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ASU Lodestar Center Blog

Research and recommendations for effective, day-to-day nonprofit practice from ASU faculty, staff, students, and the nonprofit and philanthropic community.


Wednesday, November 3, 2021

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Nonprofits depend on sustainable revenue sources to ensure their mission is fulfilled. Therefore, when a funder requests administrative costs lower than what is needed, or state they will not fund administrative costs, organizations make it work. The Overhead Project speaks to the difficulties that organizations can face when they do this:

"Community nonprofits typically have overhead that is much too low. They often underspend on essential, basic costs such as rent and insurance. They can't afford adequate accounting staff, good technology, or human resources management. They often try to compensate for under-funding of programs and systems by having too few staff or paying staff poorly. The consequences of under-investing in overhead are financial weakness and inefficiencies at the nonprofit, and as a result, fewer services or lower quality services."

Most in the nonprofit sector have heard the question, “How much of my donation will go toward programs?” This may be a triggering question, but with good reason. There are many implications that this question brings, but when it is asked by major funders it causes a ripple effect within the nonprofit sector.

By adhering to these expectations, nonprofits are supporting false expectations in other donors, potential board members, staff and the public. Goggins-Gregory and Howard in The…

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Wednesday, October 20, 2021

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Nonprofit interest in cross-sector collaboration is ramping up due to evaporating resources and increased demand for services. In 2018 analysis by Ben Gose, a reported 57% of nonprofits doubted their ability to continue meeting demand, motiving many nonprofit leaders to consider collaboration with other nonprofits and across sector lines in order to increase organizational capacity.

“Resources, symbolic attraction of alliance members, and expanded networks” as stated in a review from AIM Alliance, are all compelling benefits to joining forces, however, organizations should proceed with caution as these solutions are not sole problem solvers. The Bridgespan Group reminds leaders that “cross-sector collaboration is a complicated and time-consuming process, given the complexity of the issues and range of stakeholders involved.” So where should nonprofit leaders begin?

There is no “one size fits all” strategy, but all collaboration is rooted in trusted relationships. Nonprofits whose organizational cultures encourage outreach and relationship building are already laying the foundational groundwork of high-performing…

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Wednesday, October 6, 2021

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Ask yourself: Has there ever been a time when you sought the services of a nonprofit organization but something just didn’t feel right? Unfortunately, this is a common dilemma for minority groups and various ethnic populations.

For example, consider you’re a Spanish-speaking customer from a neighborhood that as of recently is facing a housing crisis due to COVID-impacted job losses. You find a local nonprofit in your community that you think might be able to help you find and utilize resources relating to rental assistance. You are hesitant to enter the organization because of the lack of Spanish-translated flyers, information posted outside, and because the individuals pictured do not represent you or those from your community.

Upon entering, you are greeted by an individual who does not speak Spanish. You kindly ask for assistance in Spanish, but are told they do not have anyone who speaks your language; you are worried and in need of assistance, but are just not comfortable speaking in English. With an attempt nonetheless, you begin to explain in English your needs and the struggles that your community is facing with the hopes of receiving useful support. The employee is unaware of the issues you face, and is unsure on how to help. You are disappointed that the nonprofit was unprepared to serve your community, and lacked the resources and information to genuinely help.

The concept of Diversity-Equity-Inclusion (DEI) helps…

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Wednesday, September 22, 2021

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With the recent pandemic, civil unrest and racism conversations front and center, nonprofit organizations are working overtime to serve communities deeply affected by these issues. On top of it all is the reality that the diversity needle has not moved much in board of directors’ positions at nonprofit organizations. A 2017 survey from Board Source shows that 84% of members on nonprofit boards identify as Caucasian, which does not sway far from the 2015 survey.

A board of directors is a legal requirement to establish and maintain a nonprofit organization and helps to ensure the organization achieves its stated mission and meets the expectations of stakeholders, according to Nick Price. Yet, many nonprofit boards do not reflect the communities in which those same organizations are serving.

As our country continues to diversify, our nonprofits should strive to achieve a level of diversity on their boards that meets that of their current constituents and community. What can organizations do to amplify their diversity? The following five recommendations can help a nonprofit establish diversity, equity, and inclusion strategies that can help with overall success.

Promote diversity and inclusion throughout the organization

Nonprofit leaders should have ongoing discussions on inclusion and diversity, establish best…

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Wednesday, September 8, 2021

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The Council of Nonprofits defines capacity building as “whatever is needed to bring a nonprofit to the next level of operational, programmatic, financial or organizational maturity, so it may more effectively and efficiently advance its mission into the future.” Nonprofits can build capacity through investments in infrastructure.

Infrastructure has three main components: administrative (technology, systems, and software), human capital (people, paid and volunteer, and their knowledge and experience), and financial capital (money for short- and long-term operations).The 2018 State of the Sector Survey from the Nonprofit Finance Fund found that 86% of nonprofits saw increasing demands for services and 57% would not be able to meet those demands. Investments in capacity building infrastructure can ensure that nonprofits meet demands while growing sustainably.

From the funder’s perspective, the components not directly related to program delivery are many times labeled “overhead.” The problem of overhead funding has been a decades long issue within nonprofits. Gregory and Howard conceived the cycle of nonprofit starvation. The cycle begins with funders that can have unrealistic expectations about what nonprofits should be spending on overhead. On average, funders allow 10-15% of funds to go towards…

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