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Nonprofits: Nonprofit Growth

The call from a few years ago to grow your nonprofit has changed to survive and collaborate with one another. Some have already suggested that there are too many nonprofits doing the same thing.

More than 100,000 nonprofit groups nationwide will fail within the next two years, including a few "big brand-name nonprofits," a scholar of philanthropy and government told charity leaders assembled here to discuss the fallout from the nation's financial meltdown. Paul C. Light, a professor of public service at New York University, said that grant makers and others should focus resources on strong organizations and pull the plug on those that are likely to fail.... Collaboration is the key to strengthening charities and keeping struggling nonprofit groups afloat, said New York Secretary of State Lorraine Cortes-Vazquez.... "Organizations do not fail because of the service they offer," she said. "They fail because they don't have administrative capacities." Sharing back-office functions, she said, could take the burden off small and mid-sized charities, allowing them to focus their energy on serving the needy.

NOVEMBER 27, 2008, 100,000 Nonprofit Groups Could Collapse in Next Two Years, Expert Predicts, by Paula Wasley, The Chronicle of Philanthropy,

The number of charities seeking a rapid expansion in operations - what supporters describe as taking high-achieving charities "to scale" - may herald the beginning of a new era in which relatively young charities turn into household names, much like a century ago, when organizations like the American Red Cross, Boys & Girls Clubs of America, and the NAACP began and started spreading across the nation. Many charities now are seeking $10-million or more just to cover their growth costs, and more and more donors and foundations are happy to provide the money.

SEPTEMBER 6, 2007, Way to Grow: Charities use Business Practices to Rapidly Expand their Programs, by Ben Gose, The Chronicle of Philanthropy,

What he [Robert Egger, author of Begging for Change] found over the years were that there were too many nonprofits, sometimes duplicating each other's services and fighting one another for funding and supplies. Some nonprofits that started with fire and zeal settled into hidebound bureaucracies. Some nonprofit CEOs settled into well-paid complacency. This continues on because "there are no market forces or governing bodies to oversee, organize or streamline the operations of nonprofits."

FEBRUARY 10, 2008, Generous to a Fault? Nonprofits Must Align Efforts, by Tom Condon, The Hartford Courant, [posted 1/22/2009]

The Proliferation of charities may undergo a reversal due to the tough financial environment.

While expressing concern for vital charitable programs that may be in jeopardy, Ken Berger, chief executive of Charity Navigator, a watchdog group, says a consolidation of nonprofit projects would be a good step in many states. With almost one million American charities, he says, organizations that offer duplicate services should merge. "There are too many charities," he says. "All too often, self-preservation trumps mission." Instead of waiting for the generosity of donors to run dry, he urges charities to consider joining forces now or at least share administrative staff. "There really is a value in partnering right now," he says.

OCTOBER 14, 2008, After the Fall, by Ben Gose, et al. The Chronicle of Philanthropy, [posted 10/24/2008]

As the line blurs between what types of work should fall into the realm of nonprofits and for-profits, there will be more competition for funding between the two.

If such trends persist, in a few decades we'll find that most people will produce services and products that could be produced as easily in the nonprofit sector as in the profit-making one. In this new system, charities, government, and charitable watchdog groups inevitably will see opportunities and tensions proliferate. And as service and innovation incubate together, the never-bright line between what is charitable and what isn't -- determined in part by "charitable purpose" so health care and research qualify but manufacturing and entertainment don't -- will blur even further. Meanwhile, competition will increase. Profit-making institutions will continue entering fields once left to nonprofits as rising fees and government payments make these forays more lucrative. The reverse is also true. Even if charitable contributions continue to stay fairly constant as a percentage of national income, charities will attract private and government fees in diverse arenas. As businesses and charities increasingly cooperate and compete to meet both public and private demand, we will spend more of our time providing and receiving services once defined as primarily charitable. Whether all these changes beget greater generosity is an open question.

OCTOBER 8, 2007, Blurring the Line Between Charities and Businesses, by C. Eugene Steuerle, The Washington Post, [posted 3/3/2008]

The growth of the nonprofit sector continues; 8.3% of wages and salaries paid in the U.S. came from the nonprofit sector.

Approximately 1.4 million nonprofit organizations are registered with the IRS. When compared to other sectors of the economy, the nonprofit sector accounts for 5.2 percent of gross domestic product (GDP) and 8.3 percent of wages and salaries paid in the United States. The vast majority-and those holding most of the sector's revenues and assets-are registered with the IRS as 501(c)(3) "public charities," a category that includes most arts, education, health care, and human service organizations. [The number of] 501(c)(3) public charities: 845,233 [in 2004-2005]. Human service organizations are the most common type of public charity (35 percent)...

AUGUST 2007, The Nonprofit Sector in Brief: Facts and Figures from the Nonprofit Almanac 2007, The Urban Institute, Washington, DC, [posted 3/3/2008]

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