If you're on staff at a U.S. non-profit organization or foundation you have likely heard something about “The Nonprofit Sector’s Leadership Deficit”. That's the title of an early-2006 study published by a think-tank called the Bridgespan Group, which has been written about endlessly in all manner of media. I've personally attended a couple of gatherings where the report was discussed, and the group's president has made appearances at a number of conferences to talk about it.
As far as I can tell the report's conclusion -- that this sector will in coming years be drastically short of qualified leadership-level staffers -- has been accepted as fact. Put another way: if anyone has yet doubted the report's overall logic and conclusion I haven't read or heard of it.
I'd be happy to be proven wrong on that, because the report is nonsense; I've seen stronger logic in the pages of the John Birch Society newsletter. What comes to mind from reading it is a broad-based critical-thinking deficit.
It's easy to spot specific logic problems in the thing, for example their assumption that the growth in the number of staffed non-profits will indefinitely continue to be as high as it was in the late-1990s boom economy. They also keep repeating the canard about how the public sector in the U.S. is increasingly offloading services to non-profits, and appear unaware of the fact that top-level professionals in the non-profit sector enjoy their work and tend to keep working by choice well beyond age 62 or 65. And they clearly are still working from the assumption that non-profit salaries are lower compared to the same jobs in the for-profit sector.
On the supply side they seem to think that business schools are a key source pool for all this, I have no idea why. (I've helped hire several development directors and executive directors and program directors, and the idea of an MBA degree being a major qualification would just get a chuckle from the search committees I've been on.) So they basically conclude that since the number of MBA's isn't growing as fast as the non-profit sector as a whole, one more looming crisis for the perpetually-struggling non-profits! needs to be added to the list.
Sigh. This whole thing rests on the idea that supply and demand are somehow disconnected in real life: it does not seem to have occurred to anyone that a visibly-booming economic sector tends to attract more top-level talent. Is it not obvious in seventeen different ways that smart educated young Americans nowadays are flocking to make careers in this sector? (Yes it is, to anyone who's paying attention.) Is that not evidence that salary levels are not actually penurious around here and/or that a lot of the kind of folks we want are motivated by things other than owning a Lexus?
I notice no comparative context either: does not every growing economic sector have to reach farther to find the talent it needs? Isn't that basically normal? Is this sector having a harder time with that than have law or medicine or investment banking or whatever? I have no idea, and neither does anybody at Bridgespan Group.
I hope to be around long enough to see this marvelous sector learn to expect more logic and common sense than is being displayed on this subject.
Showing posts with label too many. Show all posts
Showing posts with label too many. Show all posts
Saturday, May 19, 2007
Thursday, March 08, 2007
Too many for what, exactly?
Next month I'm attending a discussion gathering of foundation staffs for which the invitation begins, "As non-profits grow in number and stretch available resources..." Notice that this premise is stated as simple obvious fact: that the number of non-profits has been growing faster than the available funding for them. That's a widely-believed factoid which has made it into the mainstream media; its a commonplace among foundation staffers. It is easily the most-common reaction I hear to this recent report that my foundation published online.
The thing is, as stated it simply isn't true: the number of non-profits in the U.S. has not grown faster than overall non-profit revenues, indeed hasn't even kept up with the growth in charitable giving.
Independent Sector says that non-profits roughly doubled in number from 1980 to 2005; or put another way, that non-profit employment doubled from 1977 to 2001. The IRS reports (see Table 16 there) that the number of tax returns filed by non-profits increased by 138% from 1985 to 2002. [It makes sense that this increase would be a bit higher than the overall creation of new groups because the filing threshold has not been indexed for inflation.] So okay let's take that basic premise as documented: that there are somewhere around twice as many non-profits as a quarter century ago.
That same IRS table shows that total non-profit revenues increased by 112% above inflation from 1985 to 2002. (The table shows raw totals not adjusted for inflation; I applied this inflation calculator which uses the official federal Consumer Price Index through the years to make conversions.) And apparently non-profit spending has not been increasing as fast as have the revenues, because the IRS figures show total non-profit fund balances increasing by 161% above inflation in the same period.
For some corroboration I checked the printed Giving USA 2005 report: it says (page 26) that total charitable contributions in the U.S. increased by 148% above inflation from 1980 to 2004. [The heavy growth has been in non-religious giving: giving to religious organizations grew only 66% during those years (page 37).]
The time periods of these various figures don't match up exactly, and obviously there may be large differences between types of non-profits. With all that stipulated, it is clear that overall this particular piece of conventional wisdom is not rooted in reality: the booming growth in this sector is not at all "stretching available resources". At a minimum, arguments that we now have "too many non-profits" need to be driven by a different issue.
The thing is, as stated it simply isn't true: the number of non-profits in the U.S. has not grown faster than overall non-profit revenues, indeed hasn't even kept up with the growth in charitable giving.
Independent Sector says that non-profits roughly doubled in number from 1980 to 2005; or put another way, that non-profit employment doubled from 1977 to 2001. The IRS reports (see Table 16 there) that the number of tax returns filed by non-profits increased by 138% from 1985 to 2002. [It makes sense that this increase would be a bit higher than the overall creation of new groups because the filing threshold has not been indexed for inflation.] So okay let's take that basic premise as documented: that there are somewhere around twice as many non-profits as a quarter century ago.
That same IRS table shows that total non-profit revenues increased by 112% above inflation from 1985 to 2002. (The table shows raw totals not adjusted for inflation; I applied this inflation calculator which uses the official federal Consumer Price Index through the years to make conversions.) And apparently non-profit spending has not been increasing as fast as have the revenues, because the IRS figures show total non-profit fund balances increasing by 161% above inflation in the same period.
For some corroboration I checked the printed Giving USA 2005 report: it says (page 26) that total charitable contributions in the U.S. increased by 148% above inflation from 1980 to 2004. [The heavy growth has been in non-religious giving: giving to religious organizations grew only 66% during those years (page 37).]
The time periods of these various figures don't match up exactly, and obviously there may be large differences between types of non-profits. With all that stipulated, it is clear that overall this particular piece of conventional wisdom is not rooted in reality: the booming growth in this sector is not at all "stretching available resources". At a minimum, arguments that we now have "too many non-profits" need to be driven by a different issue.
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.
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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