As we watched the economy start marching towards the downturn, many nonprofit professionals (myself included) looked for the silver lining. We suggested that a downturn might help to reorganize the sector, forcing weaker organizations to go under and nonprofits providing duplicative services to merge. This would help the sector use its resources more efficiently, and make it easier for organizations to fundraise as it would reduce cause clutter.
Well, it seems very few organizations are considering mergers or sales of assets, according to a survey by the Nonprofit Finance Fund. Of course, this within itself suggests our silver lining may have been a bit off. But what I’ve noticed recently (and this is anecdotal, though evidence may exist) is that many people who find themselves without job are now deciding to start their own nonprofits. If this is true, then it’s quite possible that the sector will become increasingly fragmented – exacerbating the challenges present before the downturn.
So what is the answer? Many believe that the new 990 form will make it too difficult for some nonprofit organizations to continue. Truthfully, I don’t know. What I do know is that anyone considering starting a nonprofit needs to ask themselves three questions:
1) Is my idea meeting a community need?
2) Is there an established organization in the area who is doing this already? Or is there anyone else in the area who might be well-suited to take this idea and run with it?
3) Am I really the right person to lead this? Do I know enough about setting up the business model, meeting the legal requirements, partnering with the community, and fundraising effectively in order to make this work? (Note: sometimes the person with the great idea is not well-equipped to implement it.)
Of course, many new nonprofit organizations are both good and necessary. After all, they provide opportunities for innovation which might not occur otherwise. Nonetheless, the question still remains: what can be done to help the sector function at the level which is so needed – particularly in these times?
Doing good better 
I find it really interesting that so few non-profits are considering merging or selling assets, which, of course, we see private businesses doing quite a lot more of this year than last. This shows the disconnect in survival strategy between the two fields. I’m a little worried that the hesitance to merge or sell will lead to worse non-profit salaries and drive those most talented into higher-paying fields (which certainly still exist in this economy).
Your “three questions” are spot-on. I’d add concerns over community connections and fund raising ability (i.e., Do you have support from key community leaders who will commit to serving–actively!!–on the board? Do you have the experience and connections required to run a successful start-up development campaign?).
That’s just my 2 cents. Thanks for sharing this post!
You are absolutely correct, Lauren. A nonprofit will not survive without adequate community support – particularly in its beginning stages. What a great addition. Thank you!