Have you ever wondered how to know if your donation to charity is doing the
absolute most good that it can? At some point you've probably heard that you can
tell that a charity is "good" if it spends as little as possible on something
called "overhead" right? Wrong. Some incredible research actually shows that
organizations that spend too little on that thing called overhead, aka,
infrastructure, actually make LESS of an impact than those that sufficiently
invest in that infrastructure. That's no good! We give our money so that we can
see a big social impact to be made. We want to see social problems ultimately
solved, not perpetuated or dragged on forever, don't we? So in this video I want
to talk to you about a much better way to judge if a charity is deserving of
your financial donations and how to tell if they're making the biggest impact
possible and doing the most good that they can for as many as
possibly are able. Welcome back! If this is your first time to my channel, my name
is Amber Melanie Smith, and I am a founder and non-profit executive
director, speaker on social impact, service, and leadership, and I make these
youtube videos to help aspiring changemakers with tips and strategies to
help you change the world while living a life of impact and purpose, so welcome
back! I have worked in the nonprofit field for years and have heard so many
people casually say "well I don't want to donate to this charity or that charity
because they have a high overhead!" but what overhead actually is, is widely
misunderstood. And the idea that it's a bad thing and should be minimized has
truly hurt society's ability to tackle big social problems. As Dan Palotta asks
in his popular TED talk, The way you think about charity is dead wrong,
if charities have been putting so much into programs and so little into
overhead because of this public perception of what overhead is for so
long then if it were effective why wouldn't we have ended homelessness or
found a cure for cancer yet? Just think about how fast companies and the private
sector can move in developing new technology and having space tourism and
so many crazy huge huge changes to society, because they're investing more
in that infrastructure, that overhead, that they need to have a strong
foundation to tackle these big problems. But we're not allowed to do that for
charity. You would think that all of the billions and trillions of dollars of
donations that we've made over the past century to charities would have made a
dent in some of these big issues right? Unfortunately our mindset about how to
choose which charities to donate to has really limited our ability to make a
dent in these issues because we are focusing far too much on the unimportant
thing - overhead - and far too little on the most important thing - impacts. The reason
the public came to care so much about overhead and how much charity spends on
it a history of a couple of bad seed
organizations committing crimes that poisoned public trust for the whole rest
of the nonprofit sector. But what we really should be angry about is things
like corruption or scams or fraud or a lack of transparency but those things
don't equate to having a low overhead those things are just about a charity
being honest with the public and we can do that just fine and invest in our
infrastructure so that we can make a bigger impact so let's talk briefly
about what overhead is and why it's not actually the bad thing that we think it
is when most people think about overhead they assume it is something that pulls
funding or resources away from what the true mission of an organization is or
its programs but this perception is called the overhead myth so some of the
things we tend to think of as overhead we're talking an office space or
workspace or staff or marketing or advertising or professional development
or Dessay equipment equipment these things are not unnecessary superfluous
things these are the things that are going to lay the foundation and create
the infrastructure for a non-profit to be able to scale and meet a large-scale
social problem head-on and solve it sure some organizations claim that they
can accomplish their mission without some of these critical pieces of
infrastructure but the fact of the matter is and the research backs up but
these organizations will not be able to scale and grow and will not be able to
ultimately end the social problem that they have set out to tackle and that's
because ending a major complicated social problem requires a strong
foundation and strong infrastructure as Dan pilota
once again explains nobody bats an eye when a business says that they need a
workspace or an office or staff or equipment in order to operate but if a
charity says they need these things they might be considered immoral or
inefficient and that attitude prevents charities from being a stable
and sustainable enough to actually do what they need to do here's another way
of thinking about it let's say that your household is a charity so your top
mission your program is to make sure that your family and your kids have
enough to eat that they get an education and that they're healthy and happy right
now using this metaphor if your household were a charity the same way
the public thinks about charities in general then some examples of what your
overhead would be could include your house your car your technology your
utilities electricity etc water and you as the CEO or staff of your household
now imagine one year that you are struggling to pay your rent or your
mortgage and keep your electricity going keep your lights on and your family and
friends come along they want to help you it's just awesome but they say okay
we're gonna get all this money together and we're gonna help you but you can
only spend it I'm directly feeding your kids only the food that goes in their
mouths is what we will allow you to spend money on so they all rally
together and raise all this money for you and they give it to you and now you
can feed your kids which is awesome but you just lost your house and you just
lost your electricity which makes it kind of hard to feed those kids anyway
and accomplish the rest of your mission so your house you your electricity these
things aren't really overhead are they they are what you have to have in order
to fulfill your mission of keeping your family healthy and happy and fed and
educated they're not separated and unnecessary those things lay the
foundation for you to be able to do the rest of the work so just like for a
charity that you care about we need to start viewing these things these
critical pieces of infrastructure staff office equipment marketing professional
development as not superfluous or unnecessary things but things they're
gonna allow them to accomplish the rest of the mission that you want them to
accomplish so if I were a donor I would much rather donate a portion of money to
the organization's direct over - their infrastructure knowing that in
doing so I'm going to be able to actually amplify their entire ability to
make an impact I think of it like this if I'm going to be a donor and donate a
hundred dollars for example I can either insist that the organization's spend it
only on directly providing food to the hungry clients that they serve or I can
allow that organization to invest it in let's say an ad or a marketing campaign
that's going to allow them to raise a thousand or ten thousand dollars and
thus be able to feed way more people than my single $100 donation could feed
that's way more compelling to me as a donor because I'm all about results we
want to give and support in order to see these problems solved side rant next
time you see a social media post or something talking about the overhead
ratios of charities please pass it by or speak up or do something because not
only are most of these posts factually wrong they are perpetuating this
attitude that is causing us to starve the organizations that really need the
critical infrastructure so that we can do huge amazing things okay so at this
point you're like I get at amber if overhead is not the right way to think
of how a charity might be deserving of my donation then what is and that answer
comes down once again to the most important thing you need to know about
any charity and that is what kind of an impact are they actually making so it's
really exciting that over the past couple of years a couple of charity
watchdog sites and financial information websites that study charities have kind
of banded together to tackle this overhead myth that I mentioned and to
offer the public a new and more valid way of understanding whether a charity
could be deserving of your charitable donations they've seen the negative
results of perpetuating this idea that overhead is a bad thing that needs to be
avoided on our ability as a society and as a nonprofit sector to tackle these
really big problems so hats off to them for you know standing up and realizing
these errors and try - right the ship so that we can get some
good work done so the focus is finally starting to be on what it should be and
that is results and impacts things like how many people are escaping the cycle
of homelessness how many acres of land have been preserved from deforestation
how many people's lives have been changed these are the things I
personally care a lot more about than what someone's specific overhead ratio
is so if you want to learn more about a charity specific impact so you've got a
couple of options you can look at that nonprofits website and hope that they
are articulating those impacts very well on that site you can also go to one of
the websites that I mentioned a lot of these sites are coming together in this
network and putting an impact information section on the profiles of
each charity in their database so let's take Charity Navigator as an example if
you go to Charity Navigator org you can search for any registered charity across
the country using the search bar at the top of the site so just type in the name
of the charity that you want to learn more about or if you you can just browse
all the charities if you want and keep in mind that these websites are just now
starting to roll out this impact information section across all of them
and so not all charities across the whole country have this section yet in
these databases so just be patient check out the ones that have it so you can
kind of get a feel for what they're trying to demonstrate by showing the
results of these organizations not just their financial overhead ratios so I did
a search for a charity called families forward they received a lot of high
marks in terms of their financial transparency and accountability which is
awesome like I said overhead not important but
things like accountability and transparency definitely important
keeping that public trust is really critical for any organization but as you
can see on the family forward page or families forward page that they have
this impact section down below and it's really actually very inspiring to see so
look at that I can see as a donor the most critical piece of information to me
which is what did they actually accomplish in terms of their
and I can see that in 2018 they were able to work with 233 households to keep
them out of homelessness and in a stable home for at least six months or more
that is super compelling information to me
so in summary it's that impact information that you're really after
because if we are spinning our wheels high overhead low overhead not
accomplishing anything it doesn't really matter what your overhead is if we are
stuck in a world that still has the problems that had a hundred years ago so
if you're thinking about supporting a charity in your community or anywhere in
the world you've just got to ask them one question how have they changed lives
what have they accomplished in the past year or past several years what's their
vision for the future and how they plan to grow their impact to ultimately solve
the social problem that they were created to solve then decide if you're
going to be an investor in that kind of future that's it I really hope that this
has given you something to think about when considering where you'd like to
donate your hard-earned money to a charity this year or in the future once
again my name is Amber Melanie Smith and I make these videos once a week here on
YouTube sometimes more you're lucky and on topics like social impact charity
nonprofits leadership service and more basically everything related to how
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world or bust myself and other changemakers are having great
stations out there on how we can all work together to make an impact so I
hope that you can join me thank you so so much
happy donating happy volunteering happy making the world a better place and see
you next time
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