenges.
The problem has always been that nonprofit leaders are so committed to the work they do and so empathetic towards their clients that when budgets and staff are tight, those leaders simply work longer and harder and ask their employees to do the same. But with these new rules that can no longer be the case.
Program budgets will have to grow to reflect the real costs of those programs (including all of the countless staff hours previously hidden by free overtime). And funders who want more and more services at lower and lower costs will be forced to reckon with the actual costs of the programs in which they want to invest.
Read the full article about forcing nonprofits and funders about real costs by Nell Edgington at Social Velocity.
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