Check out yesterday’s New York Times piece about a trend toward mergers among nonprofits. Looks like deja vu all over again: in 1997 your faithful correspondent wrote about the selfsame trend for Chicago Philanthropy
(of blessed memory). In the 1980s the United Way got credit for
pushing charities toward consolidation and its attendant efficiencies;
in the 1990s the pressure ostensibly came from the foundations. Today,
apparently, the moving force is those new ultra-skeptical
entrepreneurial donors who expect not an ounce of fat on their trophy
charities. The coverage is the same–only the names have been changed.
To protect the guilty, maybe? Nonprofit executives have the same
motive to seek mergers and acquisitions as for-profit executives,
namely, to improve financial results without the bother of actually
improving what they’re doing. It’s a lot easier to fire an extra
accounting department and trumpet your "efficiency" than it is to make
a new product people can’t live without. And while you’re at it you’ve
eliminated a competitor whose efforts might have outshone yours, and
with him the likelihood that consumers will be able to find something
they prefer to what you’re offering right now. So you’ve increased
profit and reduced financial risk without actually producing anything
of value. No wonder M&A people get paid so much: they make bricks
If you run a nonprofit, you can do the hard work of persuading
people that what you do is worth supporting with their charitable
dollars, and the even harder work of offering your clients the best
possible service at the lowest possible cost to them and everyone else,
and the still harder work of determining whether those services or some
others would actually solve their problems and taking action based on
the outcome of that evaluation. Or you can look around for someone
else’s accounting department to fire, and someone else’s Board of
Directors to poach; and your Board can continue its untroubled sleep
and your services can remain in their comfortable groove because
there’s no one left to challenge the way you do things. And if anyone
complains? Blame it on the funders.
Somehow the whole thing is made more delicious by the fact that the merger at the core of Stephanie Strom’s article is one between the two largest clearinghouses for volunteers (as the superseded name, Points of Light, recalls: "a thousand points of light . . .").
The original idea, of course, was that solutions to social problems
should come individually and locally; but the behemoth which will
result from the merger will "work[ ] with more than 80 percent of
people volunteering in America each year."
If someone proposed to take control of 80% of any other valuable
resource–oil, say, or bandwidth–the Antitrust Division of the Justice
Department would have something to say about it. At what point does
"market dominance" in the nonprofit sector begin to pose a similar
danger to proper economic function?
You know those complaints we all hear about the difficulty of
finding suitable volunteer opportunities, on the one hand, or qualified
volunteers, on the other? If that’s what the current system produces,
does it make sense to reduce the number of available alternatives?
It does if your goal is to be able to ignore complaints. For, as
the great Lily Tomlin said about a monopoly of an earlier era, "We don’t care. We don’t have to. We’re the phone company."