NAM Blog

More Evidence of Just Why Focusing on Low Overhead to Judge Nonprofit Efficiency is a Really, Really Bad Idea

We don’t know if these are the right measures to replace overhead. But what we do know is that it would be helpful to have efficiency measures that actually measure efficiency. Coupet and Barrett, in this sense, at least move the discussion forward in a productive direction.

Not surprisingly, Coupet and Barrett obtained starkly different results when measuring nonprofit efficiency versus actual production as opposed to a mindless use of the overhead ratio. Coupet and Barrett indicate that, “the most efficient affiliate according to one of the scientific techniques had one of the highest overhead ratios, at 32 percent. But the affiliate with the one-percent ratio produced two new houses; the one with the 32-percent ratio produced 382 houses.” Read the full article here