Doing More With Less Is Not a Strategy

There’s a phrase repeated in this sector like it’s wisdom. Do more with less.

It shows up in board meetings, grant reports, and staff pep talks. It’s meant to sound resourceful. Mission-driven. Scrappy in a good way.

In business, the logic is straightforward: when you face a shortfall, you either make more money or reduce costs. But making more money usually requires spending some money first. That’s not controversial anywhere else.

In the nonprofit sector, it’s nearly heresy. And I’ve long suspected “do more with less” was less a strategy than a fallacy we’d all agreed to repeat.

It turns out there’s research on exactly that.

“Do more with less” isn’t resourcefulness. It’s the middle of a documented cycle that slowly starves organizations.

The Nonprofit Starvation Cycle

In 2009, Ann Goggins Gregory and Don Howard published research in the Stanford Social Innovation Review naming the pattern.

It runs in three steps. Funders hold unrealistic expectations about what it costs to run a nonprofit. Nonprofits feel pressure to conform to those expectations. And nonprofits respond by spending too little on overhead — and underreporting what they do spend, which reinforces the original unrealistic expectations.

The researchers describe the result plainly: over time, funders expect grantees to do more and more with less and less.

That’s the phrase. Sitting inside the research, describing a cycle that harms organizations. Not wisdom — a symptom.

What Underinvestment Actually Costs

The follow-on research is direct about consequences. Lowering overhead hurts financial capacity, increases financial vulnerability, and reduces an organization’s resilience to changing conditions. Underinvestment also inhibits organizational learning.

And the reverse holds. Organizations that invest in capacity — technology, financial systems, skills development, fundraising — are more likely to succeed, not less.

Which means the sector-wide instinct to prove virtue through thinness is working against the outcomes everyone says they want.

Why This Is So Hard in Practice

Here’s where I want to be careful, because it would be easy to make this sound like nonprofit leaders simply don’t understand investment. That’s not what’s happening.

The research locates the first step of the cycle in funder expectations — not in nonprofit ignorance. Leaders are responding rationally to what they’re rewarded for. A 2012 Grey Matter Research poll found donors believed a charity shouldn’t spend more than 22 percent of its budget on overhead. When your funding depends on looking lean, looking lean is survival.

There’s a second, harder piece. Diverting money away from a program — even temporarily, even to fund the thing that would generate more money for that program — feels like taking food off someone’s plate. That’s not a failure of business sense. That’s a moral instinct doing exactly what it should.

Naming this honestly matters. The constraint is real. The people inside it aren’t confused.

What You Can Actually Do

You can’t fix funder expectations from inside one organization. But there are moves available.

Name investment as investment when you talk about it. Not “overhead” — the thing that generates the revenue that funds the program. Language shapes how a board hears the request.

Pursue unrestricted funding deliberately. It’s harder to secure, because donors like seeing exactly where money goes. But unrestricted dollars are the only ones flexible enough to build capacity with.

Start with one small, measurable investment. Not a restructure. One thing — a tool, a training, a few hours of dedicated time — where you can track what came back. Evidence from your own organization persuades a board better than any research paper.

Stop something. If new investment truly isn’t possible, the honest alternative isn’t stretching further. It’s doing fewer things well. Name the activity that costs more capacity than it returns and let it go.

The Bar Isn’t Lowering

Doing fewer things well isn’t lowering the bar. It’s refusing to participate in a cycle that has a name and a documented cost.

Your team’s capacity isn’t an unlimited resource to be optimized. It’s the actual engine of your fundraising. Protecting it is strategy — and the research is on your side.

If you want to walk through the roadmap with me, the free Roadmap Class is a good next step. Join here: https://class.nonprofit411.org/fundraising_roadmap-440406

A few questions worth returning to:

• What is one activity that costs your team more capacity than it returns?
• Where might one small, measurable investment produce evidence your board could see?
• Is your organization pursuing unrestricted funding as deliberately as restricted?

Sources: Ann Goggins Gregory and Don Howard, “The Nonprofit Starvation Cycle,” Stanford Social Innovation Review (2009). Additional research on overhead and organizational capacity: Altamimi and Liu, Nonprofit and Voluntary Sector Quarterly (2022); Grey Matter Research donor poll (2012).