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Most Americans Think Nonprofits Spend 60% Too Much on Overhead

New study sheds light on donor perceptions of financial efficiency at nonprofits.

Only 1 in 4 Americans has "a highly positive view" of the financial efficiency of nonprofits, according to a recently released study.

Grey Matter Research's "Where'd My Money Go?", which examines a survey of more than 1,000 American adults, reveals that an almost-equal proportion (22 percent) of Americans view nonprofit management in a highly negative light, believing that the average nonprofit spends 60 cents or more of every donated dollar on overhead costs.

However, the average perception of nonprofit spending on overhead is about 36 cents per dollar – still 14 cents more than most people said nonprofits should reasonably be spending on overhead.

The study notes that certain factors – such as a respondent's age, income, and ethnicity – may influence one's beliefs about how much money nonprofits spend on overhead. Respondents over the age of 50 were more likely to believe that nonprofits spent more than necessary, compared to only 52 percent of those ages 18 to 34.

Similarly, the lower a respondent's income, the less likely he or she was to believe that nonprofits overspend on overhead. Those who gave the most money to charity ($1,000 or more) were also most likely to have negative perceptions of nonprofit spending.

Phoenix-based Grey Matter Research conducted the survey to follow up on a similar study of the same name from 2008. The study states that Grey Matter conducted the research because "most consumers have very little awareness of how nonprofits actually work."

Grey Matter president Ron Sellers told The Non-Profit Times he wanted to "revisit the public's perception of charities after the recession."

Although he expected some variation, he said, the data was "so identical I had to re-check the figures and make sure we didn't use the data from 2008."

CT routinely highlights the topics of giving and nonprofits and charities, including recent coverage of a recent surge in donations to evangelical foundations.

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