The GiveWell Blog

Pitfalls of the overhead ratio?

Good Intentions are not Enough gives some stunning examples of how charity can go wrong, and specifically points at the widespread emphasis on “low overhead” (which we have repeatedly criticized) as a culprit.

It’s worth noting that literal “administrative expenses” metric is often less harmful than the broader definition of “overhead.” For example, many evaluation and planning expenses can be and are classified as program expenses. However, the distinction is not always as clear to donors and even to charities as it is to accountants, so things that “feel like” overhead may be under-invested in even if they don’t affect the numbers on the Form 990.