Ken Goldstein, MPPA

Ken Goldstein has been working in nonprofits and local government agencies from Santa Cruz, to Sacramento, and back to Silicon Valley, since 1989. He's been staff, volunteer, board member, executive director, and, since 2003, a consultant to local nonprofit organizations. For more on Ken's background, click here. If you are interested in retaining Ken's services, you may contact him at ken at

Tuesday, June 06, 2006

Too Many Nonprofits?

The Where Most Needed blog has an excellent posting on Charity Mergers Booming on Both Coasts. There are plenty of references to recent articles about particular mergers, and some of the issues involved. The author also points out that one of the best times for such a move is when the chief executive of one of the partners has just left, or is planning on transitioning out.

I read the posting with great interest and agreed with most everything being said, until the last paragraph, which opened with, "Mergers may be the best solution to the excessive number of nonprofit organizations." There was no evidence given, or data to back this statement up. It was just given as a fact: there are too many nonprofits.

I take great exception to this comment. This is not to say that I am anti-merger. I am all for it, when it makes sense for both organizations and their clients. Right now I am involved in a very positive merger negotiation as an interim executive director. I have also had to shut down a bankrupt nonprofit as part of my consulting practice. Nothing about either of these experiences, however, would lead me to believe that they were the result of a glut of nonprofit organizations.

In the current situation, the two organizations are complimentary. They each serve a similar clientele, but with a different program solution. Bringing the two together will give clients the choice of which solution is best for their family. Neither agency "has to merge" - they are each financially strong and healthy. The strategic relationship we are creating, however, will be better for both organizations, their staff members, the funders, and the children served.

The agency I had to close down had come to rely on a single government funding stream. When that funding suddenly ended, the agency was not ready to diversify quickly enough. That, combined with a bit of arrogance and basic bad management, is what shut the doors, not competition from "too many" other nonprofits. In fact, a great hole is still felt in the community where that organization once stood.

I do not see duplicative services as a problem, so long as each agency serves a particular niche. Mass produced solutions may be fine for selling shoes, but often the very nature of the services nonprofits provide require narrowly tailored solutions.

Why does one city need five different women's health clinics? Perhaps one has expertise in reaching recent Asian immigrants. Perhaps another has strong ties to the African-American community. Had these all been replaced by one, large women's health clinic some of the clients may have stayed away and not been served at all. Trust is so essential in the provision of personal human services that I do not think there can be too many grassroots nonprofits with similar offerings.

The funders are complaining about too many grant applications? They have too many tough choices to make? That's wonderful! What a great problem to have. I enjoy working with funders and appreciate the difficulty of their positions. But making their life a little easier is no reason to merge organizations that are just fine on their own.

Again, I am realistic. I will assist in mergers and shut-downs when they make sense. But I will not get so caught up in our quest for efficiency and "operating like a business" that I will make decisions that leave clients un-served or missions unfulfilled.

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