Restricted funds do not cover organizations’ administration costs and the essential functions they require to do their work, (rent, utilities, technology support, financial audits, and staff development) nor does it allow them to invest in their own development, wellbeing and build up financial reserves and resilience against external shocks or adverse events (like COVID). At the same time, there is a stigma attached to asking for higher overhead costs.

High overhead costs somehow get linked to assessments of effectiveness. Due to the power imbalance between grantee partners and funders, civil society organizations and social movements are often reluctant to initiate conversations or enter negotiations revealing their real administration cost rates. This creates a vicious cycle, with organizations reporting lower administration costs than they actually incur, and funders not knowing the true costs required to deliver on their grants. It is a cycle of starvation!

Organizations that cannot get adequate administration cost coverage cut administration functions out of necessity which makes them ultimately inefficient. It is time to bust the overhead myth and invest in movements!