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Vol. 3, No. 3 May 2007

MEMBER Q & A

This month we posed this stirring question to AGF members:

Does Arizona have too many nonprofit agencies? If so, what can the funding community do, if anything, to assist with the consolidation of nonprofit resources and leadership?

16 AGF members responded to our survey question. 57% believed that Arizona does have too many nonprofits, while 38% reported that they do not believe there are too many nonprofits.

Here are the responses to the second question which asked:
If yes, what can the funding community do, if anything, to assist with the consolidation of nonprofit resources and leadership?

1. We can encourage social entrepreneurs to bring their skills, passion and approach to an exisiting agency before looking to create a new agency(for instance, starting a new program instead of creating a new organization), and only creating a new nonprofit when all other options are exhausted. This is not to say that no new nonprofits are ever appropriate, so I do believe funders should remain open to funding start-up efforts that make sense.
2. I think this is a very complex topic. It's easy for me to say that there should be fewer nonprofits duplicating services that others provide, but there are people's livelihoods at stake. Which one will be the first to put itself out of business because another is providing the same services? That said, when there are too many organizations providing essentially the same services, they compete for the same pool of finite funding dollars. Most of us are simply inundated with funding requests and/or requests to buy tables at fundraising events (that burn through staff and volunteer time). It's simply insane sometimes! It might be helpful to incent the desired behavior in the funding process -- measuring the requesting organization’s success at seeking organizational mergers (like last year's St. Mary's Westside Food Bank Alliance), or program mergers, collaborations and partnerships to leverage resources in order to achieve economies of scale when providing program services.
3. 1st -- Stop encouraging the creation of new non-profits (like ASU's program in non-profit management does) 2nd -- encourage very small non-profits to find a fiscal/administrative sponsor under whose umbrella they can "nest." 3rd -- stop funding very small, one-program non-profits and require they seek fiscal/administrative sponsors
4. Support service organizations that help nonprofits self-select merger and acquisition opportunities in advance of crisis situations; help advise "would be" nonprofits to conduct research and do their "due dilligence" before incorporating; Continue to reward collaborations and unification of organizations that have common or compatible missions; help support infrastructure to co-locate nonprofits (perhaps a first step to consolidation).
5. Raise awareness about the importance of "giving." It is not just for the wealthy - giving back is a culture that is created when people feel a sense of belonging and that they can make a difference with their giving. Jackson has a "Fun Run" every year, a parade where people dress up in the "theme" and everyone has fun. This is a yearly event and last year they raised 7 million around the "Fun Run" that was distributed to non-profits. They have a "matching pool" of doners that increases every dollar given by .39 to .50: leveraged giving.
6. Be more diligent in evaluation of actions against mission. Be honest with board members about the benefits of consolidation - cost efficiencies - vs. local / micro control
7. If a particular funder thinks there are too many nonprofits providing, say,behavioral health services, they could offer a series of "carrots" to entice collaboration and eventually merger between targeted organizations. Or, they could refuse to fund those organizations they consider to be weak, superflous, etc., and they would either merge or go out of business on their own.
8. Encourage non-profits to merge with like agencies. Point out the cost of running so many non-profits that over-lap the work of other non-profits.
9. I think non-profits can aggregate certain areas where fees can be negotiated for groups in areas such as accounting, public relations, collateral material etc. Also, non-profits should look into group buys for office equipment, supplies, etc. Easier said then done.
10. Discourage initiation of new nonprofits when inquiries are recieved from people wanting to start a non-profit. Make the connections and encourage working with an exisiting organization up front so that the new one never forms. Maintain high standards for funding; there can only be as many agencies as are receiving support.