When you decide which charity to contribute money and time to, do you check out how much it spends on administration or overhead? If it spends 20 cents on the dollar for administration, is that okay? How about 30 or 40 cents? For years, donors have been told by leaders in the nonprofit sector to use the overhead ratio as the guide for determining whether a nonprofit is a safe bet.

Well, that turns out to be a poor way of judging whether your money will be well spent and my guest this week, Jacob Harold, is here to talk about that. Jacob is the president and chief executive officer (CEO) of GuideStar, a nonprofit that gathers and disseminates information about every single IRS-registered nonprofit organization.

Jacob and his counterparts at the Better Business Bureau’s Wise Giving Alliance and Charity Navigator recently wrote a letter called The Overhead Myth that they’d like all nonprofit leaders to read and share. They make a strong case for paying attention to what matters most – results that cause lasting change in people’s lives.

It’s time, my friends, to educate the world about looking at the results of what nonprofits produce more than the overhead. And it’s time for nonprofit leaders to describe those results and make them easy to understand. By the way, we also talk about data visualization and tracking medium data. I encourage you to listen to a great companion show about a medium data online tool called Charting Impact. That show aired the week of June 13, 2011.

Enjoy and embrace this paradigm shift and by all means, share The Overhead Myth letter with your donors.