UN and Overhead

Wizbang is criticizing the UN for excessive overhead in their Tsunami assistance programs. Almost $600 million has been spent and critics are charging that a third of this has gone to "overhead". I expect a lot of conservative bloggers to jump on the bandwagon soon because, well, it's the UN.

Good charities like to have overheads of less than 10%. Checking some local literature shows that overheads of 20%-25% aren't unusual. Wizbang cites museums as having overhead of only 17%. Maybe so, but this is because museums have large endowments so that contributors rarely see overhead. In terms of their budget, it is probably much higher than 17%.

The "good" charities often take the form of grant writers and volunteer heavy organizations. If your charity takes in money and then redistributes it, then your overhead is low. All you need is a small office and a few people to answer phones, research requesters, and someone to sign the checks. If your charity is staffed mostly by self-financing volunteers, then we have another low overhead situation. However relief organizations don't work either of these two ways.

But the real problem is this: who and what is included in "overhead"?

This UPI article states that the one third number includes "staff, administration and other costs." Another states that "some UN agencies will not disclose staff costs and others account for items such as transport and equipment differently." Now depending on the staff and what they do, this may not be overhead at all. If you are a charity offering medical care, the doctors and medical personnel employed by your charity are staff. Christian organizations like Young Life have trouble with the 10% requirement too, their staff is a major expense and spiritual guidance does not have an associated monetary cost. The Red Cross has traditionally had a hard time meeting the 10% overhead requirement for these reasons.

In the case of Tsunami relief, we have a large number of relief workers entering a ravaged region. Even if they are unpaid volunteers they must still be transported there, clothed, fed, and sheltered all at considerable expense. Then we have the logistics tail of getting any supplies the region (both to distribute and support the volunteers) eating up money as well. Is that overhead? It could be.

My point is that all this talk of "overhead" is not cut and dried. Overhead is a very fuzzy amorphous term. 30% looks bad and probably means there is some fat that could be trimmed, but you have to consider the mission they are undertaking and what "overhead" includes.