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In their seminal article, “Nonprofit Starvation Cycle”, Ann Goggins Gregory and Dan Howard exhort nonprofit finance professionals to report to funders the real costs of running nonprofit organizations.

The authors explain that the popular trend to restrict funding to specific programs without accounting for infrastructure expenses leads to an unintended consequence, a “nonprofit starvation cycle”, where charities cease to function because they can’t pay for overhead costs, such as administrative employees, computers and electric bills. To break this unhealthy cycle, the article encourages nonprofits to recalibrate funder expectations by providing accurate financial reports and other supporting information to reflect the true costs of nonprofit operations.

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