Overhead

Low overhead is often treated as a virtue, but the 'overhead myth' — the idea that less is always better — can starve organizations of the infrastructure they need to be effective. Reasonable overhead pays for staff, systems and evaluation.

Judge overhead in context: compare it within the same cause area and over several years, not against an arbitrary universal cap.

Learn more

• The overhead myth

Related terms

• Functional expenses — Functional expenses are a nonprofit's costs grouped by purpose — program services, management and general, and fundraising — as reported in Form 990 Part IX.
• Program expense ratio — The program expense ratio is the share of a nonprofit's total spending that goes to its programs and services rather than to management or fundraising.