I posted a link to Dan Palotta’s TED talk a few days ago and while I still believe it is a good talk to listen to, I would like to add some additional voices to the discussion. So before we begin, I want to say thanks to Ian over at KM on a dollar a day for providing me with an additional feedback and ideas on the topic!
This post here by Alanna Shaikh summarizes some of my feelings towards the talk very well. The main reason of why I posted the TED talk (and yes, you should still listen to it!) was that the talk highlights that obsessing about overheads is not helpful and counterproductive to good development work. Alanna Shaikh comments:
I agree with Pallotta on overhead. The need to keep overhead low leads to distortions in NGO programming, distortions that make quality worse. Some organizations accept donated materials they don’t really need, because the value of the materials increases the program budget and therefore makes overhead a lower percentage of costs. Others play games with how they charge staff member time, so they can assign more salary to programs. Those are just two examples; there are more. Overall, the obsession with overhead costs takes time and effort away from real work planning and evaluation even when it doesn’t actually make programs worse by forcing the inclusion of useless donations or limiting staff availability. (Source)
I think that’s really well said. In fact, I would like to start a collecting some cases / examples of how the focus on overheads had bad impact on development and I’m even more interested in learning about good practices to keep organisations focused, lean and cost effective while not obsessing about overheads too much. Do you have any inputs or ideas for me? Thanks!