A lack of awareness exists around the role of the nonprofit sector as part of our overall economy. According to the Independent Sector, “the nonprofit community is an enormous contributor to the American economy: it provides 5.5% of the nation’s entire GDP, or $805 billion worth of output.”
And that means jobs. “Between 2000 and 2010, nonprofit employment grew an estimated 18 percent, faster than the overall U.S. economy.” Additionally, national data from the Corporation for National and Community Service shows how millions of volunteers who dedicated billions of hours of service produced an estimated value of $173 billion in just one year.
Wow!
the overhead myth
Another commonly-held misperception that has hurt the nonprofit sector is the so-called Overhead Myth: the false notion that financial ratios are the sole indicator of nonprofit performance. In October 2014, GuideStar, BBB Wise Giving Alliance and Charity Navigator wrote an open letter to the donors of America in a campaign to end this myth. Paraphrasing the letter:
While overhead can help identify cases of fraud or gross mismanagement, it tells us nothing about the results of nonprofits’ work.
Nonprofits are prone to the “Nonprofit Starvation Cycle”: a spiral of donor demands, underinvestment in core costs, and limited results. This starvation cycle hurts nonprofits and donors, but, most important, it hurts our shared work for a better world.
The letter then outlines three ways that nonprofits can work together to end the myth.
It’s on us as nonprofits – those of us who are working to improve the quality of life in Boulder County – to know the facts and dispel the myths in our circles and among our networks.
