A processing fluency perspective on overhead aversion: How much is too much?

Abstract

Overhead aversion has afflicted the nonprofit sector in recent decades. Yet, questions remain regarding how high is too high from a donor perspective and at what level overhead expenses just "feel right." Using processing fluency as a theoretical foundation, the central purpose of this research was to investigate whether a nonprofit overhead ratio fluency level exists that significantly reduces both donation likelihood and nonprofit perceptions. Results from two studies show that a 25% overhead ratio appears to be the proximate ceiling regarding what fluently fits within a potential donor's schema for acceptance. Overhead ratios exceeding this threshold tended to decrease donation likelihood and nonprofit perceptions in a relatively stable manner. Moreover, the 25% threshold seems most relevant to human and animal causes and not as relevant to arts and cultural nonprofits such as museums. The results suggest that donors have a preconceived overhead ratio limit. Nonprofits that exceed that threshold are in danger of deterring donors. If nonprofit overhead ratios