It was clickbait. ‘What is acceptable level of admin or overhard for a charity?’ But what is admin and overhead? And how do we account for it? And does a low admin cost equate to being fiscally more responsible than one that is higher?
Is research and development an overhead cost? If one organisation pays for it leadership, while another has their leader donating their time, should both have to account for this financially in the same way? How about if there is some bartering arrangement for office costs? Does a leader’s time coaching her staff or helping to implement a project all count as ‘overheard’? Or can we split the costs? It seems to me that the admin costs of a charity could be the same, but perhaps we have figured out different ways of accounting for them. And I don’t think that is a ‘bad’ thing, but it does mean that ‘admin’ costs can be arbituary.
From different projects I’ve worked on, different types of projects have different levels of ‘admin’ costs. One that has lots of physical goods or in-kind goods that we are distributing tend to have large project budgets. These budgets allow us to cover lots of ‘admin’ costs and stay within a small admin percentage. However, projects that are people intensive or involve lots of training or education tend to have smaller budget and therefore smaller allowable admin budgets. And then there are those projects reaching people on the edge, the minority, the difficult and costly to reach people. The unfortunate thing is that most projects tend to need to work with the same ratios. In the private sector, different sectors tend to have different business models and profit margins because they are different industries. In the charity world, the admin ratio tend to be the same no matter what project or area you are working in.
Similarly, we often forget to take into account the size of a charity. As organisations grow and shrink, it can impact the ratios as well. A growing organisation, charitable or for profit, needs to invest in itself to adjust to the growth. This investment tends to be considered ‘overhead’ costs. So perhaps we should be expecting different admin/overhead cost ratios depending on the size of the organisation too?
But I get it that admin costs are an easy comparison tool. They are a simple figure we can point to. However, when we engage in it, perhaps we can see it is more nuanced than we first imagined. Perhaps fiscal responsibility is something completely different.