Cause Effective Perspective

In late 2008, at the onset of the recession, Dr. Paul Light, Professor at New York University's Robert Wagner School of Public Service, and a nationally prominent commentator on the public sector, made a dire prediction.

“More than 100,000 nonprofits will fail within the next two years,” Dr. Light pronounced.

One hundred thousand was a nice round number, and it got picked up by the media everywhere. Funders and nonprofits alike reacted in hushed and horrified tones.

Soon it didn’t just sound like a prediction – it sounded like fact.

Did this statement move the nonprofit sector towards resiliency?

To me, that’s the central question.

The number, Dr. Light now explains, was actually picked out of thin air at his frustration that nonprofits were whistling past the graveyard, in denial at how bad conditions for the sector were going to get.

And while it certainly got bad (and looking at the New York State cuts, we’re not nearly out of the woods yet), 100,000 nonprofits haven’t gone under – not by any stretch of the imagination.

Nonprofits have struggled and cut (and hemorrhaged) and affiliated…and retreated into semi-dormancy…but there hasn’t been a mass extinction.

In fact, the evidence is that the number of real nonprofits folding/merging is nowhere near Professor Light’s number.

[I say real nonprofits because the IRS’s recent requirement that all nonprofits – not just those with annual financial activity over $25,000 – file tax returns, will result in the demise of a number of dormant nonprofits…but the vast majority of those exist only on paper, not in the flesh.]

So the question, looking back at Dr. Light’s statement, is not truth – but impact.

Did Dr. Light’s prediction spur nonprofits to take the deepening crisis more seriously?

For some, yes.

Did Dr. Light’s prediction help engulf our sector in a quicksand of gloom that took nonprofit leaders some time to climb out from?

For some, sure.

And did it lead certain politicians, and funders, and even nonprofit leaders, to write off the nonprofit sector, assuming it was too fragile and too marginal to respond to the forces marshaled against it?

We’ll never know.

Dr. Light was attempting to help nonprofits adapt, and some times we need a gun to our head to change.

But is the stick (or loaded gun) the most effective way to generate a response from beleaguered nonprofits?

At Cause Effective we’ve seen both ends of the spectrum:

1. We’ve witnessed nonprofits exhibiting exhilarating resiliency in the face of extraordinary adversity;
2. And we’ve come in after nonprofits have grabbed hold of any available dollar, no matter how devastating the potential consequences (I’m thinking in particular of a nonprofit I just counseled that spent its restricted funds once its reserves were gone…)

As fundraising strategists, we’ve certainly been in the eye of the storm. And what we’ve seen is that creative responses to adversity grow more easily from a sense of possibilities, not a terror at inevitabilities.

Same goal, different means.