Too Many Nonprofits? Or Too Many Silly Questions?


July 4, 2016; Boston Globe

“Does Boston have too many nonprofits?” The question is by no means new or unique, but it is persistent. In the context of the new lower threshold afforded by the 1023-EZ, which expedites applications for federal tax-exempt recognition, however, the question may sometime soon have additional relevance. Word is that the approval ratings of those IRS applications are very high. But that is not the focus of this article—which is pretty old school, judging from this detailed exchange published in NPQ a decade ago. 

The primary concern behind the question, at least in relationship to this article, is that there’s not enough money for everyone. And indeed, the article from the estimable Sacha Pfeiffer does a good and balanced job of detailing one situation where the question is emerging in response to the rise of a new organization in a field with a limited sphere of funders. The nonprofits raising the question were also in that field, but they were unwilling to be named because they did not want to raise the hackles of a major local funder.

The funder, however, feels the new group serves a different population, one often neglected by others in the field, and she is not the only major local funder who has supported the group. It was also supported by the Boston Foundation, whose president, Paul Grogan, has been quoted as saying, “You don’t want to stop innovation in the social sector, but even the most successful nonprofits have a big problem raising money…so we think there should be more mergers and collaborations.” Now, there’s a pat answer for you.

Larger organizations can get stuck in perpetuating and supporting their own models, and sometimes the time just comes for something new. Maybe the competition keeps things circulating. It’s messy. It’s democracy. It’s how we keep things vital and community-driven.

Besides, this situation is simply one example of what new nonprofits get formed to do—as expressions of active democracy, many new nonprofits are very small and funded by those involved.

If our concern is about the availability of funding for quality services, we might do better to ask, “Are there too many large nonprofits keeping unreasonable amounts of donated money in reserves?” The crowding-out of small nonprofits by the massive fundraising of larger entities is, in fact, a real concern in some regions. Or “Why can’t I manage to have a reasonable dialogue with my major funder?” Or perhaps our questioning might focus on, in the midst of campaign season, “Are there too many ‘dark money’ nonprofits?” or “Should we stop worrying about real nonprofits proliferating and focus instead on the effects of for-profits in fields like long-term care and charter schools?” In short, the frame of this question is a distraction from the real complexities of our work.— Ruth McCambridge and Kevin Johnson