The current economy – a subject much on everyone’s mind, provoking each of us to our own special set of hopes and fears – promises a host of effects on the vastness and variety of America’s nonprofit sector. The last time in our lifetimes that the sector experienced such radical prospects of disruption in the flow of funds to services was in the first years of the administration of President Ronald Reagan.
The effects of Reagan’s successful tax overhaul infiltrated the sector throughout the early 1980s. Nonprofits closed their doors in droves as federal channels of government funding for public services dried up. Studies of that decade by the esteemed Lester Salamon, a professor of civil society studies at Johns Hopkins University, revealed that the primary means by which nonprofits made up the billions of dollars in “lost” revenue was by instituting fees for service – charging clients for services, “marketizing” the sector in new ways and triaging service allocation by a person’s ability to pay. Not a pretty picture and not one that, at present, foretells easily what scenario will unfold. No one can say for sure what will occur now that every part of society – philanthropy, government, private donors, business – has been left grounded in a contracting economy not as a result of deliberate public policy, but rather by the wild and unpredictable vicissitudes announced by the exploding bubble of the nation’s financial system and markets.
People have asked me where I think philanthropy and nonprofit sector leaders might place constructive emphasis at this point in our collective journey through the current uncertainty.
I suggested three places for starters:
Safety net services: More folks will suffer as a result of unemployment, family dislocation, compromised health and entrenched poverty in this crisis than any of us now living and working in the sector have ever seen before. People facing such dire circumstances will need social welfare and health agencies to protect them from freefall. Those agencies represent as much a part of America’s critical human infrastructure as any road or bridge represents the country’s physical infrastructure. We must support them.
High performing partners: Every funder looking at their grant portfolio and every nonprofit professional scanning their field knows which organizations are the high performers, the exemplars and the superstars. In this economic and social crisis, those are the organizations that spent years doing smart things like building strong fiscal reserves, developing agile operating cultures and embracing innovation. They will survive this crisis because of those traits and they will model to future generations of nonprofit leaders what works. We must support them.
Adapative change innovators and entrepreneurs: The pressures of messed up economics reveal flaws, fissures and gaps in broken systems that ordinary times might hide. They also pre-dispose people to find common ground with new and unusal partners. An astute species of the human race - adaptive change innovators and entrepreneurs - who routinely walk among us warrant more than the normal level of notice we might already give them. Working with the raw societal material currently in a state of huge flux, these folks will have ideas that merit serious attention and investment. We must support them.