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Jul 31, 2012

When a nonprofit fails to evolve with changing community need

The Chronicle of Philanthropy reported that Y-Me, the national cancer organization that abruptly shut its doors and fired its staff earlier this month, has filed for Chapter 7 bankruptcy liquidation, according to the Chicago Tribune and The Wall Street Journal.

In its filing July 2012, the Chicago-based charity, which operated the nation’s only 24-hour, multilingual hotline for breast-cancer patients, reported liabilities of $501,001 to $1-million against assets of $101,001 to $500,000. It has seen donations plummet in recent years.

Experts said Y-Me—founded in 1978, when there was little public discussion of breast cancer and few sources of emotional support for patients—has been crowded out as groups offering such aid proliferated and pink-ribbon campaigns made the disease a major national cause.

“There are just so many avenues now to receive information that weren’t around even 20 years ago,” Janine Gauthier, director of the Cancer Integrative Medicine Program at Chicago’s Rush University Medical Center, told the Tribune. “You can literally find information anywhere.”

This is a perfect example of too little, too late.  Going out of business and firing employees is a last-minute strategy.  The proliferation of nonprofits in all areas over the past 20 years has created a situation in which many nonprofits are duplicative or at least highly overlapping.  Collaboration and merger discussions should be going on now, well before financial crisis emerges.  Who would want to merge with a financially weak partner?  The time for those discussions obviously is long past for Y-Me.  Where was the board 10 years ago?  Didn’t they have a 5-year plan that anticipated emergence of other cancer information providers?  Didn’t they anticipate virtual service provision as the technology made that more feasible?

This is how I end my book More Than Just Money:

“It is more difficult to know when community need has changed so much that the nonprofit should shut down.  For-profits have it easier:  if they don’t make money they should sell, merge, or liquidate.

“Non-profits don’t have such a simple measure of success or failure.  Nonprofit mission is fulfillment of community need.  Fulfillment of mission can be elimination of community need, which is a success.  Inability to meet a community need is a failure.  Nevertheless, in both situations the nonprofit is no longer needed.

“Nor do nonprofits have such an obvious set of options as do for-profits.  Many for-profits continuously evolve what they make or sell, since the product is less important than the continuation of a profitable company.  In sharp contrast, it is not necessarily in the community’s interest for a nonprofit to continuously evolve which community need it fulfills.

“The existence of one specific nonprofit organization is less important than having community needs be met.  The energy that nonprofit staffs and boards might spend on changing their missions in order to preserve the organization is not necessarily the best way to utilize their passion and energy to serve the community.  It is okay for a nonprofit to go out of business.  It is okay to start a new nonprofit to address a new need.  Starting with a clean slate in a new organization can at times be better than trying to retool an old organization into a new one.

“It all comes down to meeting the current needs of the community.  Clinging to an historic past is honorable but not desirable.  If the chief executive, staff, or board member are clinging, it is time for them to move on.  If the organization is clinging to its past, it may be time to turn out the lights and raise a toast to an honorable past.”

I guess Y-Me was clinging to its past and missed its opportunities to evolve.

If your nonprofit has not looked at its evolving market and competitive environment, it is time for a steely-eyed retreat.  If you are thinking about merger or collaboration, call me for a free one-hour consultation.