It’s more important than ever to make sure the nonprofits we donate to are accountable. That’s why Unseen invests in organizations only after a thorough vetting process. Over time, we’ve created a system to ensure that our partner nonprofits are doing the most good in the most accountable way. In building this system, we made a discovery; many donors are measuring accountability of nonprofits poorly. Worse than that, some accountability checks are not just ineffective; they’re harmful.
One potentially harmful practice is judging an organization’s effectiveness by their “admin costs.” Administrative costs are the ratio of a nonprofit’s budget that is spent on direct services, versus operating expenses like staff, accounting, marketing and maintenance.
Donors who want to do the most good often look at admin costs to decide where to invest. It’s really important for nonprofits to spend wisely, but evaluating nonprofits on admin costs alone misses the mark. Giving this way is like being a stingy business owner who refuses to pay for the things his or her business needs to thrive.
The truth is, investing into an organization's admin costs is important. At Unseen, we invest our services into anti-slavery initiatives. Our funding is limited, so we’re constantly working to maximize our investments. Through partnerships with effective organizations around the world, we’ve found that the most strategic donors are the ones willing to invest in the essential, boring things that nonprofits really need. The problem is that investing this way can be less fun. But the results are clear: giving to organizations that spend wisely on admin is essential to changing the world on a global scale.
Sometimes higher spending means higher investment in growth.
Jordan Maahs, Fargo