Monday, December 8, 2008

Chapter 11 for Nonprofits: Why This Idea Should Not Be A New One

I was reading the New York Nonprofit Press today and going over the article discussing the November 19th event hosted by the NYC United Way regarding the economic challenges facing the sector. Interesting synopsis and seems like every get together has the title "tough economic times". Paul Light expressed that "100,000 nonprofits will close their doors in the next 2 years". Many other displayed similiar catastophic sentiments and voiced the need for a fund to support nonprofits.

During this conference I was in Detroit visiting with national foundations. No where else in the country is the feeling of the economy felt like it is in Detroit. It is gray everywhere. A similiar statement was made to say that a relief fund (distressed nonprofit fund or DNF) should also be created for the nonprofit sector. A follow-up comment was made to say that the tough economic climate should support those agengies at-risk of closure and therefore at at-risk of not being able to provide adequate services to those most in need. While I agree that such a fund might be neccessary, I do not think that such a fund should exist because of what is being felt right now. This fund should have always existed.

I did not see when the economy was flush a move to support nonprofits approaching the same position on the cliff as I do now although there were many groups on the edge. General operating, the base of a nonprofit's lifeline, was still challenging to obtain then as is it now. Foundation giving is still focused, for the most part, on program giving with little flexibility on their giving to go outside of direct program expense. The need for the DNF should not only be created in this time, but should be a fund that is available at all times. I think it more dangerous to offer up such a fund sporadically rather than having ongoing.

The NYNP article stated that Gordon Campbell, my former professor and CEO of the UNited Way stating the Rahm Emanuel quote, "you never want a crisis to go to waste". I would voice the same thing instead I would say thay sometimes a crisis gives us the lense that we should of had all along. With the words of Chapter 11 being thrown around everyday as a safety net for struggling corporations, I say that an ongoing Chapter 11, or DNF Fund, solution for nonprofits is an idea that should be seriously explored.

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