Ken Goldstein, MPPA

Ken Goldstein has been working in nonprofits and local government agencies from Santa Cruz, to Sacramento, and back to Silicon Valley, since 1989. He's been staff, volunteer, board member, executive director, and, since 2003, a consultant to local nonprofit organizations. For more on Ken's background, click here. If you are interested in retaining Ken's services, you may contact him at ken at

Tuesday, May 29, 2007

Preview of coming attractions...

Next Monday I will again be honored to host the Carnival of Nonprofit Consultants. Now, on the Carnival FAQ:

What's a blog carnival? click here to learn about blog carnivals

What's the carnival of nonprofit consultants all about? click here for the nitty gritty of this carnival

How do I submit my posts to the carnival? you'll find that answer by clicking right about here

Thanks & See you next Monday!

Wednesday, May 16, 2007

How do you allocate overhead costs?

One of the clients I'm working with has always only had one budget for the entire organization. This is fine for small nonprofits that only really have one or maybe two programs, but this client has grown out of that stage, and has at least five or six distinct programs and program areas that should be broken out of that budget.

While we were working on that, the question from staff came up of, "How do we allocate the overhead costs to each program?"

There may be many more ways to do this than I am aware of (I'm a grantwriter and management consultant, not an accountant), but the three basic ways I went over with them were Dollars, Time, and Space.

Dollars: The simplest way to do your overhead calculations is by overall dollars and percentage of the budget. In this method you break your budget down by program, including administration and fundraising as an overhead "program." If your overhead is 12% of the total programs budget (full budget, less the overhead), you simply add an overhead line item to each program of 12%.

This type of calculation is easy to do in Excel or any other accounting or spreadsheet program you may be budgeting in, and looks nice and clean. It's also handy to know what your agency's overhead rate is, in case a donor or funder wants to know.

But, it's also a bit deceptive. Do all programs draw from overhead equally? Are each of your programs really requiring the same percentage of your nonprofit's overhead? If you really want to get an idea of a program's true cost to your agency (and I'd think you'd want to), you'll probably want to look at one of the other methods.

Time: In this method, you break your budget down by programs, and make an "overhead program" as you did in the previous method, but you do not divide the overhead equally. Instead, you look at the total hours each of your employees puts into each program, then determine what percentage of total hours that program demands. If a program eats up 25% of your staff's time, then it gets 25% of the overhead budget.

This method is based on the idea that if that's where all your employee's energy is going, it's probably also where the attention of management and fundraising is going as well. And, you might be surprised that a program that's only 20% of your budget is eating up 60% of your staffing hours. This method recognizes that labor intensive programs require more overhead (management, space, supplies, etc.) than other programs.

Space: This method is similar to the time method, but instead of looking at your time sheets, you look at your square footage. Figure out the percentage of your total square footage each program uses, and use that percentage to divide out the overhead. Does one program require a massive building, while another with similar staffing require only a room with a few cubicles? Then that program should take up a larger share of the overhead.

This method is based on the idea that overhead costs are often directly related to space costs, including rent, utilities, taxes, and insurance. If you own your own building, or have donated space, this might not be as important to you.

Every organization is different, and you may want to base your overhead split on a combination of Time and Space, or some other factor that I've left out in this simple explanation. For the client in question, I suggested we go by the Time method, at least in this first time breaking out the programs from the total budget.

What other ways do you use to allocate your overhead costs? Post a comment if you're doing something different than the methods I've just described.

Wednesday, May 02, 2007

Marketing? For Nonprofits?

Many in the nonprofit field don't like to talk about marketing. Marketing is sometimes considered a dirty word. It's all about selling, and we don't sell, we fix! Selling is considered crass, and therefore, we don't talk about marketing.

But how do you get patients in the door of your clinic if not for marketing? How do parents in the neighborhood find out about your free book give-away program if not for marketing? How does anybody know about your theater group if not for marketing? I can go on and on, but you get the idea.

Nonprofit marketing may not always take the flashy, glossy, expensive route that you might associate with a marketing campaign for a new car, but it is marketing never-the-less. And what does our disdain for sales and marketing get us?

The just released 2007 Nonprofit Marketing Survey gives us a glimpse, and it's not too pretty.
More than 55% of nonprofits are frustrated by lack of resources and leadership support for marketing, but only 37% do the tracking that generates increased budgets and confidence.
For more information and the full survey results please see the Getting Attention blog.

Tuesday, May 01, 2007

Taking Part in the Human Race

One of my current nonprofit consulting clients is Grail Family Services in San Jose (GFS), California. I am helping them out as the Interim Executive Director while we work on some long-term strategic issues and decisions.

GFS does great work the East San Jose area, focusing on early childhood literacy, parenting, and family empowerment. All the programs are created with community input, and include strong evaluation components to track what works, and what doesn't. It's a fabulous organization that I am proud to be a part of.

This month we are participating in the Human Race fundraising event that is put on by the Volunteer Center of Silicon Valley. The Human Race is your basic pledge walk/run with a 5K walk and 5K and 10K runs. You've seen these before; we have a group of board members, staff, and volunteers who will be walking or running and we're asking for your support by pledging a donation.

There will be Human Race events going on all over the country this month. Most are put on by the local volunteer centers. If you'd like to enter your organization in the Human Race, try a Google search to find an event in your area.

If you'd like more information, or to make a donation, please click on this link to go to my pledge page. Thank you for your support!