Input from a Reader on "DIS-couraging" Nonprofit Start-ups

I got a very interesting email from David Kaiser yesterday responding to the blog thread on "Dis-couraging start-up charities." Here's what he said.

"'[I]t's government's role to support such things as human service, health, education, the arts, etc.?' This is an unconstitutional idea and counter-Biblical.

"Obviously you see it as the role of government 'to discourage the creation of too many new charity start-ups in geographic locations where similar charities have already been set up.' Such centralization did not work in the former Soviet Union. This is what the free market does best.

"I have prayed that Christ will change your heart and that you will realize that a larger role for government is incompatible with liberty, human dignity and personal responsibility.

"Until then, I cannot benefit from your blog. "

Here's my response:

"Keep reading, David. It hasn't all been said yet, and your input is valuable. I like the way you're thinking.

"We must, of course, provide avenues of expression for any idividuals who desire to start up charities. There's no question but what this is both right and a staple of our system of government. It also fits well with the role of the independent or voluntary sector as we have defined it in this country in the last 50 years. Nonprofits sit in between government and business, because nonprofits do what business won't and what government can't.

"However, it seems to me that the proliferation of nonprofits (some 40,000 per year at this point) can work best in an environment where resources are quite a bit more plentiful than they are now under current political circumstances. This is true both for the federal level and for the State of Michigan But I am speaking mostly here about the significant decline in federal resources available to charities of all types since the beginning of the Reagan presidency.

"Keep in mind that our nonprofits have three main sources of revenue: fees for service and receipts from sales of products; grants from government agencies or entitlement programs; and voluntary contributions from the public.

"During the 1950s thru the 1970s the American public got used to having government be largely responsible for a lot of human services, arts, health and education funding. Since the early 1980s, however, this trend has dissipated and the feds have gotten out of providing a good deal of that support and have left the states and our nonprofits scrambling for money. Not a real solid way to support a voluntary sector that does as much good as our nonprofits do for us, is it?

"I am identifying two different (but not unrelated) problems here in discussing the proliferations of charity start-ups.

"1. They are too often set up without careful, thorough strategic planning and without a solid and comprehensive fund development plan, and that gets them into trouble in their first 5 to 7 years of existence. I'd like to find ways to avoid this trouble they get into because it's inefficient and nonproductive for the public to give to such organizations only to see them fold up. It's hard on the target populations they serve too! That doesn't mean we need to squelch individual initiative. It may mean we need to examine more closely the way in which that personal initiative is expressed through charity start-ups in better planning, fundraising and governance. So that's what I'm supporting here in this blog on "founder-itis. We need to find a way to help new charities succeed."

"2. The other issue here is that unless we become more generous at the federal level with our nonprofits, and provide them the funding they need to serve the society as we've come to experience and expect -- and they certainly do serve more effectively and cost efficiently than government agencies have or could do -- then we will continue to have this problem of scarcity of resources for an increasingly greater number of nonprofit enterprises. How much money is there to go around?

If the current climate continues -- and there's no compelling reason to think that it won't (Democrats controlling Congress notwithstanding) -- then the question becomes "How can we deal with a proliferation of new charity start-ups in an environment of decreasing public resources to support them?" What's the picture going to be 20 years from now. Well, at roughly 40,000 new charities per year, in 20 years we'll grow from 1,049,000 in 2005 to about 2,650,000 in 2025. Will we have the resources to adequately fund the work of all those nonprofits? Where will the money come from? Congress? Fees for service? The donating public?

"Pehaps one answer, or one PART of an answer, lies in more effective solicitation of the giving public. I certainly think that we have left a considerable amount of money on the table and that we should all be out there asking more people for more money. But I do not sense that the complete answer is to be found there. Can the private sector be reasonably expected to bear the entire cost of the volunteer sector, to the exclusion of significantly increased contributions by the business sector and government? And is the donating public ready to bear it, psychologically, after 50 years of increasing government assistance in these various causes? I think that's a tall order. We may need to do some educating.

"You might consider going back to read the report of the Filer Commission in 1973, which did a great job of detailing the efficacy of nonprofits for the greeater society. It is certainly instructive, and provides a good basis for the case for support as we go to individual donors with more requests for more money. But wouldn't it also be of help to find ways to slow the growth of the voluntary sector in ways that bring acccountability, transparency and better planning without impeding the personal initiative and voluntary spirit that has been so essential to the development of our democracy?

"Thanks for your comment! Much appreciated."

Do I hear more comment? Readers, it's time for you to get in on the conversation.