- Where do you get your funding?
- How efficiently do you spend the money your investors give to you?
- How do you calculate or define overhead?
- What is a standard overhead rate for charities?
Where do you get your funding?
Room to Read has attracted many "blue chip" funders since our inception, and we now have a diverse funding base that consists of individuals, family foundations, foundations, corporations and schools. In 2005, the breakdown of support between these sources was as follows:
- 59% Individuals and Family Foundations
- 22% Corporations
- 12% Foundations
- 7% Schools and Other Sources
Some of our significant corporate and foundation support comes from: Accenture Foundations, Prudential Holdings, Boeing Corporation, Credit Suisse Foundation, DHL, The Draper Richards Foundation, Goldman Sachs, The Michael and Susan Dell Foundation, Morgan Stanley, and The Skoll Foundation.
How efficiently do you spend the money your investors give to you?
We pride ourselves on keeping our overhead as low as possible. From our inception in 2000 through 2005, we kept our overhead expenses to less than roughly 10% of total expenses. Although this number will increase as we make strategic investments to build capacity, we will always do our utmost to make sure that your money goes towards helping children in the developing world, not to a wasteful bureaucracy or to unnecessary programmatic spending. And since villages are co-investing in our projects, your support is often leveraged and sometimes even doubled.
How do you calculate or define overhead?
Room to Read (and most other non-profits) defines the overhead ratio as the total administrative and fundraising costs divided by total expenses (administrative, fundraising, and programmatic). Per IRS guidelines, all expenses are broken into three categories: management and general administrative, fundraising, and program services. When calculating the overhead ratio, the first two go into the numerator, while all three go into the denominator:
| Overhead = | Total Administrative & Fundraising Expenses |
| Total Expenses |
What is a standard overhead rate for charities?
According to the Better Business Bureau Wise Giving Alliance's Standards for Charity Accountability, charities should keep their overhead rate at 35% or lower. Traditionally, Room to Read has operated at 1/3 of that rate – something that we are very proud of! And despite the increase in our overhead ratio to greater than 10% in 2006 & 2007, we pledge to continue to scrutinize every area of our business to keep our overhead expense well below the industry standard and to spend your money efficiently.
