“Creative destruction” and nonprofit consolidation

photo credit, dhnieman, via flickr

Let’s start summer right, folks!

This week, I’m doing three posts related to concepts in Robert Egger’s book, Begging for Change. He has become one of my very favorite writers, speakers, and thinkers on topics related to nonprofit organizations and social change work, and I find myself continually challenged by his perspectives, going through an entire pack of sticky notes to mark pages I want to remember. If you haven’t read the book, you should, but, first, do me a favor and read the posts this week and share your thoughts about how I’ve connected his ideas (from 2004) to today’s not-for-profit landscape. And, you know, you can enjoy the sunshine, too.

Almost every semester, I am struck by the inclusion in at least several students’ career goals of something related to “start my own nonprofit organization”. This semester, I had students express interest in starting adoption agencies and drug treatment programs and mentoring projects for at-risk youth. I also receive relatively regular inquiries from former students exploring starting their own nonprofits. Myself, I honestly don’t have an entrepreneurial bone in my body; I’d never want to start my own organization, and I have even turned down a few promotions because I’d have to spend more time paying attention to payroll and less time generally agitating.

But it would certainly appear that the desire to be one’s own boss, combined with passion about the social problems we face, leads at least many within the social services sphere to dream of setting up their own shop. Now, you know that I don’t believe that duplication of effort is, necessarily, an evil. All things being equal, two excellent organizations working on the same social challenge should mean that, together (or apart, but headed towards the same goal), they reach victory more quickly than one would alone. And I like to win.

But Egger’s book, and my conversations with my students, and some discussion in the blogosphere (see, in particular, Lucy Bernholz’s awesome post on peer-reviewed nonprofits) and the traditional media have me thinking about what it would take to really change the game in terms of the ‘marketplace’ for nonprofit organizations. I mean, why does it often seem easier to start a nonprofit than a for-profit business, when, most of the time, our goals are much more ambitious (making success, therefore, seem more elusive)? Why are there nonprofit organizations still in business long after they ceased to really meet a compelling social need? Why do our current organizations often fail to capture the imagination of bright and talented graduates, pushing them to envision charting their own path instead (especially when we have a near-crisis in executive leadership in the sector)? Why is the recent uptick in nonprofit mergers seen as a sign of doom, when for-profit mergers are often hailed?

Egger calls for “creative destruction”, hence the title of this post–the consolidation or collapse of the most ineffective and wasteful organizations. He acknowledges that such a recommendation creates more questions than it answers: where would one draw this line? How do we define success? Without good benchmarks or a good roadmap to outcomes, how can we measure waste? How can we promote social enterprises that bring more social value to the for-profit sector, and are there places and ways in which such an approach is inappropriate? Questions that he doesn’t ask, but which must be addressed, include how to balance between consolidation and the sustenance of ‘niche’ organizations that effectively serve small, particular constituencies; and how long organizations should have to try innovative (but failing) approaches to entrenched problems. Should all nonprofit organizations be held to the same standards, once we can figure out what these standards should be? Or should they be more locally defined, taking into account differences in contexts and inputs? What are the responsibilities of donors, who give for all kinds of ‘illogical’ reasons, to stop supporting organizations that are failing in their missions?

I read Egger’s discussion of creative destruction with a different lens, I expect, than that through which it was written: that was 2004 and this is 2010, and some even excellent nonprofit organizations are collapsing because of the dramatic dropoff in foundation and corporate giving, in particular. But, also, perhaps because I just finished my class on macro systems, I thought back to a lecture early in the semester when we talked about the role of stress in social systems, and how stress can provide the impetus for real transformation, as systems struggle to adapt to new and harsher realities.

And that’s where I conclude this post, with questions, a little bit of despair, and some hope thrown in. I’d greatly appreciate others’ thoughts as I muddle through this–where do we go from here? Since we don’t have a ‘market’, per se, how do we make these decisions in a way that respects our shared values as a social service sector? How do we understand and communicate the stakes involved in perpetuating the status quo? And how do we use the current economic climate as the

4 responses to ““Creative destruction” and nonprofit consolidation

  1. Hey Melinda, color me honored that you would dedicate three posts to my thoughts from Begging for Change.

    There are times when (like any author or actor) I look back at work through the lens of time and wince at certain assumptions I made, and the high horses I mounted…..that being said, I’ve also continued to push, push, PUSH for change, while also probing the, at times still maddening, reluctance of the sector to get it ON.

    On the probing end, I have been tracing the roots of “modern” philanthropy and exploring the role of gender boundaries of the 1970’s, when millions of college educated women left the home to pursue professional careers, but who were pushed into the world of .org (because, they were told, they had no skills to offer the .com world). I’m convinced that those institutionalized attitudes accounts for our sectors reticence to roar. For more on that theory, check out this op-ed I wrote a year or so ago for the Chronicle of Philanthropy– http://www.robertegger.org/blog/wp-content/uploads/2008/01/a-new-generation-a-new-commitment-to-change-jan-28-2008.pdf

    (side note—when I wrote Begging, I was really in a “blame the player” phase. The more I explore, I came to realize it’s the game that’s at the root of our ills.)

    That’s why I co-convened the first Nonprofit Congress in 2006. And it’s why I continue to look for ways to get the sector to find common ground, and then build political power on it—through the V3 Campaign

    But one cool little experiment we’re conducting is a Volunteer Bill of Rights. The goal is to codify our commitment to transparency while also pushing the idea that, if 60 million volunteers start to ask “what did I do today, specifically, that changed the community” then nonprofits will be forced (or incentivized) to evolve into ass-kicking, results delivering, love machines. I posted a blog on this on my website— http://www.robertegger.org/blog/?p=768

    Anyway—big fat props for your blog. I am a fan.

    • Thank you so much for your comments! And there was quite a bit of discussion on my Facebook page when I posted the original entry, too, so I’ll post the comment and see what it generates. One of my former students used a quote from your book in a presentation she did for her PhD course. So you have fans in Kansas! I really appreciate the piece of your editorial when you reflect on Dr. King’s work connecting economic independence to true liberation, and the meaning of that link in today’s nonprofit world. And you painted such a vivid picture of Resurrection City, making that history real for those of us who didn’t live it. And the Volunteer Bill of Rights is really exciting–I’m wondering what the thoughts are about linking this to social media applications, so that nonprofits might be “ranked” in terms of the transformative value they’re providing to volunteers, the same way that we use social media to share our rankings of restaurants or movies? How have other nonprofits taken to the idea, at this point? I’m truly psyched to have found you, and your work, and to be part of your orbit around this critical thinking for our sector, and our generations. And I’ll be in DC in September with my four-year-old and intend to try to make it to DCCK just to see where the magic (except it’s really hard work and smart thinking) happens!

  2. I’m presenting on the Bill of Rights at a gathering of nonprofit hunga-mungas next month, in an ongoing effort to bump it further out. I really believe in the idea…but some of my more academic colleagues really want a formula. In all honesty, a little of each is probably a good mix.

    PLEASE drop in when you all roll thru DC. I’d love to show you the shop.

    • I’ll watch your blog for a report on how the reaction to the Bill of Rights goes–I’m especially interested in the conversation about what it would mean to greatly enlarge the ‘stakeholders’ for nonprofits’ work, and to give them tools by which to hold us accountable for real change.

      And I’ll contact the Kitchen to set something up for when we’re in DC! Hope we can cross paths!

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