Report: Pay What It Takes
Social Ventures Australia (SVA) and the Centre for Social Impact (CSI) have released a major report into the problem that many not-for-profits and social enterprises in Australia face: that funders do not sufficiently cover the indirect costs of projects and initiatives.
The report notes that:
Indirect costs do not indicate the efficiency or effectiveness of a not-for-profit
Not-for-profits ‘true’ indirect costs often far exceed the amount they are funded
Caps on indirect costs leads to lower capability and effectiveness
The drivers of indirect cost underfunding are complex and interrelated
The authors make six clear calls to action:
Educate the public and stakeholders on the fact that impact requires investment, and low overhead does not equal effectiveness.
Encourage open dialogue between funders and non-profits regarding the true, actual costs of programs.
Establish an independent data source for typical indirect costs to make reporting safer, while avoiding rigid benchmarking.
Foster a common language across the sector to clearly define what constitutes indirect costs.
Build trust-based relationships, with funders taking the first step to overcome traditional power dynamics.
Collaborate across the philanthropic sector to share learnings, accelerate funding changes, and ultimately influence government policy.
Read the full report on the Pay What It Takes website here or download a copy here.
Published March 2022
