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When Government Funding Goes Away—and it will

Every now and again an article pops up in media outlets concerning the approaching “cliff” in the level of government funding for nonprofits.  Like small seismic warnings, these predictions seem to go unnoticed by most nonprofit leadership.  Make no mistake, however—it is coming.  The only thing that is uncertain is how quickly—and drastically—direct public support will be withdrawn.  So what’s an organization to do?

I, for one, do not see this as Armageddon but a golden opportunity for worthy charitable organizations with critical missions to distinguish themselves and demonstrate their value.  Market forces acting upon the charitable world will clarify the community worth of many organizations and require that they demonstrate their value to their constituencies.

Basic generosity has not gone away.  Research continues to show philanthropy as elastic and with significant untapped potential (Cygnus, 2012).  What has changed is the willingness by many who would be generous to give indiscriminately.  Donors are demanding more transparency, more accountability along with a stronger emphasis upon outcomes by the charitable organizations they support.  This is especially true among younger philanthropists—think “entrepreneurial philanthropy.”  I’m not sure what that means, and I doubt many of those who espouse it really know, but the growing strength of market forces acting directly upon the nonprofit world is indisputable.

How a charitable organization responds to these forces will largely determine its future and relevance.  The best option is to embrace the change rather than fight against it.  Continuing to behave as though it’s “business as usual”; bemoaning the situation with calls that “the sky is falling”; or simply hoping that the boogey man will go away will only lead to irrelevance or extinction.

The good news is that I believe that there is still ample opportunity—and time—for charitable organizations to learn and adapt to the open market of worthy missions from which well-motivated philanthropists will choose to invest.  Remember it’s not what’s being given to charity now—it’s what could be with full engagement of the philanthropic community.

In the next few posts, I’ll be exploring the ways in which charitable organizations can develop a healthy response to the withdrawal of public funding and sharing ideas how they can embrace market forces and turn them to their advantage.

Here’s to the future!

Larry C Johnson
TheEightPrincples.com
Twitter:  Larry_C_Johnson
LinkedIn:  Larry C Johnson, CFRE
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