Segmenting similar nonprofits and setting benchmarks among them is a useful way to gauge indirect costs, but ultimately outcomes are what really matter.
Even for a foundation committed to funding impact rather than just programs, achieving that goal is easier said than done.
Building trust and understanding between funders and grantees is a vital part of pay-what-it-takes philanthropy.
Businesses don't distinguish between direct and indirect costs on price tags. Why should nonprofits?
For many nonprofits, government funding caps for indirect costs pose even more of a challenge than similar caps at foundations.
If a foundation refuses to fund indirect costs, the burden should be on it to justify that decision.
There are four things all funders can do to help the sector move away from obsessing over indirect costs. Segmenting the sector and setting benchmarks isn't one of them.
It's important that we continue to collect data that can help us sort nonprofits into meaningful groupings.
Last Word: Jeri Eckhart-Queenan and Michael Etzel respond to the comments on their article.