As a society, we tend to think that more of something is better: more food, more jobs, more choices, more apps on your iPhone.
However, in the nonprofit community that is not always the case. When there are too many nonprofits, the result is often Duplication of Services, Donor Fatigue, and waste.
That is the situation we face in Gaston County. The problem is two-fold.
Firstly, the excess number of nonprofits means that many nonprofits provide the same basic services to the same groups of people, leading to an inability of any one or two organizations to grow, expand and innovate; it also leads to waste.
Secondly, Gaston’s nonprofit sector is expanding at a pace that doesn’t allow donors to keep up with the fundraising demand; that leads to Donor Fatigue.
That doesn’t mean that the nonprofits in Gaston are doing bad work. Every nonprofit that I have worked or met with in Gaston has a big heart for service, and the desire to make Gaston County a better place for the people they serve. And every nonprofit in Gaston County will tell you how their organization is slightly different than others that provide similar services.
There are some cases where having multiple nonprofits in a field makes complete sense. Nonprofits with billable services are a great example, because billable services provide an additional stream of revenue than traditional nonprofit fundraising. Billable revenue is unrestricted, and therefore can offset things like admin and costs for an organization.
However, there are many cases in which a crowded field can hurt nonprofits in a sector, and ultimately lead to decreased quality of service to people in need.
Sadly, most nonprofits in Gaston County cannot reach the necessary scale to have the impact they desire. They may grow just big enough sustain operations, or to be able to do some level of good work. But in the end they just struggle to keep their heads above water, and are constantly worrying about whether they can get enough donations or grants each year to keep their doors open and staff paid. The problem is that the more resources our community pours into duplicated services, the less resources we have to build capacity in programs with solid business models and innovative services.
In business, and the for-profit sector, there is a natural incentive to reduce duplication and waste. Smaller organizations with limited capacity sell to larger companies. The benefit in business to de-duplication is economy of scale.
For nonprofits, the opposite occurs. Executive Directors don’t want to have to look at their Board and suggest that maybe the long-term solution is to combine resources with another organization. That could mean losing or eliminating jobs or staff positions, or being less free to run an organization the way that they would like to. Nonprofits rarely voluntarily dissolve or merge unless faced with a crisis. The problem is that a nonprofit in crisis becomes toxic, and can harm an organization that absorbs it. Normally the end result is two bad decisions for the community:
1. Let the nonprofit fail and pick up the pieces afterwards, which is hard on the people who have come to rely on services from that nonprofit.
2. Rescue the nonprofit through one-time injections of capital, which takes a lot of community resources and most often doesn’t fix the systemic problems that led to the organization’s crisis in the first place.
What’s the solution to Gaston’s nonprofit problem? The solution must be a community effort to change our nonprofit landscape.
Nonprofits, especially those struggling with funding each year, will need to examine their own capacity and services to determine if their organization is in a field with duplication. Then they need to have the tough conversations with other nonprofits to see if combining resources makes sense.
Donors will have to be more selective when giving, and give to programs that are actively working to reduce duplication in the community. Donors will also have to accept that a healthy nonprofit will have administrative and capacity costs.
Foundations and funders, like my organization, will have to take the lead and be more selective in the grant process in requiring that programs show how they are not duplicating services, and how they are creating solutions to problems instead of sustaining problems. Gaston’s nonprofits must get into the problem-solving business.
Ultimately, this community conversation will need to be followed by action. We owe it to the people we serve to have the strongest nonprofit community that we can provide.
Director of Development and Marketing
United Way of Gaston County