Is Non-Profit Impermanence A Synonym for Failure?
By Richard Marker
A few years ago, a noted professor of History of Education invited me to speak to a graduate class about my role over the course of my career in the creation of a number of interesting and cutting edge nonprofit organizations. With the vantage of a rear view mirror, he noted, whether by serendipity or opportunity, I had been involved at an early stage with a surprising number of well-known and often honored ones. In inviting me, his goal was to give his students a kind of inside look at the dynamics of organizational creativity. And, to be sure, I was proud of these involvements.
The response of the graduate students surprised us both. What the professor considered a litany of cutting edge creativity was not how the students responded at all. They felt that I had told a tale of one failure after another. Why? Because only a very few of these organizations are still around. That alone was proof that they hadn’t succeeded. The fact of their impermanence, whatever transformational changes they may have enabled, was all the evidence they needed.
Most of the organizations of which I spoke lasted 15, 20, 25 or more years. They weren’t brief novae invisible to no one. Some were world renowned, others had a national presence; a few were only local. Each was worth talking about because it represented innovation and change in some element of education, identity formation, or organizational design. These stories are never the work of one individual – I may have intervened at a key moment, or played a role along with others at an early stage. Often, I was a crucial behind-the-scenes player, my role evident to only a few insiders. But involved I was.
Yet these graduate students, millennials all, a generation whose lives and careers are a veritable paradigm of transiency, did not hear my presentation as a celebration of the possibility of creative change but of the inevitability of the failure of innovation. The host professor was astounded, and I was crestfallen. What the students heard was not the story their professor wanted heard, nor the theme of the book he had been urging me to write [still unwritten], nor the message he thought his students needed to hear.
I am currently very involved in the closing of two visible organizations: one is a public charity and the other a private foundation. The response to their closings has been markedly different. The closing of the public charity which has been around for about 50 years is one of anger, disillusionment, and failure. The closing of the private foundation has included some disappointment, but is characterized mostly by a celebration of what it has accomplished over its much more limited life.
The difference in response to the two closings is quite remarkable.
Why does impermanence for the nonprofit/ngo sector so often imply failure? Is it the angst and disappointment of nonprofit sector leaders who watch demographic changes and cultural shifts shake their organizations’ historic raison d’etre? If they advocate closing or merging, are they besmirching a proud legacy and belittling the contributions of so many who have come before? Are they embarrassed that they may have been too slow to re-invent themselves – perhaps into something unrecognizable to their founders – just so that their organizations might continue to exist? Should they? Have they miscalculated that the loyalty of past donors will pass, as if genetically, into new generations? Has the nature of organizational life been so transformed that they no longer have the agility or the access to funds that will guarantee their relevance going forward?
Or perhaps they have made the choice willingly: they have become self-reflective and they have decided that their expertise is best managed by another organization? Their original purpose has been usurped by a changed world and they honor their past best by closing or merging? Is their long standing way of operating too inefficient for this age and they are either too small or too undercapitalized to change that? Has their funding business-model imploded? Have they acknowledged that their volunteer and professional leadership pipeline has dried up? Are their funders impatiently urging changes that can no longer be ignored?
Why is it that so many consider it failure if an organization faced with this range of challenges decides that it is time to close or merge? Why do we imagine that a nonprofit should have a claim to perpetuity simply because it has lived for one or two or three generations, and anything less is an embarrassment? So much for the legacy organizations.
But, in fairness, that wasn’t what upset the graduate students. They were presented a narrative about innovation and heard failure. Here the plot thickens. Did they fail, if fail they did, because legacy organizations overwhelmed them? Or because they never had access to mezzanine and 2nd stage funding that would be accessible in the for profit sector? Do funders talk a good game about innovation but are perfectly willing to starve it along the way? Are lean and mean start-ups asked to do more than they have bench-strength to accomplish? Is a high risk of failure the price of entry into a very fragile and tenuous market? Is failure of an organization the same as failure of an idea? Is it even fair that we ask our most creative thinkers to become organization builders?
Perhaps the question needs to be asked a very different way. Why should an organization, any organization, expect to last more than a few years, or more than a generation? A century? Don’t organizations come into existence to solve a problem? If they do so well, they have a respectable chance of being around for a while. When the problem goes away or a different problem surfaces, why even turn to these organizations? Sometimes what was once new becomes so normal that a separate organization is no longer needed. Of course, some organizations learn to “recycle” or re-invent themselves. But if an organization chooses not to, has it failed or simply recognized that its very valid and worthy contribution was of a different time or place?
Now here is the kicker: On the private foundation side, impermanence has become celebrated. There are numerous highly visible private foundations and philanthropists who have announced that they will spend their money during their lifetimes or within a defined period of time. Indeed, in my work, the choice of perpetuity vs limited lifetime is a core question, either answer to which is considered valid. The question is not new at all – Andrew Carnegie and Julius Rosenwald answered this question very differently from one another a few decades ago.
It isn’t an easy choice: every funder and foundation makes a calculated, even when well-informed, bet about the best use of limited resources. And make no mistake, even the very largest foundations have limited resources compared to government coffers and the scope of human need. Is it smarter to make “big bets” on solving one problem now, or is it more valuable to assure that there will always be an independent source of “risk capital” to experiment and respond to new and unanticipated needs as they arise?
In the world of funders, there is no unanimity at all on how to answer this question. It is a dynamic and vital discussion for every philanthropy strategy plan.
But, I have never heard a foundation that chooses to spend-out called a failure. Nor are funders who choose to give all of their philanthropy resources during their lifetime condemned. Why is it legitimate and honored for funders to make this choice but not so for public charities? Why is it a source of hand-wringing and even shame when a nonprofit chooses impermanence, by its own volition or otherwise but a source of hand-clapping when a funder makes the same decision?
Over the course of my professional career and as an active volunteer board member, I have been involved in a good number of decisions about mergers, closures, and attempted reinventions. These discussions and the surrounding processes are never easy. Human beings have deep emotional commitments and investments in the answers. It matters to us and it should.
Yet the divide between how we feel about and respond to the impermanence of public charities and private philanthropy is very large. Perhaps our sector would do well to recognize that impermanence of institutions and organizations need not be synonymous with failure, and, instead, to celebrate existential life cycle decisions, including closure, as a sign of a robust and healthy sector.
Richard Marker advises funders and foundations on their philanthropy strategy through Wise Philanthropy, and teaches philanthropists and foundation professionals at both Penn’s Center for High Impact Philanthropy and NYU Academy for Funder Education.