P O S T E D B Y A L B E R T
Are there too many nonprofit organizations in the United States? This question invariably produces in me a mental cramp.
There’s typically so much confusion and ideology rolled into the question, that it’s better discussed over an ice-cold beer and a bowl of salted nuts. The short answer is, “By what metric?” The longer answer requires some careful unpacking of assumptions.
This question is often asked by a funder concerned about the proliferation of nonprofit organizations in a given geographic region or field of interest (e.g., environmental advocacy). He raises the question because he worries that there’s too few charitable dollars to support an ever-increasing number of organizations. Isn’t there too much overlap in their missions?, he wonders. Shouldn’t more of them consolidate their operations and merge?
Here’s a few things for funders (and nonprofits) to consider:
1. Most charities are charities on paper only. Don’t go by the number of organizations granted 501(c)(3) status by the IRS. They were incorporated by good-hearted people driven by the desire to make a difference in the world. In most cases, that desire didn’t extend beyond the filing of papers with the state attorney general.
2. Charities with real revenue streams are there for a reason. And you might be one of those reasons. A newly incorporated nonprofit organization will coast along on volunteer support for months, even years. Having established a track record, there may come a time when it will turn to the donor community for help with that next step in its evolution. If the charity makes it past this awkward transitional stage, it’s because it was able to convince a large enough segment of the donor community that there was a real need for its services. Who’s to argue with that?
3. Hooking up with an established charity is easier to say than to do. A funder might ask a newly minted nonprofit why, instead of incorporating as a new organization, it didn’t simply join forces with ABC, Inc. and provide services under its aegis, obviating the need for the creation of a new charitable entity.
I remember trying this on several occasions. The conversation with the established nonprofit went something like this:
NEWCOMER: I’d like to do X, Y, and Z under your aegis.
ESTABLISHED NPO: Really? Do you have any experience doing X, Y, or Z? or do you have any funders to support you?
NEWCOMER: No, but I have enormous passion and a lot of great ideas.
ESTABLISHED NPO: Well, then, bugger off.
4. Mergers between nonprofit organizations carry significant opportunity and other costs and seldom deliver the anticipated efficiencies. A full discussion of this topic would turn this into a monograph rather than a blog post. If you disagree, by all means leave a comment. In the meantime, you might want to read this, for starters.
Ultimately, whether or not it’s the best solution for society, the market will decide. It’s us individual donors, and it’s institutional funders and other rainmakers who will or will not open their purses for a given charity. Won’t we simply end up voting with our dollars?
Whatever the role of the nonprofit marketplace in deciding this question, we need to be responsible with the advice we give would-be nonprofits. We should exhort them to consider becoming a program of ABC, Inc. rather than a separate organization. We should remind them of the challenges of establishing, running, and sustaining a charitable entity in the increasingly crowded nonprofit marketplace. And we should encourage them, if at all possible, to continue doing their work on a volunteer basis or to explore alternative models, like the Tides Center.
But beyond that, how far should we go to stifle an exuberant desire to address a clearly articulated social need?
I offer the above as an answer to one variant of the original question, “Are there too many charities?” A more interesting version of this question, in my view, is addressed by Gerard Alexander in a recent Weekly Standard article. Mr. Alexander worries over the effect of a large Independent Sector on the national character and economy. He clearly has a flair for the dramatic as he implicates the nonprofit sector in “the New Left’s long march through our national institutions.”
Does he make a strong case? That, dear reader, must wait for another post …