“Git’er Done and Go Home”: Short-Term Nonprofits and Foundations
I just finished my December column for Columbus Business First. The column is based on an article by Maureen West in the Chronicle of Philanthropy and an article in Advisor One from last month. The article discussed nonprofits that are started with the intention of shutting down in five to ten years, and the other article focused on foundations that plan to spend down all their assets in about ten years and then go out of existence.
This concept intrigues me because I regularly talk about the problems that arise for nonprofits because of some approaches to philanthropy. The emergence of effective philanthropy has emphasized measurable goals and achievements for funded projects. This has tempted many donors to use those measurements to evaluate the “pay off” of their generosity each year. This in turn has led to increasing use of match requirements, start-up funding, and substantially increased reporting mandates for nonprofits. This bias toward immediacy has eroded the reserve funds of nonprofits and contributed to pervasively weak balance sheets.
The obvious solution is for philanthropy to change and realize that its most important duty is to be a reliable funder of a useful need in the community. A short-term approach to grants does not do this very well. But philanthropies and nonprofits that have mutual, finite lives may not have this conflict. The article talks about Water Advocates and Realizing Rights, two nonprofits that began early in the decade and plan to shut down soon. The other article talks about The Atlantic Philanthropies and The Quixote Foundation as two examples of foundations that have decided to spend down all their assets and close up shop in 2016 and 2017. Matching the two approaches can be harmonious: both with a passion to accomplish something demonstrable in a relatively short time period.
This should not become a trend because reliable support of ongoing community needs remains the main purpose for the nonprofit sector. But when the short-term is a mutual time horizon, reliability is redefined. If a foundation wants to accomplish a well-defined goal by a specific date, it is going to be a very reliable supporter of the nonprofit on which it depends to accomplish its goals. And it is not going to allow a recession or a drop in the stock market to disrupt the work.
In the article I talk more about the pros and cons:
- Pros: focus, mitigation of distrust and competition, actions over studies, speaking more frankly and less diplomatically
- Cons: problems attracting and retaining staff, people feel they are walking away from the philanthropic and nonprofit communities by shutting down
At the same time, probably too many nonprofits keep going when they should be merging or shutting down, so I cannot be overly critical of an emerging movement that says “git ‘er done and go home.”
For more information on nonprofits’ approaches to philanthropy, problems that may arise and solutions, consult the newly-released More Than Just Money: Practical and Provocative Steps to Nonprofit Success.