Charities are all too familiar with being scrutinized over their administrative costs, but in a twist, a foundation in Britain is being asked to reduce its overhead.
John Copps, a head researcher at the British charity-evaluation group New Philanthropy Capital, describes on his organization’s blog how the Big Lottery Fund — Britain’s largest grant maker — is being instructed by the government to reduce its administrative costs from 8 percent to 5 percent.
While it may seem that the foundation shouldn’t be immune to the cost-cutting going on elsewhere, Mr. Copps says, limiting the organization’s administrative costs will likely cause harm.
Faced with less money and fewer employees, the foundation would likely make fewer small grants, start fewer new grant-making programs, and spend less on research and evaluation of programs. None of those moves would be good for nonprofit groups, says Mr. Copps.
What do you think? Should grant makers that spend a lot on administration be encouraged to cut those costs to get more money out the door to grantees?