This is the nut of the problem. We live in a highly entrepreneurial culture which rewards risk and punishes failure. The nonprofit sector is open to all new entrants…and that’s the way we want it. However, we’ve yet to design a mechanism for forcing ineffective nonprofits out of existence.
I call these Zombie Nonprofits….because not only can’t they be killed but they wander around eating the living.
Thanks for the comment and the link to your post—agree 100% with your piece as well. The challenge of forcing ineffective nonprofits out of existence is a real one, since philanthropy is a market driven by emotion and not results. Perhaps the real answer is a new market that is based on performance and outcomes —“impact investing” or whatever the term you wish to use—which looks at funding from the perspective of ROI and not smiles. We will always have philanthropy, and people will always give based on their emotional connection to a cause. But social impact has to be driven by results, and that needs to be fueled by other metrics.
What I’m seeing in the local community, is groups (of twos or threes, primarily) pretending to be setting up organizations. In reality, the groups are simply occasionally talking on the phone or wearing t shirts that match. There is no Board Development. There’s no funding plan. There isn’t a program - rather a bunch of ideas this or that individual likes, that may or may not get done. And should a grantor provide funding, then it’s what that donor says, that gets done. In other words, there is no actual mission or vision. In a couple of years (sometimes less) these “groups” disintegrate. So anyone who relied on them to promote real change, loses out.
On the other hand, while they exist, they also help prevent big changes being accomplished, by others with organizations. They do this by dividing up the funding pie into such tiny slices, that no entity can finance a big enough risk. They also confuse donors to no end—which group is supposed to be doing what? Who do you call, when? Did you just make a gift to group A, or was it really group B?
I have tried to encourage recruitment of people for boards. I’ve tried to talk about local associations that offer workshops and training. I don’t have letters after my name, however, and struggle in the same milieu, and so everyone keeps TALKING about collaboration, but nothing really happens.
Thanks SSIR, for bringing this kind of issue to the fore!
Think about this line, failure is a vital element of a successful marketplace… Then think about how our government, by tax subsidies and bailouts and rigged rules keep many businesses open.
To think the non profit should then follow differnet rules seems unrealitstic given America’s economic structure.
In addition to non-profits being allowed (forced?) to fail we need to create incentives to encourage non-profits with similar or adjacent missions to merge their activities. In Boston, we have an extremely weak developed non-profit sector. While this is a good thing, it also means that we have many organizations doing the same thing in the same community. This is a waste of limited resources and is confusing to funders.
In the private sector the incentives would be to merge businesses for “economies of scale”. In the non-profit sector these incentives don’t exist and there are actually negative incentives for ED’s and board members to merge.
I believe that it will ultimately be the role of funders to apply discipline around this matter.
COMMENTS
BY Michael Brand
ON June 6, 2015 09:47 AM
Finally, more nonprofits need to fail
This is the nut of the problem. We live in a highly entrepreneurial culture which rewards risk and punishes failure. The nonprofit sector is open to all new entrants…and that’s the way we want it. However, we’ve yet to design a mechanism for forcing ineffective nonprofits out of existence.
I call these Zombie Nonprofits….because not only can’t they be killed but they wander around eating the living.
http://michaelbrand.org/the-problem-of-zombie-organizations/
BY Ken Davenport
ON June 8, 2015 10:28 AM
Michael—
Thanks for the comment and the link to your post—agree 100% with your piece as well. The challenge of forcing ineffective nonprofits out of existence is a real one, since philanthropy is a market driven by emotion and not results. Perhaps the real answer is a new market that is based on performance and outcomes —“impact investing” or whatever the term you wish to use—which looks at funding from the perspective of ROI and not smiles. We will always have philanthropy, and people will always give based on their emotional connection to a cause. But social impact has to be driven by results, and that needs to be fueled by other metrics.
BY Linda
ON June 9, 2015 01:27 PM
What I’m seeing in the local community, is groups (of twos or threes, primarily) pretending to be setting up organizations. In reality, the groups are simply occasionally talking on the phone or wearing t shirts that match. There is no Board Development. There’s no funding plan. There isn’t a program - rather a bunch of ideas this or that individual likes, that may or may not get done. And should a grantor provide funding, then it’s what that donor says, that gets done. In other words, there is no actual mission or vision. In a couple of years (sometimes less) these “groups” disintegrate. So anyone who relied on them to promote real change, loses out.
On the other hand, while they exist, they also help prevent big changes being accomplished, by others with organizations. They do this by dividing up the funding pie into such tiny slices, that no entity can finance a big enough risk. They also confuse donors to no end—which group is supposed to be doing what? Who do you call, when? Did you just make a gift to group A, or was it really group B?
I have tried to encourage recruitment of people for boards. I’ve tried to talk about local associations that offer workshops and training. I don’t have letters after my name, however, and struggle in the same milieu, and so everyone keeps TALKING about collaboration, but nothing really happens.
Thanks SSIR, for bringing this kind of issue to the fore!
BY Laura DeVriendt
ON June 12, 2015 06:24 AM
Think about this line, failure is a vital element of a successful marketplace… Then think about how our government, by tax subsidies and bailouts and rigged rules keep many businesses open.
To think the non profit should then follow differnet rules seems unrealitstic given America’s economic structure.
BY Jeffrey Kushner
ON June 30, 2015 01:07 PM
In addition to non-profits being allowed (forced?) to fail we need to create incentives to encourage non-profits with similar or adjacent missions to merge their activities. In Boston, we have an extremely weak developed non-profit sector. While this is a good thing, it also means that we have many organizations doing the same thing in the same community. This is a waste of limited resources and is confusing to funders.
In the private sector the incentives would be to merge businesses for “economies of scale”. In the non-profit sector these incentives don’t exist and there are actually negative incentives for ED’s and board members to merge.
I believe that it will ultimately be the role of funders to apply discipline around this matter.