It Ain’t What It Used To Be – Or Is It?

At last observation we have been in this economic downturn for at least 3 years or so and that is if you just consider the beginning of this financial crisis to coincide with the Wall Street crash – which of course most experts believe that such an origin of September, 2008 as arriving much too late to the party.  Though many were concerned that the bubble was eventually going to burst, even the most cautious observer must admit that no one planned for what has taken place since the end of the last decade.  With all these changes subsequent to whatever date we want to acknowledge as the start of the Great Recession, we must ask ourselves if what we are now experiencing is the new normal.

Dr. Paul Light of the NYU Wagner School recently wrote in the Washington Post that non-profits are a reflection of the greater economy and that “in between the starts and stops, the sector bears the brunt of increasing demand, budget cuts and delayed payments.  Reserves begin to disappear, credit lines evaporate and volunteers become clients.  Asked to do much more with far less, many nonprofits end up trying to do almost everything with nothing.”

The non-profit sector remains a very viable sector with trade associations and professional societies in many ways having a renaissance of sorts.  These elements of the not -for-profit community are finding new and creative ways to serve their members since such competition as Google and Facebook now are players in their forum.  With 11 million employees, 63 million volunteers and an annual income of $1.5 trillion, this sector quite conceivably has Wal-Mart envious of its magnitude.

However, the non-profit sector cousin – the philanthropics are having an even greater issue with this recession.  These community and service charities are having greater demands placed upon them due to budget restraints while fund raising campaigns are certainly not where they once were during those robust years of the 90’s. 

Professor Light writes: “there is growing evidence that many nonprofits closed their doors over the past three years, while others are about to do so.  In 2008, I estimated that 100,000 of the nation’s 1 million tax-exempt nonprofits could go under due to the recession.  Those exits may or may not be offset by the creation of new nonprofits, but there seems to be little doubt that much of the deforestation is now occurring in the low-income communities where service deserts are swallowing up thousands of small community-based organizations.  If we could map decimation by census tracks, we’d see the deserts popping up in all familiar neighborhoods – the ones where the most vulnerable Americans live.

Though numbers are hard to come by from the AMC Institute, one only needed to participate at their latest Annual Meeting in Connecticut to ascertain that association management companies are in growth mode and are the beneficiaries of a down economy.  Stand-alone associations with small or modest budgets are finding it more advantageous, in certain circles to contract with for-profit management firms in an attempt to spread their dollars a little farther.

 The member value proposition continues to be vital for the livelihood of any non-profit.  If the overhead continues to rise due to natural growth in compensation and expenses, the products and services available to the membership or in the case of philanthropics – clients, unfortunately dwindles.  If this practice continues over time, membership numbers start responding in kind.  This economy can’t justify membership dues increases so if you are going to balance the budget, associations must find new and creative ways to bring in more cash.

Light is concerned that those non-profits that are surviving may not be those that are needed most: “the prevailing wisdom these days is that survival of the fittest should take its course, the only problem being that the fittest may not be the most valuable.  There are some nonprofits that are extremely strong but no longer relevant, and others that are very weak but intensely important for strengthening communities, delivering services where no other resources exist and serving as harbingers of the social trust that Robert Putnam wrote in Bowling Alone.  Strengthening weak but important nonprofits is an imminently better investment for the sector than allowing moribund, perpetuity-seeking nonprofits to survive.  Picking the right nonprofits to sustain while easing out the nonprofits that long ago forgot why they exist is both difficult and painful.  But it is the only way to assure that the sector retains its longstanding commitment to fill the gaps created by market failures, antiquated government programs and needless delays.”

The real answer for any not-for-profit is to remain relevant.  Through intense and on-going planning the leadership and membership of all organizations must continually investigate why they exist.  Are they meeting their original intentions as an organization or have they evolved into something entirely foreign from their initial Articles of Incorporation and Mission Statement? 

Charles Darwin might have envisioned associations when he declared his Theory of Evolution in 1859 but the lasting question must be asked:  The fittest may survive but are those survivors making society a better place for all?  Only the leadership and membership of every association can answer that question truthfully.

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