Tuesday, November 14, 2006

Non-profit mergers -- too many or too few?

Mergers are not common in our sector but a few large ones have been in the news this year, such as in Boston, Cleveland, and Memphis. A good number of veterans in the field, particularly at foundations, react to that news by saying, "Good! There are way too many non-profits today!" It's one of the most-common threads of conversation nowadays.

It also seems odd. When a new Target or Wal-Mart opens up in town do we say, "Good! There are way too many small businesses around here"?

It is a fact that there are far more incorporated not-for-profit organizations in the U.S. today than there used to be (and radically more than in any other nation in the world). Even assuming that a fair number of the organizations on the books with the IRS are actually defunct, the active total basically doubled from 1990 to now. There's no sign of any slowdown either.

To me, that's on balance a good thing. Healthy industries, and for that matter societies, are attractive to people -- the clearest sign of the decline and fall of the U.S. will be when the day comes that millions of people are no longer so eager to come raise their children here. The non-profit sector is booming because more and more people are willing to fund it, which is because it's gotten more and more smart and effective, which in turn attracts more smart young people into the field, rinse and repeat.

Healthy growing economic sectors are dynamic with lots of churn, that's part of the deal. We could ask the U.S. auto industry what the opposite feels like....Now if it one day turns out that the not-for-profit sector has been growing faster than the demand for it (expressed in earned and contributed revenues) then there will be some shakeout. I'm not cavalier about this because I once had to shut down a failed non-profit, and if you haven't been there you've no idea how much that sucked. But again: it's part of the big picture, and the big picture is overall terrific.

For example it's easier today to discuss and test new paths to greater effectiveness, and evaluation, and efficiency, and interdisciplinary bridgebuilding and several other hot topics, because at the crowded industry conferences the rooms are full of smart focused 30-somethings who aren't wedded to the rules of thumb and so forth which some of us learned on back in the paleolithic era. A big thumbs up to that (cue George Burns: "I wish I was 28 again...").

It's not that older non-profit staff are simply threatened by the flood of new folks, I detect little of that. It could be that funders are simply uncomfortable with the idea of having to act like customers and choose from among more and more possible grantees. It may be that we don't want the implied pressure of our sector being healthy and thriving with strong growth in resources: it doesn't fit our collective self-image as the underdog fighting upstream to improve the world despite endless funding cuts and the slings and arrows of a regressing society and so forth (cue violins).

Well I vote for dynamic and growing. Like the cliches go about democracy: it's messy, noisy, frequently unpleasant, and beats the heck out of all the alternatives.

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