Inside Philanthropy

A blog on philanthropy and nonprofit news and issues. A publication of Philanthropy Journal.

March 30, 2009

Giving sector needs to get real

By Todd Cohen

Instead of gearing up to weather the deepening economic crisis, the giving sector continues to descend into hysteria.

Fueled by their sense of entitlement, nonprofits and foundations find plenty to complain about rather than taking the tough steps required to advance their mission.

The proposal by President Barack Obama to reduce the tax break for charitable giving by the wealthiest Americans, for example, has unleashed a chorus of wailing by nonprofits such as Independent Sector that say the tax change could hurt donations to charity.

Nonprofits apparently do not buy Obama’s common-sense view that what drives charitable giving is altruism, not lower taxes.

But if they truly want givers to give, nonprofits need to do a much better job telling their story and engaging givers in their organizations.

That story is important yet is becoming downright alarming.

As Nonprofit Finance Fund says, based on its new survey, nonprofits are “strained to the breaking point.”

That survey of nearly 1,000 nonprofit leaders finds only 12 percent expect to keep their head above water this year, only 16 percent expect to cover operating expenses this year and next year, 31 percent lack enough operating cash to cover over one month of expenses, and another 31 percent have less than three months’ worth of cash.

Nonprofit Finance Fund recommends funders and nonprofits “address fundamental practices and strategies, along with tactics, that will improve the strength and readiness of the sector.”

For its part, Congress last week took some big steps to invest in the sector, with the Senate approving an act to create an army of 250,000 volunteers a year, up from 75,000.

It also adopted an amendment to that act to create a $25 million matching grant program to provide needed technical assistance and training to boost small and mid-sized nonprofits on issues such as financial and legal compliance, grant-writing and board governance.

While that is good news, the giving sector cannot expect government to bail it out, especially when it is not willing to fix itself.

The economic crisis has handed nonprofits and foundations a rare opportunity, maybe a final chance, to stop their sobbing, get rid of their entitlement mindset and build market-driven business models.

To cope in the real world, nonprofits and foundations need to get real.

Instead of looking to foundations and government to bail them out, nonprofits need to get their own houses in order.

And instead of squealing like stuck pigs over the loss in the value of their endowments, foundations need to dig deeper and invest what is needed to help nonprofit equip themselves to take on the social and global problems they exist to address.

If it expects to help the communities it serves help themselves, the giving sector need to stop looking for handouts and take responsibility for itself.


  • At 3:51 PM, Anonymous Charlie Quirk said…

    Great post Todd - Those figures from the Nonprofit Finance fund are really alarming!

    I think you are spot on that foundations need a shot in the arm of both perspective and creativity. They can no longer rest on their laurels.

    Like the car companies in Detroit, they need a reimagining of the practices that left them vulnerable like this in the first place.

  • At 9:14 AM, Anonymous Jason Lewis said…

    Well said... wow, you dare say entitlement.


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