I was sitting in a meeting of young professionals last week and the subject of nonprofits, grant funding, grant writing, and fundraising arose. In addition, the continued subject of interest to me (ethics, governance, and accountability) was also mentioned. But, I found the thoughts of the group of young professionals to be fascinating, well-timed, and very thoughtful: those nonprofit organizations that are ‘irrelevant’ or ‘duplicative’ are no longer needed in our communities, are drawing funds away from other, arguably more viable, needs and should not be expected to survive.Interesting!

As the discussion progressed, it was clear that the young professionals truly have adopted ‘social media’ (LinkedIn, Facebook, Twitter, etc.) as their means for communicating. They do not attend the meetings – nor do they join the community organizations – that were the mainstays of the past. This phenomenon places large numbers of non-profit organizations in jeopardy. Where are tomorrow’s leaders? How does the mechanism of ‘social marketing’ find its way into the governance process required of nonprofits?  Countless articles have been written about the scarce resources that continue to spiral downward for organizations in the nonprofit (charitable) sector.

And, thoughtfully, this group of young professionals believes ‘survival of the fittest’ is very appropriate, particularly in this economic climate.

When you stop and think about it, the young professionals are correct – even by the standards of the ‘old timers’ (like this author). We have watched nonprofit organizations proliferate, compete, fuss and fight, refuse to collaborate, and provide ‘services’ that are no longer beneficial by the community. Curiously, communities have not proactively rid themselves of irrelevant and duplicative nonprofits. Ostensibly this is because even the most irrelevant and duplicative nonprofit organizations still have some modicum of interested supporters (and funders).

So, what does The Center for Ethics, Governance, and Accountability (CEGA) recommend?

Well, for starters, our entire focus at CEGA has always been on ethics, governance, and accountability – and so it shall remain. If a community or a funder or a nonprofit organization were to focus on the ‘accountability’ aspect of the equation, would not that identify issues of ‘irrelevance’ and ‘duplication’ among the nonprofit sector? Sure it would!Nonprofits are notoriously skeptical of measuring outcomes – not outputs – but outcomes. Why? Simple answer: outcomes speak directly to the viability and the success of the nonprofit as measured against its mission. CEGA advocates a proactive approach to accountability and we argue that those nonprofits who can demonstrate excellence in accountability (and ethics and governance) should stand above their peers in the increasingly difficult fundraising arena.

What is the difference between ‘outcomes’ and ‘outputs’ as tools of accountability?

Using an example of a nonprofit jobs training organization, ‘outputs’ would typically measure the number of participants in the program, along with program costs, etc.; however, to make the move toward ‘outcomes’ the organization would need to track the number of program participants (outputs) that actually (a) successfully completed the training, (b) found jobs that pay a living wage, and (c) stayed employed over a given period of time. Now, that’s accountability!

Let’s take a look at the two obvious ends of the spectrum of organizations in the nonprofit sector.

The ‘government’ (federal, state, and local), by the process it uses to distribute funds, is an enabler of ‘output-based’ measures. A good example is the long-standing concept of the “community action agency” and its myriad of funding mechanisms that ‘automatically’ flow to these groups every year. Many of the community action agency funds are actually codified in federal and state law. Opponents of community action agencies would argue the very point of ‘irrelevance’ and ‘duplication’ arrived long ago. Make no mistake that accountability is enforced by means of audits of community action agency programs, but the audit can only be as good as the required measures.  

While it is impossible to tally the numbers, considerable amounts of funding are not creating the desired outcomes. It is time to demand accountability from all nonprofits.

Conversely, individual donors and foundations are free to make contributions to nonprofit agencies of their choice, using whatever measures they deem appropriate. We would advocate both increased accountability by nonprofits and increased accountability by funders.Should we ponder merging similar nonprofits?

Most discussions that I have been involved in over the years that concern ‘duplication’ of activities among similar nonprofits have predominately centered on the issue of ‘job protection’ for the executive director. While this is entirely predictable, it should be recognized that the issues driving the missions of nonprofits are not easy to solve and there may never be enough people to get the job done. Accordingly, the merging of similar (duplicative) programs and agencies seems to be a very reasonable way of addressing the community needs and the individual protectionism among executive directors and even board members who have long-standing ties with certain organizations, despite the possibility that those organizations are now either ‘irrelevant’ or ‘duplicative’ to the objective reviewer.

So, where do we go from here?

Without a doubt, the discussion among the young professionals in the meeting I attended was thought-provoking. There is no better time than right now for nonprofits to look internally, get their house in order, cooperate with their peer organizations, and conduct themselves in a manner consistent with the privilege awarded them through their IRS charitable designation.