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|  | MARCH 3, 2006
Are There Too Many Charities?Some experts think the nonprofit sector is growing too quickly for its own good. I wonder if it's growing fast enoughWalter Sczudlo, executive vice-president of the Association of Fundraising Professionals (AFP), recently told industry publication The NonProfit Times, "What concerns us is that this proliferation of charities is creating a huge competition for donor dollars. There are so many charities now going after so few dollars and it's getting parsed out so finely." Trent Stamp, president of Charity Navigator, which evaluates the use charities make of the money they recieve, has written that it's a simple matter of mathematics: "If we had fewer charities, we would spend less as a nation on fundraising and administrative costs, and more on the programs and services the high-performing charities seek to deliver." Robert Egger, president and founder of D.C. Central Kitchen and author of Begging for Change, an examination of problems in the nonprofit world, contends in the Chronicle of Philanthropy that all charities are hurt by uncontrolled growth. "We would be a much better sector with 25% less nonprofits," he said. IS THAT SO BAD? These are just a few of the voices speaking out. Even a New York gossip columnist recently told an audience that one of the biggest problems in New York was the burgeoning number of fundraising events each night, which made it impossible for his staff to cover them all. Yes, there are a lot of nonprofits, and obviously there's overlap in terms of mission and competition for donor dollars (as well as gossip columnists' time). But is that such a bad thing? Why aren't other sectors of the economy subjected to this same type of scrutiny? For example, one doesn't hear that there are too many small businesses in the U.S. In fact, it would seem unpatriotic to suggest stifling America's entrepreneurial spirit. We also seem to easily discount the economic impact of charitable organizations. In New York City alone, nonprofits are responsible for more than $43 billion of the city's economy. SIGN OF GROWTH. And no one seems to suggest there's too much religious activity for our economy to support. Like other nonprofits, religions depend for survival on their ability to capture people's hearts and minds. The vibrancy of our various religious cultures is considered a positive asset to society just as the proliferation of small businesses is seen as a sign of the health of our economy. Yet economists Inkyung Cha and William Neilson at Texas A&M University's Private Enterprise Research Center say that while competition is generally a good thing, it isn't when it comes to charities. Their research shows that the increase in the number of charities is creating a "crowding-out effect" that's actually counterproductive. My work in the nonprofit sector over many years has led me to believe the opposite. I think the number of charities is actually a sign of our nation's prosperity. Like other parts of the economy, if more and more charitable organizations are competing for the same amount of dollars, market forces will ensure that the weak will simply not survive. Donors are always able to channel their money where it means the most to them. (That isn't to say that all groups do things equally well or efficiently, which is a topic I'll explore in another column.) BOOMER BUCKS. Paul Light, professor of nonprofit studies at New York University, has stated, "The real question is how long will this growth [in charities] be sustainable? At some point, we'll simply have too many and the funding won't be able to support the numbers." I disagree. In fact, I wonder if it isn't possible that we may very well be able to support even many more charities than now exist. For example, if a study by Boston College researchers is accurate, baby boomers will unleash an unprecedented $41 trillion to their heirs and charities over the coming decade. Where will all that money go? Moreover, the average American family gives 3.2% of their income to charity. In actuality, most of us could comfortably give more (see BW Online, 11/21/05, "It's Time to Donate a Little More"). So perhaps the growth is sustainable. People seem to get absorbed by the financial fates of multimillion-dollar charity organizations, forgetting that the majority of charities actually struggle with budgets of $400,000 or less. How do they manage? They run on the fervor of people who so believe in a cause that they donate their time and talents to bring it to life. In New York City alone, it's estimated that there are over 342,000 volunteers assisting local charities. NEW LEADERS. Thinking back on my experience as president of a national organization in the early days of the women's movement, I remember that highly intelligent women's desire for leadership opportunities, which they had been denied in other sectors, often manifested itself in the reluctance to let go of power or to share it. This led to the formation of new organizations and duplication of services -- and considerable angst. Yet I realize now it was that very multiplicity, that mosaic of organizations, which led the women's movement to become one of the most momentous social movements of the 20th century. There will always be emerging leaders who seek their own voices outside of their chosen organizations. Some fail, yet the ones that succeed make their own contributions to the welfare and vitality of our communities and our country. They may organize around their kitchen table, through their block associations, in their community house, through angel investors, or myriad other ways. The point is that they do it. This American dedication to charitable activity and giving is a profound asset, one that we should be loath to diminish. We must nurture and protect it, not attempt to put impediments in the way of its flourishing.  Cristine Cronin is president of NYCharities.org, a free Web site dedicated to helping people donate whatever they can -- time, money, or talent -- to New York State's 60,000 charities
BW MALL
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