Public opinion supports that the more money given to a nonprofit that goes directly “to the cause”, the better the organization. While most nonprofit leaders would agree with this sentiment, the nonprofit sector is failing to make appropriate long-term investments in human capital, facilities and financial systems to maintain long-term operations. The nonprofit sector has fallen victim to the infrastructure starvation cycle, which begins with unrealistic expectations from funders about how much running a nonprofit should cost. Without allocating the appropriate financial resources to create sustainable infrastructure, nonprofits will fail. 

Ratings agencies have contributed to the public opinion that nonprofits who spend less than 35 percent of their costs on overhead or infrastructure are worthy of donations or are doing the most “good” with their funds by issuing stars, seals or other rewards for compliance. Studies confirm that underfunding overhead hurts nonprofits’ ability to deliver program services and achieve their missions. Infrastructure refers to systems and business processes like employee training and development, investments in technology, risk management and financial processes and capital projects. Closely tied to infrastructure, capacity-builders are specific non-profit organizations and consultants that support nonprofits in the creation of systems, industry best practices or teach specific skills which allow smaller nonprofits…

Nonprofit leaders are challenged daily by the unique funding dynamics of the social sector, often relying on grants from funders that do not support the full program costs. A 2015 survey found that only 7% of organizations reported having foundation grants covering the entire project expenses. The systemic issue of underfunding is sustained by misconceptions about operating costs that lead to restrictions on grant expenditures. Arbitrary overhead limits can unintentionally jeopardize the long-term sustainability of an organization and need to be opposed by grantees.

Operating capacity

Nonprofits are burdened by infrastructure and capacity needs that funders neglect to support. Studies demonstrate that organizations are most heavily pressured by their funders to maintain and report low overhead costs. Grantees must continually reduce operational spending, resulting in fragmented administrative support across the organization, neglected infrastructure needs, and a lack of investment and therefore capacity in critical human resources functions such as training that impact program execution. 

The realistic overhead rate for nonprofits falls between 25-35%. However, 75% of nonprofits reported in a study that the indirect cost rates of their current government grants or contracts were limited to 10% or less, if funding was provided at all. Organizations under the constraints of unrealistic funding expectations from grantors cannot…

In an era where smartphones and laptops have become extensions of ourselves, volunteering has undergone a remarkable transformation too. The digital age has revolutionized the way we give back to our communities and the world at large.

The evolution of volunteering

Traditionally, volunteering meant physically showing up at a local charity, or community center. While these forms of volunteering remain crucial, the digital landscape has expanded the possibilities of volunteering. Today, anyone with an internet connection can contribute their time, skills, and resources to causes across the globe.

This shift has made volunteering more accessible than it was in the past. No longer constrained by geographical boundaries or time zones, individuals can now lend a helping hand to communities thousands of miles away or support causes they're passionate about without leaving their homes.

The rise of virtual volunteering

Virtual volunteering, or online volunteering, has emerged as a convenient service in the nonprofit sector. This form of volunteerism allows people to contribute their…

A common question presented to many young professionals when deciding their career paths is: "Do you want to work for passion or pay?" As a young professional in the nonprofit sector, I have been told that switching sectors is the only way to make a livable wage. However, when I chose my career path, I also challenged the lack of competitive pay in the nonprofit sector and explored how professionals can achieve competitive pay while completing the work they are passionate about.

Many factors contribute to the nonprofit sector's high turnover rate, such as lack of growth opportunities, dissatisfaction with an organization’s culture, and inadequate compensation. According to the US Bureau of Labor Statistics, wages of management, professional, and related workers at nonprofits are, on average, $3.36 an hour less than those of their counterparts employed by for-profits. Moreover, once the cost of benefits is added in, the difference in total compensation is $4.67 an hour less (US Bureau of Labor Statistics, 2016). With this information in mind, there is no wonder why this sector's turnover rate is 7% higher than the average all-industry turnover rate

As young professionals continue to mention competitive pay as a determining factor in their careers, the nonprofit sector continues to experience high job vacancy rates (National Council of Nonprofits, 2023). The National Council of Nonprofits' 2023 survey states that of the nonprofits that responded to the…

Working in the nonprofit sector can be very rewarding, but it also comes with unique challenges and emotional demands. Nonprofit professionals often find themselves on the front lines, helping vulnerable populations and tackling complex social issues. While their passion and dedication drive them, the constant exposure to trauma, stress and limited resources can take a significant toll, leading to burnout and compassion fatigue.

Burnout arises from a prolonged state of extreme stress and overwhelm, leaving individuals physically, emotionally and mentally drained. When a person has burnout, they experience feelings of cynicism, detachment and a sense of ineffectiveness. Compassion fatigue is a form of secondary traumatic stress that happens when caregivers become emotionally overwhelmed by the suffering and trauma they witness in their work.

Both burnout and compassion fatigue can have devastating consequences for nonprofit workers, their personal well-being, and the organizations they serve. Symptoms may include physical and emotional exhaustion, insomnia, irritability, difficulty concentrating and a diminished sense of purpose or accomplishment.

Causes and contributing factors

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