Nonprofits, government, and a financially sustainable future

The weak financial condition of many cities, most states, and the U.S. government is pretty generally recognized.  The quarrels over how to respond may be making the basic problem a little harder to see.

It is simply not possible to shift to a financially sustainable future without painful changes. No matter what paths are chosen to find a way out of this mess, familiar patterns are going to be disrupted and risky choices will have to be made.

As we take part in the national conversation around this challenge, here are some things people in the nonprofit sector need to be prepared to talk about.

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Divide/Wisdom sign (photo: Julia Smith)

First, it is simply impossible for nonprofits to “take up the slack.”

Nonprofit organizations can and should do more to protect the vulnerable, tend to the sick, enhance the quality of life, and contribute to the debates about big issues.  But it’s a mistake to think that the nonprofits that serve America’s communities can somehow replace the critical services that governments provide.  When that suggestion is made, it needs to be firmly, politely, and publicly challenged as simply beyond any possibility.

Second, tax exemptions are a bargain for communities.

Because they can attract donors, volunteers, and other support, nonprofits deliver value to their communities that neither governments nor businesses can. Encouraging nonprofits by exempting them from some kinds of taxes means there are more resources available for their work.

Of course, the ways public services are financed vary widely. There may be some places where nonprofit organizations should, in fact, help to assure that the government has the resources required to protect the community’s health and safety. Negotiating agreements to recognize that will be tough…but it can be done.

Third, the bills have to be paid.

Sometimes governments respond to fiscal crises by changing the arrangements they have made with nonprofit providers abruptly, and for the worse. A recent study by the Urban Institute documents the ways this has been happening state by state.

Tim Delaney, President of the National Council of Nonprofits, urges the correct response is to point out how this hurts the entire community.

Fourth, let’s not knock each other.

Some nonprofits exist (at least in part) to challenge the ideas and goals of other nonprofits. And it’s natural—even necessary—to believe passionately in the specific missions of the organizations we work for or support. But it won’t help the U.S. deal with the financial crisis if people who love one nonprofit point to others as somehow “expendable.”

The country’s nonprofits deliver countless valuable services to people and communities every day. Beyond that, though, they also demonstrate the great range of deep and passionate commitments we have to finding solutions, helping people, and pursuing the good life. Each of us can play a part in preserving that diversity and creativity – even, or perhaps especially, when we disagree.

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Comments (1)


  1. Lumutz writes:
    March 3, 2011 at 2:52 pm

    I don’t agree with point #1 at all. Imagine if we redirected all the tax dollars currently being used inefficiently on bloated government social programs to non-profits. This would mean that non-profits would have to compete for federal money and would really cause an explosion in the efficiency and innovation of non-profit models and services. And since non-profits can hire and fire people with the same vigilance as for-profit corporations, non-profits would have a much more effective workforce than public sector jobs.


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