Different types of nonprofit organizations have different cost structures.
Flat and too low overhead rates, regardless of the nonprofit profile, hamper nonprofits’ operational stability, depriving them from the means to invest in essential organizational infrastructure.
At governance level, create the ground for questionable workarounds and fundamental inefficiency embedded in the efforts to fit overheads hurdle rates at the expense of the program impact focus.
A last but not least consequence is the undermining of trust between the actors on both sides of the funding equation.
Sector segmentation, correct terminology and cost classification are essential procedural steps to support a wind of change in funding. Nonprofits must step up on transparency, communication and education efforts on what-it-takes to deliver and accelerate the impact.

Pay-What-It-Takes Philanthropy, Jeri Eckhart-Queenan, Michael Etzel, Sridhar Prasad, May 2016, 
https://www.bridgespan.org/insights/library/pay-what-it-takes/pay-what-it-takes-philanthropy

​
NGOs are trusted because they are perceived as being nonprofit oriented, primarily helping to improve lives and reduce inequality. NGOs are, however, very diverse in terms of mission, goals, financial and organizational strength, operational vision and rigor, willingness and ability to demonstrate transparency and accountability. Public trust of NGOs comes from two main sources: performance and accountability. By performance is meant the useful social value placed on projects, which support positive and enduring change. With their increasing role in service delivery, NGOs must adopt more business practices, strengthen their management structures, become more enterprising and innovative, all whilst providing ‘better value’ for money. To maintain accountability at the standard now expected by most donors, NGOs must engage in a substantial amount of financial and programme management, monitoring, evaluation and reporting before, during, and after the end of the project cycle.


The 2015 Edelman Trust Barometer found NGOs were the most trusted among government, NGOs, media and business, but trust in these organizations fell the most over the past year, to 63 % from 66% a year earlier, with levels down or unchanged in 19 countries. [1]
​


Businesses can learn a lot from NGOs’ receptivity to shifts in social values that shape consumer demand. Consumers and stakeholders are increasingly placing a premium on social impact, the territory that nonprofits know best. These shifts provide companies with opportunities for first-mover advantages. Companies should adopt NGOs best practices to build the ability to engage communities around a common cause, promote their strategy with articulated storytelling about the social impact of their products and services, treat the community as a major shareholder to which the business is accountable for delivering value.  

Most businesses produce benefits for society, however the society less and less trusts their strategies and means. Most NGOs deliver social value, however fund providers expect more business-like practices and transparency. Through partnering with NGOs, corporations can leverage the NGOs' greater legitimacy for competitive benefits while NGOs can leverage the business expertise and discipline to secure more sustainable funding.


[1] https://www.statista.com/Informed Public Trusts NGOs Over Media & Government