Falling into the gap: The COVID-19 crisis exposes the consequenses of failing to invest in nonprofit businesses

SALVATION ARMY
Salvation army employees load cases of water that are part of large supply kits, which local units of the charity distribute. https://www.philanthropy.com/article/The-Crisis-Exposes-Lack-of/248340/

It is time to take the business of the nonprofit industry seriously. Nonprofits provide essential services in parts of the economy that are areas of crisis, need, public benefit and life enhancement where market failure precludes effective intervention by the private or government sectors. “When the nonprofit sector is really being pushed and strained, we’re seeing how dependent the sector has become on overworking people, underpaying them, using volunteers, and relying on people working extra hours while not being paid,” says Greco. “The very gas that kept the nonprofit sector going, which is sweat equity, that’s being dried up.”

Just as we accept the entire spectrum of organizational development as essential to the success of for-profit businesses, it is equally essential for nonprofit companies. We cannot continue to over-simply the needs of nonprofit organizations with vague references and ambiguous terms like “capacity building.” According to the Center on Nonprofits, capacity building by definition, “strengthens a nonprofit’s ability to fulfill its mission over time, thereby enhancing the nonprofit’s ability to have a positive impact on lives and communities.” What does this really mean in the real world? This catch-all term has consisted of the same four or five aspects of nonprofit objectified organization functions for the better part of the last fifty years: fundraising, governance, financial management and strategic planning (sometimes marketing is included). Not one of these terms alludes to people, their development, alignment, career path, or their integration with systems, growth or sustainability.

It is no surprise that the mission-driven business model is failing under stress. For decades donors large and small have demanded that their contributions be expended only on “programs” or “direct services” as opposed to organizational operations, people or business infrastructure. If the organization is weak, hobbled by the inability to direct dollars to build organizational strength, it can not sustainably carry out its mission and produce positive outcomes from its programs and services. Once the program money is expended–then what?

How does the organization sustain its business from one grant or donation to the other? It is like shoveling sand onto the beach. Build up the beach and when the first big storm hits, it erodes all progress. So nonprofit leaders must continually look for more sand and keep shoveling. The people who work in nonprofits run programs, deliver services and measure outcomes. Investing in organizations and the people they employ improves program results and delivery on the mission.

The last decade has seen some movement in this trend on the part of larger foundations and some donors. It is not nearly enough. Since government has abandoned the concept of a social safety net, nonprofits have filled the gap. Now they are falling into it.

4Real

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