As we enter giving season, let’s put to rest one of the most toxic myths plaguing the nonprofit sector. For years, donors have been told to watch how much a nonprofit “spends on overhead” as if that one number tells the whole story. It doesn’t. In fact, this idea has done real damage to the sector. Nonprofits need more than good intentions; they need strong systems, fair pay, and room to grow. That takes overhead.
At Greater Sum, we work with early-stage nonprofits that are building toward long-term impact. And we see it all the time: the most thoughtful, scrappy organizations get penalized for investing in infrastructure, even though that’s exactly what they need to thrive.
The Overhead Myth Explained
Overhead refers to the costs of running an organization: things like staff salaries, accounting, legal fees, fundraising systems. It’s the foundation under the mission. And yet, some donors treat it like waste.
Here’s the truth: a low overhead rate doesn’t mean a nonprofit is effective. It might just mean they’re under-resourced, overworked, and stretched thin. The overhead myth tells nonprofits to look lean even if it puts their sustainability at risk.
Why Nonprofits Need Overhead
Smart giving means funding what works. That includes overhead. Hiring and retaining great people? Overhead. Using data to improve programs? Overhead. Avoiding burnout and turnover? You guessed it: overhead.
This is what we mean when we talk about capacity building for nonprofits. It’s about giving organizations the tools, systems, and support to do their work well and keep doing it, year after year.
At Greater Sum, we back nonprofits that are already doing the work and need help leveling up. We’ve seen what happens when small teams finally get breathing room: they sharpen their strategy, reach more people, and tell their story more clearly. That doesn’t happen without overhead.
What Metrics Matter More
If you want to give smarter, look beyond admin ratios and start asking better questions:
Who’s being served?
What’s actually changing as a result of the work?
Is the organization transparent, even about what’s hard?
Outcomes matter. So does learning. Some of the best nonprofits aren’t perfect. They’re evolving.
Smart Giving Strategies for Nonprofit Accountability
Want to be a savvy donor? Here’s where to start:
Read annual reports and look for real impact stories. A nonprofit should be able to connect the dots between what they’re doing, what that work costs to deliver, and what happens as a result.
Ask how the organization is learning and adapting, not just how much they “spend on programs.”
Support nonprofits that are honest about what’s working and what’s still a work in progress.
Early-stage nonprofits in our network are often incredibly transparent—because they’re used to having to prove themselves. They’re doing a lot with limited resources, and they’re hungry to grow in the right way.
Takeaway
If you want real change, don’t ask nonprofits to do it on a shoestring. Ask them what they need to do it right.
Smarter giving means supporting both programs and operations. It means backing leadership, infrastructure, and learning—not just outcomes you can measure today.
At Greater Sum, we help donors move past the overhead myth and support small, bold nonprofits that are building for the long haul. Because doing good well takes more than just heart. It takes fuel.
