Overhead Isn’t a Myth. It’s a Trap.

The overhead debate never really goes away. It lingers in the background—quiet but persistent—ready to surface whenever someone wants to stir emotion or make the case for spending more boldly. The argument is tempting: Why shouldn’t nonprofits pay staff better, invest in infrastructure, or market like they mean it? What nonprofit employee wouldn’t nod along at first glance? It feels like common sense, even justice. Yet, for all its intuitive appeal, the argument hasn’t freed us; it’s only made the trap harder to see.

Dan Pallotta helped give voice to this frustration. His TED Talk, The Way We Think About Charity Is Dead Wrong, named the double standards nonprofits face: punished for spending, shamed for scaling, and denied the tools to pursue transformational work. His message resonated for good reason—it made a generation of nonprofit leaders feel seen. Yet here we are, more than a decade later, still explaining why paying a decent salary or investing in donor relationships isn’t a moral failure. The argument hasn’t moved the needle. If anything, the backlash has evolved faster than the reform.

That’s because we’ve misunderstood the problem. The overhead debate isn’t just a myth that needs correcting; it’s a trap that emerges from the wrong frame — one rooted in the logic of the market where value is measured by cost-efficiency, not care; and trust is earned by cutting corners, not building relationships. As long as we keep trying to win inside that frame, we will keep losing. Because, once you accept its terms, the game is already rigged.

The Cheap Steak at Waffle House

I’ve eaten my fair share of steaks at both Waffle House and fine steakhouses. Waffle House calls it a steak. It even tastes like steak. But no one in their right mind would compare it to a perfectly aged, meticulously prepared cut served at a high-end restaurant—at least not if they understood what made it meaningful. You can compare them, sure. But one will always win, depending on the criteria you choose. And that’s the point: the outcome isn’t about the quality—it’s about the frame.

That’s exactly how the overhead conversation works. Once you accept cost-efficiency as your primary metric, depth, care, and relationship will always lose. Just like the cheap steak, the logic of “lean” and “low overhead” sounds appealing—until you realize it flattens everything that actually matters. It asks us to serve generosity fast, strip out anything that feels “wasteful,” and still call it impact. And, if we resist, we're seen as irresponsible; inefficient; or, worst of all, indulgent. The frame sets the rules, and the frame is market logic.

We’ve been trying to make a case for generosity using the tools of the marketplace. But you can’t measure trust in a cost-benefit analysis. You can’t benchmark presence or scale belonging. And, when we try—when we chase the approval of market logic—we end up comparing the sacred to the mass-produced. It’s Waffle House logic applied to the gift. It might fill the plate, but it leaves the table empty.

Giving the Wrong Frame More Legitimacy

The overhead myth won’t go away because we keep fighting it on its own terms. We try to debunk it with data. We point out how little overhead actually correlates with impact. We make a case for why infrastructure is vital or why executive pay should be competitive. And, in doing so, we keep giving the frame more legitimacy. Every time we justify our spending, we reinforce the idea that generosity needs to be defended in market terms. We’re not escaping the trap; we’re building better arguments inside it.

The logic goes like this: if we just explain it well enough, people will get it. If we show the return on fundraising or prove that “waste” is actually investment, we’ll win donors over. But that logic assumes the frame is rational, and it’s not. It’s emotional. It’s cultural. People don’t resent overhead because they misunderstand the numbers. They resent it because they’ve been taught that good giving should look selfless, simple, and direct. So, when we respond with charts, metrics, and cost ratios, we confirm their suspicion that something sacred is being turned into a business.

This is why the overhead myth is more than a misunderstanding. It’s a frame—a worldview that organizes how we think about value, virtue, and what generosity is supposed to look like. And, when you fight a frame from inside, you lose by default. You feed it energy. You make it real. You keep trying to win a debate that was never neutral to begin with. The only way out isn’t better evidence. It’s a different story, a different logic, a different way of seeing what the gift actually is.

Fixes Confined to Marketplace Logic

Pallotta didn’t invent the overhead debate, but he gave frustrated nonprofit leaders a bold new script. His five core arguments—about compensation, marketing, risk, time, and capital—hit hard because they named real constraints. Why shouldn’t nonprofits be able to pay competitively, invest in visibility, take risks, grow patiently, and access serious capital? For those of us who had long felt boxed in by scarcity thinking and martyrdom culture, Pallotta’s framework felt like freedom. Finally, someone was fighting fire with fire—pushing back against unrealistic expectations by asking the sector to think bigger.

But here’s the problem: the logic beneath Pallotta’s fixes was still confined to the marketplace. His argument was the feel-good, fundraiser-facing side of philanthro-capitalism, strategic philanthropy, and effective altruism—each a late-stage capitalism fix designed to soothe market fundamentalists without ever questioning the frame. It offered moral permission to play a rigged game rather than a way out of it—license to spend more, but only if we could justify it in performance terms. That’s not liberation. That’s assimilation. It didn’t challenge the false economy; it completed it.

And, once that logic takes hold, it doesn’t stop with spending. It shapes everything. We start designing programs for legibility, not depth. We tell cleaner stories. We avoid ambiguity. We optimize everything that might otherwise require trust, patience, or nuance. The overhead debate becomes a proxy war for a deeper distortion: a sector that starts to mimic the very institutions it was meant to disrupt — a gift reshaped to fit a ledger.

Reading Between the Lines

I say this, not as a distant critic, but as someone who was once genuinely energized by Pallotta’s message. I remember seeing him speak at an event hosted by a nearby community foundation and thinking, admirably, that someone was saying what we’d all been feeling. I cited him in my book. I shared the TED Talk with colleagues. I believed that, if we could just explain the contradiction between what we’re expected to accomplish and what we’re allowed to spend, we could win the argument. For a while, it felt like we were finally pushing back.

But, by the time his film came out—and I was asked more than once to engage with it—I had learned to read between the lines. Yes, the system was unfair. But, instead of challenging that system, we were asking for a bigger seat at its table. Pallotta wasn’t critiquing the rules; he was showing us how to play nicely within them. It was a playbook made for a neoliberal era: one that worships at the throne of the market, is obsessed with scale, captivated by growth, and convinced that return on investment is the ultimate proof of salvation. That’s why the message resonated. It didn’t disrupt the dominant logic; it spoke it fluently.

But that’s also why we can’t win the fight he framed. We’re not battling Walmart over commodity prices. We’re not selling shoes, and we’re certainly not trying to confuse a cheap steak with the kind of meal you never forget. We’re doing messy, relational, deeply human work—the kind that doesn’t show up cleanly in a quarterly report. And, the more we try to play by market rules, the more we betray the very thing we came to protect.

Pallotta Helped Create a False Economy

The false economy Pallotta helped create doesn’t reward the most relational, community-centered, or trust-driven work. It rewards those who commodify the gift—those who tell simple stories, reduce outcomes to metrics, and run fundraising like a finely tuned machine. These organizations are seen as high-performing, efficient, scalable. They pass the test, not because they’re more generous, but because they’ve learned how to translate their work into the grammar of market logic. And the sector keeps applauding them for it.

Meanwhile, the groups doing the slow, deep, relational work often get left behind. They’re the ones whose outcomes aren’t linear, whose results can’t be easily quantified, whose models aren’t built for mass consumption. They’re doing the real work: building trust, repairing harm, standing alongside people in complex situations. But, because they don’t perform well in cost-benefit terms, they’re seen as risky, inefficient, or hard to fund. These are the ones for whom, no matter how decisively the overhead debate is “won,” it will never be won enough. They fail the test, not because they’ve lost their way, but because they’ve refused to compromise what the gift sets out to do.

And it’s not just practitioners who lose. Donors do too. They’re sold a version of generosity that feels productive but ends up shallow—easy to measure, easy to celebrate, but hard to connect with. They never get to experience the messiness, vulnerability, or transformation that real giving invites. Instead of becoming participants in a shared story, they become customers of a branded cause. The result? A sector that looks busy and polished on the surface but hollow underneath — full of movement, but devoid of meaning. And then we wonder why their commitment stalls, why they don’t renew, why they hesitate to give more. Why should they? They’re getting what they paid for: something fast, cheap, and low-commitment.

Misplacing the Logic of Tax and Commodity

This same flawed rationale appears in how we interpret the role of private foundations. Increasingly, we expect them to act like public institutions—funding infrastructure, subsidizing safety nets, stepping in where government has pulled back. It’s comforting logic, especially for those who believe in state responsibility; but it’s dangerously misplaced. Foundations may act like public agencies, but they remain private institutions. They control private wealth, answer to no electorate, and hold no authority to tax or redistribute on behalf of the people.

When we rely on foundations to do what governments no longer will, we don’t just shift responsibilities—we shift the basis of accountability. We replace democratic voice with strategic discretion, turning public need into private initiative. This deepens the false economy: we tell ourselves the gaps are being filled when, in fact, the definition of a gap is being rewritten—shaped not by public will, but by private judgment. What once belonged to all of us becomes conditional. The gift loses its grounding in mutuality. The public loses its claim to shared responsibility. And we’re left with institutions that wear the language of service but serve no one they’re obligated to.

When The Frame Becomes a Trap

Pallotta’s framework gave us the rationale to spend more on the things we were always told to scrimp on—like salaries, marketing, or infrastructure. But it came with a catch. In order to justify those investments, we had to speak the language of Walmart: cost-benefit, return on investment, performance-based decision-making. And, once that logic is in the system, it spreads. What began as a strategy for defending overhead becomes a blueprint for managing everything.

We start optimizing for efficiency instead of meaning. Donor stewardship becomes a loyalty program. Programs are redesigned for visibility, not depth. Storytelling becomes branding. Relationships become pipelines. It all starts to look very polished—high-performing, strategic, scalable. But it’s not generosity anymore. It’s retail. It’s just Waffle House in a mission-driven wrapper: quick service, predictable portions, no room for nuance.

And that’s the trap. The more we act like Walmart to justify ourselves, the more we become Walmart—at least in the eyes of the people we serve, the funders we court, and the communities we’re supposed to walk alongside. And, once we’ve reshaped the gift to behave like a commodity, it starts to obey all the rules of the market: extractive, selective, and transactional. It looks like we’ve leveled the playing field. But, really, we’ve made the work easier to sell and harder to believe in.

Is the Logic of the Gift More Difficult?

Of course it’s harder. Market logic gives us rules, templates, benchmarks. It gives us something to point to when we’re challenged. It gives us the illusion of security. A new frame—one grounded in the logic of the gift—doesn’t come with neat metrics or guaranteed returns. It asks us to trust what we can’t fully measure. It asks us to build relationships instead of pipelines, to stay present instead of scaling up, to create meaning instead of managing optics. And that’s terrifying in a sector that’s already stretched thin.

It’s also scarier because the gift isn’t neutral. It’s vulnerable. It demands reciprocity, not just performance. It asks leaders to show up with clarity, not just strategy. And it asks donors to do more than give—it asks them to stay and risk being changed. That kind of work is messier, slower, and far less efficient than what market logic rewards. But it’s also where the real transformation happens, not just for the recipient, but for everyone involved.

We don’t trust the gift because we’ve never been taught to. We trust taxes. We trust commodities. We trust the systems we can price, bill, track, and audit. The gift resists all that. It doesn’t obey supply and demand. It doesn’t scale predictably. It’s not a lever you pull; it’s a relationship you enter. And, unless we’re willing to leave the comforts of Walmart and Waffle House behind, we’ll keep missing it.

Leaving Waffle House and Wal-Mart

We keep calling it generosity. It even tastes like generosity. But, too often, it’s been engineered to be fast, cheap, and easy to measure. It’s generosity shaped to look good in a dashboard or development report. That’s Walmart and Waffle House logic—efficient, predictable, familiar. But the gift was never meant to be any of those things. It was meant to bind us together; to hold tension; to move freely; and, most of all, to mean something.

The gift wants to afford us more freedom than we can imagine. But we don’t understand it, and we certainly don’t trust it the way we trust the tax or the commodity. So we try to control it. We hedge against its unpredictability. We wrap it in logic that feels safer: metrics, optics, ROI. And, in doing so, we reduce it to something it was never meant to be. We manage generosity instead of receiving it. We measure it instead of honoring it. We flatten it to fit a frame that was never meant to hold it.

Overhead isn’t a myth. It’s a trap. And Walmart and Waffle House is the frame we have to leave behind. If we want to protect what matters most about this work, we can’t keep asking the gift to behave like a bargain. We have to build a new frame—one that starts with trust, ends in relationship, and refuses to apologize for being deeply, beautifully human.

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Jason Lewis

, Founder, Responsive Fundraising

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