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Too Many Nonprofits?

April 28, 2010

How did I find myself on the side of the negative-Nellies who say too many nonprofits are competing for too few resources?

The age-old debate continues: Are there too many nonprofit organizations?

My usual reaction to this question is to pull out my soapbox. The routine goes something like this: “Too many nonprofits? No way! As long as passionate, creative people are identifying community needs (or assets to build upon), they will create nonprofits to meet those needs. Nonprofiteering is democracy in action, people taking care of their own families and communities, leveraging public and private resources for a shared goal. From the smallest grassroots groups to the largest NPOs and NGOs, nonprofits are an effective way people gather around shared interests. Nonprofits are tools Americans use to figure out how to do the important work that government and business either CAN’T do, or WON’T do.”

That was my first response when I saw the latest Chronicle of Philanthropy resurrecting the old question. But the Chronicle added a new twist: It attributes 2009’s more than 46,600 (!) new US nonprofits in part to…wait for it…unemployed folks trying to create jobs for themselves.

Pardon me? This is where MizInformation puts on her skeptical face. How did anyone get the idea that starting a nonprofit is a good way to create a job for yourself? Every founder I’ve known has worked hard (sometimes at multiple jobs) for several years to support their new charitable venture. Like a business start-up, nonprofits can take up to five years to break even.

But “nonprofits are the answer” seems to be a perennial refrain. For example, last month I was on a panel of several nonprofit leaders talking with a bunch of very bright, creative and passionate graduate students at the North Cascades Institute. Most of the students wanted to know, “How do I start a nonprofit?” Really, most of ’em. We took a poll. Like 90% want to start their own NPO.

To my surprise, I replied, “For Pete’s sake, DON’T!” I was probably wearing my skeptical face.

So, how did I, an unrepentant nonprofit cheerleader, find myself on the side of the negative-Nellie pundits and foundations who say too many nonprofits are competing for too few resources?

By looking around. Here in my community, nonprofits are shedding programs, staging mergers and some are closing their doors for good. It’s sad. Great groups, important missions. Now, low-income pregnant moms and homeless youth have fewer options, and in some cases none. The good news? Hard times have spawned cross-sector creativity, collaborations and better use of resources. If old models didn’t work, this is the opportunity to try new ones. Unfortunately, some people may suffer as the community re-groups and tries again to meet those needs in new (and, we hope, more effective) ways.

This isn’t an academic exercise for me. One of the organizations I serve currently is going through a radical restructuring. Board, staff and funders have had to make hard decisions. We transferred one program to another nonprofit that has a more efficient business model. I’ve laid off great employees, as well as part of my own position. Closure has been an option on the table for several months. So why do I think changes like this can be a good thing? The board has refocused its vision and mission, which has made all the difference. The organization’s key niche now is clear, so the conversation has shifted from “how do we save the organization” to “how do we create the change we want to see in the world“? For two years, the time has been right to restructure, but this group of partners needed external financial pressure to look for innovative ways to achieve their common goal. Bottom line: It’s not about the nonprofit; it’s about the community. Whether we thrive or die, that’s the bottom line of every nonprofit.

At that panel discussion last week, I urged the North Cascades grad students to try every avenue possible BEFORE founding their own nonprofit. Could your great idea fly as a pilot of an existing organization with a similar mission? Try asset mapping to be absolutely sure you’re not creating redundancy or “filling a need,” but rather you are building on the community’s existing strengths. Could you operate as a fiscal sponsorship of national or local like-minded nonprofit while testing the viability of your business plan? Or try another tactic entirely: Could your big idea fly as a for-profit social venture?

Yes, of course: Some of the most brilliant community-change innovations have yet to be made by today’s and tomorrow’s nonprofit entrepreneurs. I love that we have leaders like Robert Egger pushing for “.orgs to be the next .coms.” But seriously, 46,600 new nonprofits in 2009? Good thing the Chronicle also has a regular reality check on “Staff and Budget Cuts at Nonprofit Organizations: A Sampling.” Yes, one of my soapboxes is that nonprofits are democracy in action. Yet even MizInformation has to admit that just having MORE nonprofits isn’t enough. We also need better, smarter, and more collaborative nonprofits.

How do you think we can grow outrageously creative community innovations, without launching an endless stream of nonprofit orgs?

3 Comments leave one →
  1. October 5, 2011 11:56 am

    Great point, Hildy! I’m so glad you focused in on that quote, because the other half is “philanthropic passion.” This is the GOOD reason to start a nonprofit, right? A community gathers around a need or passion and does something about it. I just hope folks do their due diligence, and see how their endeavor can contribute to rather than deplete that community’s resources. Sometimes starting a new org makes the pie bigger for everyone, but sometimes it just carves out a new slice.

  2. October 4, 2011 4:33 pm

    All the arguments on both sides are valid and create much food for thought. One point of fact, though, regarding the Chronicle’s suggestion that people are forming organizations to create gainful employment. Here is specifically what the Chronicle noted: “Some anecdotal evidence suggests that a significant number of laid-off workers are considering creating a nonprofit group for gainful employment or to fulfill a philanthropic passion.”

    If I provided those words to a funder as evidence that my project worked, I’d likely be encouraged to take a course in measurement. “Some anecdotal evidence” and “considering creating” (not that they are part of the 46,000 who HAVE created, but are merely considering it…) sounds to me like 3 reporters making snide comments over beers…

    Thanks, though, for the rest. Thought-filled and thought-provoking stuff!


  1. Where to Start a Nonprofit «

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