Are There Too Many Nonprofits, or Too Few?

Are There Too Many Nonprofits, or Too Few?

We read and hear volumes about the growing number of nonprofit organizations, now approaching one million nationally, with consequent warnings of imminent disaster for many.

The causes of the disaster vary, according to source of commentary. Competition for resources is big: there just isn’t enough charitable money to pay for it all. Too many groups asking foundations, corporations and individuals for much more than is available makes difficult choices.

Then there is the claim of overlapping service or uncoordinated outreach, followed by lack of efficiency, thus reduced effectiveness. Underpaid staff almost exploited by mission and rapid turnover of personnel complete this analysis.

Another strong voice is that of the critic who cites scale, the inability to demonstrate impact and the lack of novel approaches to societal need.

And they are all true. Yes, there are too many nonprofits out there, aren’t there?

Solutions have to do with merger and acquisition, with only rewarding scalable ventures, and recognition of the need for more business-like processes, among others.

The Case for More

Proponents point out the social benefit of what these organizations are doing and the need for even more benefit in the society. We need more nonprofits dedicated to social good.

Community organizations staffed by volunteers do lots of positive things that wouldn’t get done. Pride of the local effort is enough to justify existence, given the service, regardless of whether it is either highly efficient or not.

Many of the creative solutions for society’s problems originate in new small nonprofits just setting out. Creativity, ingenuity, novel ideas, major societal contributions often start as an idea.

The “garage” and “storefront” nonprofits are major contributors.

Scale and complexity often serve well in the nonprofit world. Multibillion nonprofit budgets coexist with the mites of smaller groups.

The more the merrier.

Who is Correct?

So who is right? No one, every one. The fact of the matter is that we really don’t have the metrics to know.

Sure, we’re told by foundations to do evaluation, to develop methodologies to measure performance and outcome, even impact on society.

With certain exceptions, e.g. Gates, Rockefeller, little money is included in grants to really gauge impact.

We do have the monetization of the Robin Hood Foundation that offers one of the missing pieces in most evaluations: comparability.

Look at how Charity Navigator is struggling to fulfill its intention to measure impact. No amount of words and cover will mask the fact that they are nowhere near goal.

The Need for Comparability

The fact is that, without comparability, we’re into impressions, opinions, smart talk, PR, positioning, and a number of other ways of demonstrating standing and outcome. However, the empirical solutions are not quite there.

In an earlier piece, here I suggest field trials and other well-known social science and epidemiology research methods to develop the repertoire of measurement variables that can be used.

One test will certainly not fit all, but a series of test variables will start us on our way.

The marketplace has a number of empirical measures, ratios, stock prices and a variety of other metrics to have us determine what may be called the “best performers.”

It’s now time to do the same for the nonprofit sector, not using the above metrics largely based on money, but a larger, measurable set of societal benefit factors against which we could not only compare but which we can use to improve.

Leave a Reply

Your email address will not be published. Required fields are marked *