Time to think about 2021

It’s time to start re-thinking the future  — Fiscal Year 2021 — in the wake of a global health and economic crisis.

For most nonprofits, especially those that get funding from government agencies, 2021 doesn’t start in about eight months, it’s actually much sooner than that, at about 70 days.

In the nonprofit world, May 5 starts the 4th Quarter of FY20. Which means in the midst of a pandemic, increased demand on services, stay-at-home orders, and expected shrinkage in City and foundation funding, nonprofits need to start planning and budgeting for their next fiscal year that starts July 1, 2020.

Maybe we can use this crisis as an opportunity to completely rethink the structure of the nonprofit sector.

There’s a common refrain that “there are too many nonprofits,” but the full statement should be, “there are too many nonprofit corporations.” There are about 10,000 individual nonprofit corporate entities in Philadelphia, from some of the city’s largest employers like UPenn and CHOP which are multi-billion dollar enterprises, but the vast majority are small organizations, most of them are struggling with little to no reserves for an emergency like this.

There is no shortage of, nor should we limit, people who want to help their fellow Philadelphian. The question is, do they each need their own legal entity, each with their own legal status and administrative burden and costs?

The need to start your own 501(c)(3) or foundation is diminishing through disruptions like GoFundMes, fiscal sponsorships, cash apps, donor advised funds, and B corps or LLCs. Social entrepreneurs have a wealth of options to directly help those they want to help, without going through or starting large or small nonprofit institutions and the related costs of maintaining a 501(c)(3).

Existing 501(c)(3)s need to consider the sunk-cost bias in maintaining their 501(c)(3) corporate status. It takes a lot of work and money to actually get their 501(c)(3), and no doubt it’s an achievement, but is maintaining it in this day and age integral to furthering your mission?

The nonprofit industry is the only sector where mergers and acquisitions are not pursued to increase impact and this has to change.

Nonprofits aren’t founded to exist in perpetuity, but to accomplish a mission, and to accomplish that mission you need allies and coalitions. Now is the time to focus on the mission and not corporate legacy.

If you’re a nonprofit leader, funder, or a board member and you made it to the end of this post, thanks.

It’s time for all of us to come together and solve Philadelphia’s persistent and emerging problems together — focused on our collective mission to create lasting impact.