The Great Non-Profit Die Off


Marc Lapides wrote an op-ed in Crain’s Chicago Business calling for an 1871 accelerator for creating new non-profits.

Most cities could actually use the opposite. What they need is an infrastructure for euthanizing non-profits that are past their expiration date.

When I look around older cities, I frequently see that they’ve got a veritable armada of non-profits. Rarely do I see these making a huge difference in the trajectory of the city.

The usual complaint about too many non-profits is that they aren’t coordinated, and so often overlap or don’t work well together on whatever cause it is they are trying to advance.

This actually doesn’t bother me. The temptation to try to create a single uber-structure for everything is always there, but distributed systems have their own virtues. And where there are legitimate problems, the organizations generally come up with a solution. An example is the various “clearing house” organizations that charitable orgs use to prevent double-dipping.

The bigger problem is that all these non-profits are basically sand in the gears that make it harder to get anything done. While the Lapides talks about innovation, from what I’ve seen non-profits seem to be among the biggest advocates for the status quo.

Ironically, Lapides implicitly makes this point when he acknowledges funders prefer big, established organization.

Try to do anything in a city and you’ll be told to meet with all these “stakeholders”, a large percentage of whom are non-profit leaders who claim to speak in the name of some constituency or cause but too often represent their own personal fief.

Anyone wanting to do things in a city has to run this gauntlet of non-profits and find a way to placate them.

Sean Safford’s famous study “Why the Garden Club Couldn’t Save Youngstown” is a perfect example of this. The Garden Club – a non-profit – was basically a vehicle for reinforcing existing social networks, creating excess social capital that made change difficult.

Too many cities are like Safford’s Youngstown. They could use a culling of non-profits more than the creation of new ones.

Killing unneeded stuff off is hard almost everywhere. For example, eliminating an obsolete app or even a report can be very difficult, as I can tell you from my IT experience. But I can also tell you a lot of them do very little. One time I replaced a legacy system with over a thousand reports. We went live with less than 15 initially critical reports, and the lack of the other 1000+ made no difference. In cities, the Pareto principle likely applies to non-profits as it does everywhere else: the top 20% most effective non-profits deliver 80% of the public benefits.

But just because eliminating organizations is hard doesn’t mean it’s not worthwhile. In cities that are having trouble changing or dealing with problems, leaders should be looking harder at getting rid of a bunch of non-profits than they are at starting new ones.

This piece was originally published on Urbanophile.

Aaron M. Renn is a senior fellow at the Manhattan Institute, a contributing editor of City Journal, and an economic development columnist for Governing magazine. He focuses on ways to help America’s cities thrive in an ever more complex, competitive, globalized, and diverse twenty-first century. During Renn’s 15-year career in management and technology consulting, he was a partner at Accenture and held several technology strategy roles and directed multimillion-dollar global technology implementations. He has contributed to The Guardian,, and numerous other publications. Renn holds a B.S. from Indiana University, where he coauthored an early social-networking platform in 1991.

Image via Crain's Chicago Business.