Paying what it takes to create impact – audio

New research from SVA and the CSI has found that not-for-profit organisations across Australia are, in general, not funded for the actual cost of what they do.

Summary
  • Not-for-profits, like all organisations, need to pay and support their staff. These costs are often broken into ‘direct’ and ‘indirect’ costs based on how closely they are tied to on-the-ground projects.
  • Many in the sector, NFP staff as well as funders, believe that the level of indirect costs reflects the efficiency or effectiveness of the NFP, despite growing evidence to the contrary.
  • As a result, not-for-profit organisations across Australia are, in general, not funded for the actual cost of what they do. Funders cap their funding of indirect costs, and NFPs under-report their true costs. This leads to underinvestment and inefficiencies in NFPs.
  • Solving this requires funders to be proactive in funding indirect costs, and reassuring NFPs of that so that they are told the true costs of running the project or organisation.
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Sam Thorp
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