4 ms·

They need to ask: 1. At what percentage will your entity spend on administration costs? 2. Will you agree to keep it to less than 10%, if we give you funds?

They need to ask: 1. At what percentage will your entity spend on administration costs? 2. Will you agree to keep it to less than 10%, if we give you funds?" 3. Flat out ask the future non-profit, "How much money do you feel you will need to run the non-profit. Would you agree to take only what the standard cost of living in the county you reside--if it succeeds?" 4. Will your BOD contain any family, friends, or relatives? 5.(Sorry if I sound callous; I live in a county where starting a non-profit is a career move. Some of the salaries are mind boggling.) 6. (Note to any future non-profit. I applaud your efforts if they are honest. Just a reminder--if you ever close down the 501(c)3 you can't keep any assets--not even a paper clip. Nothing belongs to you. )

joshdance 13y ago
"1. At what percentage will your entity spend on administration costs? 2. Will you agree to keep it to less than 10%, if we give you funds?" Sometimes (important word, sometimes) admin costs need to go above 10%. You have to spend money to make money. If a business had an opportunity to spend 1 million dollars to make 2 million dollars, they would do it all day. (Taking into account their rate of return etc.) If a nonprofit had the opportunity to spend 1 million dollars to make 2 million, they might not, because they don't want their admin costs getting "too high".
sanj 13y ago
Though it is tempting to try to capture the entirety of the "efficiency" of a non-profit with a single number, it isn't really helpful. In particular, it turns out that "administration" doesn't scale linearly. A 4 person nonprofit still needs their ED to spend ~50% of time fundraising; there's likely >15% of your salary right there. Information from folks that have done this for a while: http://philanthropy.com/article/3-Major-Charity-Groups-Ask/139881/ http://philanthropy.com/article/3-Major-Charity-Groups-Ask/1... Data, if you want: http://nonprofitquarterly.org/management/22239-new-study-low-nonprofit-overhead-does-not-greater-efficiency.html http://nonprofitquarterly.org/management/22239-new-study-low...
- dragonwriter 13y ago
  > Though it is tempting to try to capture the entirety of the "efficiency" of a non-profit with a single number, it isn't really helpful. Even when it would be, "ratio of total spending to administration spending" probably is almost never the right single number.
  - sanj 13y ago
    I was using Unicode "scare-quotes". They may not have rendered accurately. http://en.wikipedia.org/wiki/Scare_quotes http://en.wikipedia.org/wiki/Scare_quotes
  - marincounty 13y ago
    Yes--there's no real number on administration costs. Maybe that's the problem? Just keep giving--we're complicated! I guess I keep giving to the nonprofits that sound good? The one's that advertise on T.V.? Any nonprofit founder, should be able to answer a few questions; "How much do you, the founder expect in salary-- present and future. If we decide to fund your initial nonprofit, would you agree to work for these amounts? If you want to make a large salary--start a for-profit business. There's nothing wrong with wanting to make a good living, but don't hide behind a nonprofit entity. Oh yea, Obama is hip the nonprofit dance, but hasn't done anything. A few years ago, he wanted to separate legitimate nonprofits from just money making businesses. As far as I know, nothing has been done?
dragonwriter 13y ago
The idea that "low percentage of admin costs" = "high efficiency" in a non-profit is, well, naive. The resources you devote to making sure the other money you spend is effectively serving your objectives and researching more effective ways to meet your objectives is admin costs -- its trivial to minimize admin costs, but its foolish to mistake minimizing admin costs with increasing efficiency. Certainly, having an objective measure of value produced and maximizing the ratio of that measure to total dollars spent is a good thing, but "dollars spent less admin costs" is not a good objective measure of value produced for most non-profits.
- sanj 13y ago
  Hiring well is the most important thing any organization can do. Guess what accounting bucket that goes into?
cdcarter 13y ago
Remember, in addition to what everyone else said, working for or founding a non-profit should not and is not a death sentence to a comfortable life. If the officers are making a salary that is appropriately valued (which WILL be audited by any reasonable board of directors) things are correct.

joshdance 13y ago

"1. At what percentage will your entity spend on administration costs? 2. Will you agree to keep it to less than 10%, if we give you funds?" Sometimes (important word, sometimes) admin costs need to go above 10%. You have to spend money to make money. If a business had an opportunity to spend 1 million dollars to make 2 million dollars, they would do it all day. (Taking into account their rate of return etc.) If a nonprofit had the opportunity to spend 1 million dollars to make 2 million, they might not, because they don't want their admin costs getting "too high".

sanj 13y ago

Though it is tempting to try to capture the entirety of the "efficiency" of a non-profit with a single number, it isn't really helpful. In particular, it turns out that "administration" doesn't scale linearly. A 4 person nonprofit still needs their ED to spend ~50% of time fundraising; there's likely >15% of your salary right there. Information from folks that have done this for a while: http://philanthropy.com/article/3-Major-Charity-Groups-Ask/139881/ http://philanthropy.com/article/3-Major-Charity-Groups-Ask/1... Data, if you want: http://nonprofitquarterly.org/management/22239-new-study-low-nonprofit-overhead-does-not-greater-efficiency.html http://nonprofitquarterly.org/management/22239-new-study-low...

dragonwriter 13y ago
> Though it is tempting to try to capture the entirety of the "efficiency" of a non-profit with a single number, it isn't really helpful. Even when it would be, "ratio of total spending to administration spending" probably is almost never the right single number.
- sanj 13y ago
  I was using Unicode "scare-quotes". They may not have rendered accurately. http://en.wikipedia.org/wiki/Scare_quotes http://en.wikipedia.org/wiki/Scare_quotes
- marincounty 13y ago
  Yes--there's no real number on administration costs. Maybe that's the problem? Just keep giving--we're complicated! I guess I keep giving to the nonprofits that sound good? The one's that advertise on T.V.? Any nonprofit founder, should be able to answer a few questions; "How much do you, the founder expect in salary-- present and future. If we decide to fund your initial nonprofit, would you agree to work for these amounts? If you want to make a large salary--start a for-profit business. There's nothing wrong with wanting to make a good living, but don't hide behind a nonprofit entity. Oh yea, Obama is hip the nonprofit dance, but hasn't done anything. A few years ago, he wanted to separate legitimate nonprofits from just money making businesses. As far as I know, nothing has been done?

dragonwriter 13y ago

The idea that "low percentage of admin costs" = "high efficiency" in a non-profit is, well, naive. The resources you devote to making sure the other money you spend is effectively serving your objectives and researching more effective ways to meet your objectives is admin costs -- its trivial to minimize admin costs, but its foolish to mistake minimizing admin costs with increasing efficiency. Certainly, having an objective measure of value produced and maximizing the ratio of that measure to total dollars spent is a good thing, but "dollars spent less admin costs" is not a good objective measure of value produced for most non-profits.

sanj 13y ago
Hiring well is the most important thing any organization can do. Guess what accounting bucket that goes into?

cdcarter 13y ago

Remember, in addition to what everyone else said, working for or founding a non-profit should not and is not a death sentence to a comfortable life. If the officers are making a salary that is appropriately valued (which WILL be audited by any reasonable board of directors) things are correct.