Forty years of experience have given me lots to think about the challenges facing the nonprofit sector today. During my career, I worked for five nonprofits in the fields of developmental disabilities, aging, and domestic violence; negotiated service delivery contracts with Federal, State and local government agencies; managed devoted staff; recruited generous donors and board members; and served clients whose lives were forever changed for the better. But the jury is out as to whether relatively small nonprofits can survive in today’s economic, social service environment.
Many books have been written, lectures presented, and debates held since 2008, when funding for nonprofits plummeted. People rationally and articulately argued for business models that included collaborations, partnerships, and (the dreaded) merger or acquisition. At the same time, we saw nonprofits circle the wagons, beef up their fund development staff, and commit to sticking it out independently. This approach certainly has a rational basis as well.
Nonprofits create and maintain a unique social space, some focused on issues and constituencies that otherwise would not receive attention. For clients whose individual complex of needs doesn’t fit neatly into publicly funded categories, nonprofits are, in many cases, the sole providers addressing their needs. For individuals who understand the role and impact these organizations have, and who want to volunteer to be a part of the solution, nonprofits enable them to spend time with clients, provide pro bono assistance, write grants and staff fund raisers, serve on boards, and act as ambassadors in the local community. These individuals move the agenda and expand the reach of the organization, while attaining personal satisfaction. For staff, motivated by the desire to have a personal role in addressing human needs, the nonprofit environment provides satisfying and impactful employment. And for people who want to share their financial resources to make the world a better place, nonprofits provide a place to donate where donors can see the impact they have made.
There is a palpable, well-earned conceit among nonprofits. Many nonprofits were founded by people who understood the needs of a sector well, identified an unmet need, motivated donors to fund the dream, and accomplished what larger, more "economically efficient" organizations could not. Many founders of nonprofits were personally touched by challenges that motivated them to create solutions to some of society’s most critical issues. The prospect of ceding their individuality, identity, and ability to address specific social needs to a larger, more "economically efficient" organization is chilling indeed!
The challenges of meeting one's nonprofit mission and satisfying all related administrative obligations are daunting at best. An organization must:
- meet the diverse needs of individuals, families, and/or communities (well outside the scope of any single not-for-profit!);
- cover direct service costs, payroll and administrative costs, as well as the cost of fund development;
- comply with multiple regulations of public funding, including maintenance of real estate; and
- maintain qualified boards, invested donors, and the multiple relationships essential to the longevity of the organization.
I've watched too many small nonprofits on the brink of closing over the last six years, face dwindling funds, excessive regulatory environments, and stretched volunteer and donor bases.
The answer for the small nonprofit may lie somewhere between total independence and shutting down, a space we might call interdependence. Interdependence may bring five or more small nonprofits together to share the costs of back office functions. Interdependence might bring providers together to share the responsibilities of real estate holdings, letting them focus more of their daily resources on services. Interdependence might help assemble staff teams that can address problems' root causes, so that outcomes — the holy grail of the nonprofit world — are achieved.
There are already many viable examples of interdependence among nonprofits that have successfully maintained individuality, expanded reach, and stabilized partners while moving shared missions toward robust outcomes. These give me great hope for the future of the nonprofit landscape, ensuring the protection of its unique and valuable social space. But I sometimes wonder: will nonprofit leadership embrace interdependence on a broader scale, and if so, how long will that take?