Flickr Photo: All ChihuahuasDid you listen to the This I Believe segments on NPR? They had some great ones -- Finding Freedom in Forgiveness and There is No Such Thing as Too Much Barbecue are personal favorites. Both had me crying, in completely different ways. I always wanted to write one of those essays, but never got it together before they ended the series. 

My topic would have been "The Nonprofit Sector Deserves Better."

Though I mostly get joy out of working in the third sector, it frustrates me, too. I get annoyed when people tell me nonprofits are inefficient. I'm frustrated when I finally get a grant, but can't spend a single penny of it on "overhead." I'm often disappointed so many of us feel that training and technology are cost centers, not investments in our organizations.

These are all themes in "The Nonprofit Starvation Cycle," from the latest Stanford Social Innovation Review. Although anyone in the sector can tell you that nonprofit infrastructure is severely underfunded, the actual numbers are still startling. The nonprofit norm is to spend 10 to 20 percent on overhead. That's far less than most for-profit industries; software and services companies spend just under 50% on overhead.

Technology is a big part of "overhead". It's the music program of the nonprofit industry, the first to get cut and the last to be reinstated. This leaves many nonprofits feeling like they can't provide the tools, training, and staff they need in the technology department. 54% of respondents to our last IT Staffing Survey told us they're understaffed in IT. Further, 29% felt they were "lagging behind" or "in trouble" in terms of technology adoption at their organizations. 

Why do we spend so little? Again, we know the story. Foundations don't want to pay for it. It's not sexy, and they're supposed to fund effective organizations. Donors also want all of their donation to go straight to programs.

Somehow, effective has become synonymous with low overhead. That's not right. 

But here's the really interesting part: Maybe we have ourselves to blame. The authors found that nonprofits routinely UNDER-report overhead numbers to funders and donors -- because they feel pressure to do so. From the article:

...researchers found that more than a third of the organizations reported no fundraising costs whatsoever, while one in eight reported no management and no general expenses."

I would add to this a personal observation: we kind of like it when we have to suffer. I've been in this sector for over a decade, and I've worked with and talked to hundreds, if not thousands, of organizations by now. We're a proud bunch, and rightly so. The work we do is simply astounding. Often, we do it with very little. We're the MacGyvers of social change.

But somewhere along the way, I got the sense that many of us prefer to work this way. We start to believe we can't do our work with fully-functioning computers or software designed for our needs because that would be a waste of money. Every penny should go straight to our clients and communities.

Sure. I agree. We should put everything we can into our clients and communities.  But this kind of thinking is so shortsighted, it hurts. A dollar spent on a computer that boots up on the first try is a dollar that isn't feeding someone today. But there's a significant opportunity cost we aren't accounting for with this kind of thinking. That same dollar could very well turn into five more clients served over the course of the year because of the staff efficiencies gained by using real, working equipment. 

Why don't we do this math? Well, we're bad at evaluating, for one thing. Only 21.5% of respondents to the 2008 IT Staffing Survey evaluated the technology projects they completed that year. So, we don't have great numbers to help us make better decisions.

But mostly, I think we kind of like our lot in life. It's part of our culture to be under-resourced. We're underdogs, and we like it.

It's just too bad it's at the expense of our causes.