Why do Mission Agencies Charge Overhead Fees?

One of the most frustrating things about raising financial support is often the amount of money that missions agencies place on top of the amount you need to raise for life and ministry in your target country. Have you considered the cost of missions? Agencies put a variety of names on this amount of money – overhead, assessment, etc. – but, let’s be honest, it is generally a “tax.” An agency taxes its workers to help pay for its operation.

If we think of in this way, as hard as it is, it all actually makes more sense. A government taxes its people to be able to operate and provide leadership, protection, and care. We may not always agree with how the money is spent, but we all realize that some taxation is necessary for the nation to survive.

Size Does Matter

Money is needed for agencies to survive, too. The amount an agency charges depends on many factors. Three common ones are 1) size of the agency, 2) funding sources, and 3) services offered.

Very small agencies do not have a very high operational cost, because they probably don’t have an office, many (or any) employees, and likely don’t offer many services to their ministry family. Very large agencies have huge operational expenses, but can spread those expenses over 100s, if not 1000s, of workers, making the individual load lighter. They also often have a larger number of partnering foundations or major donors who may help pay for their general operational costs.

The agencies in the middle are the ones who struggle most in this area. They are large enough to have an office with employees who are paid salaries. They offer a variety of services beyond receipting donations (such as training, member care, or prayer letter publishing). These organizations may not be large enough, though, to spread their costs out enough to lower the individual burden, or to draw the attention of major donors or foundations for general needs. These “middle class” agencies end up having to charge higher “taxes” from their workers to support their overall, global impact.

Contractor vs Employee

A factor not often considered is the type of organization that the agency is in the eyes of the IRS. Some agencies are, in a sense, co-ops of self-employed individuals. Their workers contract with them to do a “job,” but are on their own for raising and spending money for life and ministry. Many of the “extras” are kept optional – they can be used at the discretion of the worker, depending on the money available and their need for particular services. These agencies tend to charge lower overhead taxes. Other agencies are seen by the IRS as an employer. Employer agencies actually hire their workers and commit to a salary and benefits, regardless of the money that comes in for their support. This “security” of monthly income and added benefits usually comes at the price of a higher overhead amount.

So, What is the Cost of Missions?

So, how much money are we talking about here, in general terms? Small and very large agencies can often keep their overhead costs in the vicinity of 8% to 10% of what their people are raising. That seems understandable, as it is similar to the tithe placed by God on the people of Israel to keep the priesthood running. Mid-sized agencies have to charge their people between 12% and 18% depending on the factors above. Breaking it down into dollars and cents, for a $4500/month support requirement (family of 4 going to a country with a moderate cost-of-living), a smaller/larger agency may require around $400/mo in “taxes.” A mid-sized agency would need to charge around $700/mo.

Remember to Pray for Direction and Provision

If you are considering cross-cultural work and partnering with an agency to do so (which we would recommend), we would suggest that you ask multiple questions about how money is handled. Make sure you ask and compare not only what is included in the overhead cost required, but what is NOT included. Match up those facts with your needs, values, and priorities as a cross-cultural worker or family, and factor that into your decision. Remember that who you partner with should be directed by God, just as much as your decision to get involved in the first place. If God is directing you to a more expensive agency, trust him to provide the extra money needed.


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