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How a TED Talk Destroyed the Charity Overhead Myth

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The news that Charity Navigator, BBB Wise Giving Alliance and Guidestar have launched a "campaign" to encourage donors to not only focus on non-profit organizations overhead costs as a measure of efficacy is welcome -- if surreal -- news.

The effort includes a new website, a social media campaign, a press release and even a petition encouraging others to "pledge to end the overhead myth."

The news is welcome, because the notion that the overhead costs of an organization are a good measure of that organizations effectiveness is -- and has always been -- absurd. Anyone and everyone working to address the many problems of the world knows that what matters most is results.

The news is surreal because it is these organizations that created the very myth that they now are campaigning to dispel. Their leadership gives interviews every day of the week reinforcing this simplistic analysis to reporters all to willing to play "gotcha" with non-profits around the world.

It's a bit like a donut shop denouncing donuts.

So what is really going on here?

One name answers that question: Dan Pallotta.

Dan is the author behind a now famous TED talk called "The way we think about charity is dead wrong" that simply and clearly demolished the old silly argument that so many had made a profession of making. The talk has now been seen by almost two million people, and destroyed the ability of self-appointed charity overhead measurement watchdogs to make the case that overhead matters more than results.

Overhead ratios are attractive to those looking for a quick uninformed analysis of non-profits because they are simple. It's much harder to measure sustained results.

But as Dan so ably points out, those who are fixing the problems of the world should be paid in a way that incentivizes them to solve those problems.

What should we pay the non-profit CEO that figures out how to stop 30,000 kids a day from dying from preventable causes? Whatever they want.

Should anyone donate to a non-profit that wastes money? Of course not. But now that the charity overhead ratio industry is campaigning against charity overhead ratios we can get back to what matters: measuring results.