Responsible Nonprofit Leadership

It is rare for nonprofit news to make a front page in Philadelphia, but that has changed recently with the abrupt closure announcements of the University of the Arts, Greater Philadelphia Coalition Against Hunger, and Benefits Data Trust. While every situation is unique and complex, from where I sit, these closures reflect the underlying challenges affecting nonprofits in the most difficult environment that many leaders have ever faced.

In my work leading the Nonprofit Repositioning Fund – a pooled philanthropic resource which helps the region’s nonprofits explore mergers, shared services, and other forms of collaboration – I have been inundated recently with calls from organizations considering collaborative transactions to increase their sustainability, and it is not difficult to see why. The nonprofit sector is an economic engine in Philadelphia, providing tens of thousands of jobs and generating billions of dollars in revenue annually (The University of Pennsylvania alone, Philadelphia’s largest employer, reports generating $10.8 billion in revenue for the city annually). Yet despite addressing the most urgent and difficult social problems, the sector is stretched and systematically underfunded. COVID relief funding has been exhausted; inflation is making it more costly to provide critical services (while driving up demand); and organizations face planning and budgeting uncertainties with November’s impending elections. So, while these closures are shocking given the organizations’ community standings and reputations for high-quality services, it is hardly surprising that they and their peers are struggling.

Nonprofit work takes fortitude, tenacity, and resourcefulness, but Philly’s nonprofit leaders possess these qualities in spades. In my experience staff and board leaders almost always try their best to preserve their organizations’ services. Yet, unplanned closures leave gaps in community resources that are difficult to fill. When closure happens abruptly rather than through a managed process, jobs are lost; programs disappear; and the history of good work in service to the mission is buried under the chaos of the closure, leaving the people the organization has historically served, as well as its legacy, at risk. (Compare the closure of UArts with the planful closure of Public Private Ventures in 2012.)

While it is enormously difficult to make the decision to close, with careful planning and strong leadership, it can be made and communicated in a timely, compassionate manner. Since these stark realities usually come to light in boardrooms, nonprofits must build strong, community-representative boards including both mission expertise and financial literacy. Here are some ways that nonprofit board members can exercise responsible leadership for today’s challenges:

1. Ask the second (and third, fourth, and fifth) questions: Financial and budgetary decisions made in an organization’s boardroom can significantly impact the community. If you do not understand how the cash flows, how one-time windfalls will affect day-to-day operations, or anything else about how work is completed and funded, seek additional information until you have the knowledge required to make informed decisions.
2. Center the mission: Board members can misinterpret their fiduciary duty of loyalty as an allegiance to the organization, rather than to the mission the organization exists to advance. Strategic leaders understand this distinction and steward the mission independent of organizational boundaries – including acknowledging when a resource or program is in jeopardy and considering other options to ensure service continuity.
3. Explore alternatives early: Mergers, shared space or service arrangements, and other collaborative transactions can be viable alternatives to closure. However, these considerations generally require money – a recent evaluation of the Fund revealed that two-thirds of our grantees would not have been able to make thoughtful, informed decisions without the Fund’s investment – and time – on average, it takes 6-12 months to thoroughly assess partners and explore and another 9-24 months to plan and enact. And there are no guarantees: even if leaders engage in a deliberate process to consider alternatives, winding down may emerge as the best option.
4. Model collaboration and responsible governance: Foster candid, supportive communication between yourself and staff leaders, and reframe collaboration within the nonprofit ecosystem as a sign of strength and opportunity for growth.

I empathize with the leaders engaged in the hard work of winding down. Philadelphia is resilient, generous, and shows up for its own. We should take this most recent rash of closures as an impetus to proactively rally around the nonprofits that make Philly the vibrant place where we love to work, play, live, and learn – and continue to advocate that they receive the respect and resources their critical work deserves.

Lindsay Kijewski is a Senior Vice President at SeaChange Capital Partners and the Director of the Nonprofit Repositioning Fund. She is an adjunct faculty member in nonprofit governance in the Master of Science in Nonprofit Leadership programs at the University of Pennsylvania and La Salle University.

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