In recent years, there has been a public conversation about nonprofit overhead, or administrative costs, and the extent to which those costs should influence giving. Some believe low overhead is evidence of an efficiently-run operation. But advocates and those who work for nonprofits argue that donors should not use overhead as a measure of a nonprofit’s success, but rather its impact on the communities it serves.
Nonprofits are required to report administrative costs when filing their 990 forms with the IRS. Administrative costs can include things such as human resources, accounting and other personnel.
Two different United Ways oversee the Hamilton and Middletown areas. The United Way of Greater Cincinnati funds nonprofit programs that serve the Middletown, Monroe and Trenton areas. Middletown’s United Way merged with Cincinnati in the mid-1990s. The Butler County United Way handles Hamilton, Fairfield and other areas on the south side of the county.
The Butler County United Way took in $2.05 million last year. The majority of that total, 74 percent, comes from workplace campaigns that are underway now. Corporate gifts account for 14 percent of the income, while 13 percent comes from investment income, sponsorships and individual gifts.
On the expenditures side, 70 percent of the money goes to community funds, 10 percent goes to developing community initiatives, and 19 percent goes to administration. That number includes 15 percent for fundraising, 4 percent in internal operations, and 0.5 percent in United Way dues to state and national organizations.
The United Way of Greater Cincinnati took in $61,050,000 last year. About 79 percent of that total goes to charities, while 9 percent accounts for fundraising, and three percent goes to operating costs, according to Carol Aquino, the vice president of marketing for that United Way. A separate breakdown for the Middletown division was not created, she said.
“We’re trying to accomplish significant bold goals … any organization has a cost of doing business,” she said.
Detractors of the United Way say that too much of the money donated goes to overhead, so it is preferable to give directly to the charities. However, there are benefits to giving to the United Way, said Sheri Hedrick, the director of community impact for the Butler County United Way.
“There’s a concept called value added,” she said. “You can take your $10 and you can give it to a really good agency, and that’s great. There’s absolutely nothing wrong with doing that. Or you can take the same $10 and give it to the United Way. We’re vetting agencies and making sure that they are quality … we’re investing it wisely. We’re helping bring volunteers and other funding into that program. … So your $10 goes farther (with the United Way) than if you just hand the $10 over (directly to an agency).”
The extra effort includes “helping them with grants that they’re writing or technical assistance or training — all these things that go toward helping build stronger programs. Those are services we provide to the programs we support,” Hedrick said.
While charities appreciate any donations they get, the United Way funds are crucial to their operations, directors say. Christine Birhanzl, the director of the Butler County Red Cross, receives funds from the Butler and Cincinnati United Ways, as well as the Oxford United Way.
“When I go out and ask people to give, I ask people to give directly to the United Way. That allows the allocation committees to allocate those dollars to where they’re needed,” she said.
She noted that United Way pledge cards give donors the option to donate to specific agencies.
Allocation decisions are made by volunteer committee members, and not by paid United Way staff, according to Hedrick.
“When the campaign dollars come into the United Way, we don’t decide where it goes — that decision is made by panels of volunteers,” Hedrick said.
The director of SELF, Supports to Encourage Low-Income Families, Jeffrey Diver, said that last year, the agency received $43,000 in individual gifts, but $83,000 from the Cincinnati and Butler County United Ways.
“It would be extremely difficult to operate our programs without the United Way. I don’t think we could make up the difference with individual donations,” Diver said.
The Butler County and Middletown United Way fundraising campaigns are underway. Butler’s goal is $1.9 million, the same as last year. Middletown’s goal is $1.23 million, an increase from the goal of $1.2 million last year.
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