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Knowledge Base
Q:
Will foundations fund overhead or administrative costs for nonprofits? What is an acceptable overhead rate?
A:

Although many foundations prefer to support direct programmatic activities, many do give grants to help nonprofits cover administrative costs, also known as general operating expenses or overhead costs.

Overhead rate for an operating budget

There is no single accepted standard percentage of overhead that can be applied to every nonprofit organization. Nonprofits spend varying amounts of their budget on administrative costs, depending on the scope and structure of their operations. However, some organizations that rate charities, such as the Better Business Bureau and Charity Navigator, have their own benchmarks, which prospective donors might choose to follow to evaluate a nonprofit's levels of efficiency.

Overhead rate for a grant proposal

Similarly, there is no single accepted overhead rate that applies to every nonprofit organization, or one that is used by all grantmakers. Many funders have policies regarding the percentage of overhead that they will allow within a project budget. Some do not allow any overhead at all to be included, while others allow overhead to be a specific percentage of total costs or personnel costs. To learn more about proposal budgeting, take our free course, Proposal Budgeting Basics, available online or as an in-person class.

How to find funders that give for general operating expenses

Foundation Directory Online is our searchable database of grantmakers. To find funders who give grants for general operating expenses, do a Type of Support search for "General operating support", in addition to search terms for field of interest and geographic focus. Subscribe to search from your own location, or search for free at our libraries and Funding Information Network locations.

Selected resources below may also be helpful.

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