Can the Nonprofit Sector be Saved?

Girard College, Founder’s Hall, Philadelphia, PA (Capital Supports)

The nonprofit sector today is threatened not only by forces of financial insolvency, as we are most often inclined to point out, but more critically by its rooting in white corporate culture and supremacist practices. Though our sector is one of the battle fronts for social justice, to what degree can we use instruments wrought by white supremacy for its own undoing? 

So the critical question is not whether the sector can be reimagined in a more financially sustainable manner. Rather, the critical question is, “Can the nonprofit sector be redeemed from its complicity in the very problem to which it has made such a great contribution?” My answer is, I don’t know, but I think it’s worth trying. At this fragile moment in the American Experiment we can’t afford to declare defeat. The path to change, though, will require us all to pursue, with equal vigor and persistence, a range of strategies.

My first political mentor was the late artist and activist, Fred Ho, with whom I had the great privilege of working for a number of years up to his untimely death in 2014 . Fred embodied a fascinating and complex set of contradictions. He believed in economic self sufficiency and anti-capitalist divestment, designing and making his own clothes, eating macrobiotic, and refusing to use instruments of debt. He also wanted to beat capitalists at their own game through acts of neo-Marxist subterfuge, largely through commercializing his own radical art.  Much of Fred’s work is grounded in Chinese legend and myth, in particular the trilogy Journey to the West and the stories of the Shaolin Temple and its warrior monks. Figures from this literature, both mythical and real, provided for him archetypes for contemporary political actors, and their exploits were blueprints for social change. 

Fred was a prolific writer on social and political theory, drawing parallels between the particular struggles of Black and Asian people in white, neo-liberal America. The figure of Shaolin Warrior Monk represented for him militant, in-your-face activism, burning old systems to the ground and wiping out enemies, physical and metaphysical. Fred was also interested in the figure of Sun Wukong, or the Monkey King in Chinese mythology. Sun Wukong belongs to the mythical archetype of the Trickster, who uses cunning to infiltrate, disrupt, and outmaneuver in order to defeat his enemies. The Monkey King is also a seducer, capable of convincing others to do as he pleases. 

These figures, their attributes, and my many conversations with Fred have been the inspiration for a lot of my own thinking about approaches to structural and political change for our sector, which I think will require us to embrace all three modes of action: warrier, trickster, and seducer.  

The Warrior tears down the offending structures and establishes a new order. We must undo the fragmentation, starvation, and competition of our sector and achieve safety and strength in numbers through local, shared resources and infrastructure.

The Trickster infiltrates the existing systems and changes them from within. We must  embrace more collective action and renovate our nonprofit practices toward ones that embrace commoning and resource sharing governed and controlled by the people whom our resources benefit.

The Seducer builds a new system beside the old one and invites people to abandon the old for new. We must revive and revision alternative paths to economic sovereignty, such as cooperatives, commons, mutual aid organizations, and the emerging technologies underpinning cryptocurrency. 

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The American nonprofit sector is vast and diverse, encompassing about one million nonprofits (at last count in 2019 by the National Council of Nonprofits it was 901,206), and about $2 trillion in expenditures–about a quarter of the entire federal budget. Most of the organizations that make up our sector are small: 88% operate below $500,000 in expenses and deliver programs at the local level, but account for 80% of the total expenditures of the sector.

Considering the above, it’s worth noting that the tax-exempt sector is also not a monolith of good. American constitutional freedoms allow thousands of nonprofit missions to exist in the name of bigotry, racism, and greed: Prosperity Gospel churches, evangelical Christian congregations, White Nationalist organizations, conservative think tanks, to name just a few. And does the NFL really need to be tax-exempt? Seriously.  But a vast portion of our sector does work to further the cause of social justice.

Today we hear a steady drumbeat of doom for nonprofits, exacerbated by the economic crisis brought on by COVID-19 and the continued irresponsibility of post-2008 Wall Street racketeers. Instead of Collateralized Debt Obligations, which brought down the house before, we now have Bespoke Tranche Opportunities and Collateralized Loan Obligations. Same Ponzi Scheme, different name. COVID adds fuel to the fire, both today and in the unfolding fiscal reckoning. Financially, the majority of our sector is fragile. According to the Nonprofit Finance Fund’s most recent report, 86% report increasing demand for services, yet 57% cannot meet demand; 62% report that financial stability is their top challenge; and 50% have less than one month of operating reserves. That was before COVID. A fiscal and structural reimagination is in order, if we are to describe a sustainable future.

But the more acute challenge to the sector’s future has been cast in glaring light by the continued rise of Black Lives Matter and our national reckoning with racial injustice. This problem is more urgent for our sector than the broad question of financial sustainability. It is structural racism, after all, that has produced financial inequity, not the other way around. We cannot talk about one without the other, and systemic racism is primary problem to confront.

The nonprofit sector has been built in the image of the private sector, assuming the structures, practices, and oppressive trappings of corporate power. It follows the neoliberal fantasy that free and efficient markets are the underpinning of a just society, embracing a fetishization of competitive innovation, assumed survival of the fittest, and an appetite for scale and value of mission measured by budget size and BHAGS. These attributes have earned the sector the snarky sobriquet, the “nonprofit industrial complex”. Though many wield this adaptation of Eisenhower’s famous phrase with sardonic wit, it’s more chilling than amusing, considering that the original had “military” in the place of “nonprofit”.

And with the trappings of corporate power, come the forces of white supremacy. The received structures and conventions of the nonprofit sector, in its imitation of for-profit, white corporate culture, are fundamentally oppressive and predominantly white spaces. Eighty percent of all nonprofits are white-led, with that figure rising to ninety percent for the 315 largest nonprofits in the country. The uncomfortable truth about this domain of social good, is that it is also a place where white supremacy prevails, with little change in sight. 

Over the years, I have heard with growing frequency a message of doubt and broken faith in the nonprofit sector, in particular among younger leaders of social change and most acutely from leaders of color. This aversion or outright opposition is well founded. The barriers to starting a nonprofit are many, and capital for nonprofit start-ups is a rare commodity. The overwhelming majority of philanthropy today still goes to larger, white or white-led organizations. Holly Sidford and Helicon Collaborative have studied this in the arts and culture field in Not Just Money: Equity Issues in Cultural Philanthropy. The number of studies and stats supporting this observation grows with every passing month. Despite a steady stream of much-deserved critique on the sector and its funding pathologies from many leaders–notably Vu Le in his blog Nonprofit AF–change has been unacceptably slow. If we are to have any hope for redemption for the nonprofit sector, it needs to cease to be part of the problem.

So, to my colleagues in the sector, I say…

Be a Warrier

Tear down structures, policies, and practices that consolidate power among the few and replace them with those that share power and authority with the many.

Call out and critique funders and institutions that maintain practices of oppression that present barriers to access and hold up white standards of excellence and value. Support Black Lives Matter.

Dis-invest from traditional capital and philanthropy, and embrace the democratization of capital being enabled through blockchain technology and the rise of cryptocurrency markets.

Be a Trickster

With close to one million nonprofits and $2 trillion in throughput, we cannot (should not) simply burn the sector down down and start again; we must change it from within as best we can.

Work to transform, even if incremental, oppressive practices and replace them with more equitable approaches to managing for social good.

To reimagine the sector from within, we need to build more fiscal sponsors of, by, and for communities of color using the approaches of participatory, commons management.

Be a Seducer

In addition to work within our sector, we need to support the adjacent development of alternative economic structures adjacent to our sector, such as private cooperatives, mutual aid organizations, and others.

Look to the vast and growing field of applied behavioral sciences, for ideas and models for how it can “nudge” people toward more prosocial behaviors and values.

Invest more in advocacy and lobbying for the interests of social justice and for increased funding and more equitable funding policy for our sector overall.

SUPPORT BLACK LIVES MATTER.

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