Overhead Defined

Most nonprofits have three expense categories:

• Administrative Expenses (also known as Management and General Expenses) – The cost associated with sustaining the operations of your organization.
• Fundraising Expenses – The costs incurred to bring in additional revenue for your organization, particularly in relation to the solicitation of donations, gifts, grants, etc.
• Program Expenses – The costs for programs and activities that directly advance your organization’s purpose and mission.

Administrative Expenses and Fundraising Expenses make up your organization’s overhead. To determine your organization’s overhead, you will need to make the following calculation:

Administrative Expenses* often include, but are not limited to:

• Rent
• Utilities
• Supplies
• Executive, board and staff compensation (salaries and allowances)
• Pension and employee benefits
• Depreciation expense for equipment
• Professional fees (legal, accounting, audit, investment advisor)
• IT (information technology)
• Human Resources
• Finance department
• Insurance
• Meetings of the board or staff
• Printing and publication costs (i.e. annual report)
• Postage and mailing
• Housekeeping

*Except for those expenses that are directly associated with program and fundraising activities.

Fundraising Expenses often include, but are not limited to:

• Publicity for fundraising campaigns/events
• Soliciting bequests, corporate/foundation grants/donations and government charitable grants
• Participating in federated fundraising campaigns
• Preparing, printing and distributing fundraising mailers and other fundraising materials
• Salaries associated with fundraising