Who Cares if Central Texas Has Too Many Nonprofits?

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Back in 2009, when Greenlights released the “Does Central Texas Have Too Many Nonprofits?” report, many were surprised to learn that we counted 6,000+ nonprofits in our MSA, or more organizations per capita than any other city in the Southwest. Even before that report was produced, we at Greenlights had been talking about the pros and cons of having so many nonprofits in our community. Our board, leadership, and team often discuss whether it makes sense not only to ask nonprofits to consider alliances or mergers with others, but to actively encourage them to do so.

Four years later, much has changed in our nonprofit landscape, but much has stayed the same. Since 2009, we’ve all weathered an economic recession, seen cuts in government funding, watched social media become an essential part of communications, seen clear trends emerge in the nonprofit workforce, and witnessed several examples of nonprofit collaborations and even a few mergers. After all that, we want to know if the number of Central Texas nonprofits has changed since the 2009 report. So, we’re updating the data and releasing new numbers at our upcoming town hall event.

In case you haven’t heard, on May 7, nationally renowned nonprofit strategist, David La Piana, will be in Austin for a very special Town Hall event. Greenlights is partnering with our friends at the RGK Center for Philanthropy and Community Service and OneStar Foundation to produce the Town Hall which is titled Aligned for Impact: Perspectives on What Works in Nonprofit Collaborations and MergersThe event is intended to get you and other nonprofit leaders engaged in a conversation about what’s best for our city and the communities we nonprofits serve.

Do we still have too many nonprofits? Does it matter that the vast majority of our nonprofits are very small, with annual budgets of less than $100,000 (73% in 2009)? Does the community get greater value out of having lots of flexible, grassroots organizations helping people in need? Is it fair to ask donors to cover overhead costs for multiple groups when they could merge and share expenses?

As with any complex issue, there is no simple answer. And this is Austin we’re talking about. We are entrepreneurs. We are creative. We are young and idealistic. We want to find our own way of getting things done and we’re usually smart enough to pull it off. So what if nonprofits in other parts of the country have fewer nonprofits and more mergers than we do?

In his 2010 Stanford Social Innovation Review article, Merging Wisely, David La Piana shared a bit about how these questions are asked in other regions: 

“…the urge to merge shows no signs of abating. Underlying this trend are two core beliefs: The nonprofit sector has too many organizations, and most nonprofits are too small and are therefore inefficient. Mergers, the thinking goes, would reduce the intense competition for scarce funding. Consolidating organizations would also introduce economies of scale to the sector, increasing efficiency and improving effectiveness.

Yet a closer look at the nonprofit sector suggests that this thinking is too simplistic. Mergers are risky business. They sometimes fail, although not so frequently as in the corporate world. They usually cost more than anticipated. They sometimes create more problems than they solve. And the problems that they allegedly solve—too many nonprofits, too small in size—may not be problems after all. 

Instead of reflexively pulling out the biggest gun in the partnership arsenal, nonprofits should consider a variety of ways of working together.”

Do you care if we have too many nonprofits? Does it matter if you’re a funder of multiple organizations with similar missions or the founder of a small start-up that you have nurtured for years?

As the national leader on the subject says, we should consider a variety of ways of working together. Hope you’ll join us on May 7 to contribute your answers to these challenging questions!


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