‘Overhead Costs’ - How to “Not” Judge an NGO.

1. www.happyfacesvadodara.com ‘ ‘Overhead Overhead Costs Costs’ ’ - - How How to to “ “Not Not” ” Judge Judge an an NGO. NGO. Overhead costs are an intrinsic and unavoidable part of any NGO. Overhead costs are necessary to operate the NGO, even when they don’t specifically relate to the cause that they are serving. It’s important to address the NGO’s overhead ratio – each and every rupee being spent as operating cost is a rupee that’s not being used for its mission. But it shouldn’t be used to extensively judge the effectiveness of an NGO. Simply because an NGO has a high or a low overhead ratio doesn’t mean that it is an effective NGO or otherwise. Overhead rations don’t represent a measure of an ‘effective NGO’ because of the following reasons: 1. Overhead rations don’t reflect the true quality of services being provided – in fact, low overheads might indicate that the NGO is over-reliant on good intentions of the people; 2. Higher overhead costs might indicate high-quality work – the work of effective NGOs, such as NGO in Vadodara, require expert research and robust monitoring, and all of this could lead to more overhead costs; 3. High-impact NGOs, such as the best NGO in Vadodara, often tend to have higher salary costs, as they often employ appropriately-trained staff members, thus ensuring that the jobs are being done by the right type of rightly trained people. 4. Low overhead ratios aren’t an indicator for the appropriateness of approach either, or even of long- term impact;

2. www.happyfacesvadodara.com 5. Overhead costs can be massaged when there is an absence of any clear criteria of the type of costs that must be labelled as ‘overheads’.