Hard choices: How can the ‘nonprofit industrial complex’ do better?

Nonprofit organizations face enormous challenges at the moment. Many are confronting rising demands for their services during a time of declining revenues. COVID-19 has complicated everyone’s ability to function effectively.
But some of the toughest tests that nonprofits face are not external. Within many organizations, staffers are asking hard questions: Why are our highest-paid executives and our board members almost uniformly white? How come our business model requires us to accept money from people who have earned their wealth by doing damage to society? And why haven’t we made more progress in advancing racial equality?
Some have even gone so far as to denounce the sector as a whole, using the epithet “the nonprofit industrial complex” to highlight the ways in which nonprofits often mute calls for social justice and perpetuate the very problems that they were intended to solve.
In short, the chickens are coming home to roost for many nonprofits.
Despite the halo that often surrounds the nonprofit sector, there is a real need for course correction. At too many organizations, burnout is a fact of life – staffers are required to work long hours at wages that would never be tolerated in the business sector. And the leadership of nonprofit agencies does skew white – a recent study suggests that nearly 9 out of 10 of the leaders of the country’s largest nonprofits are white (compared to 60% of the general population).
How can nonprofits do better?
One of the most common demands advanced by unhappy nonprofit staffers is for greater investments in “anti-racism” training. In recent years, an entire industry has emerged to provide such trainings to nonprofit agencies, often at a steep price. Many nonprofits – desperate to be seen as doing something, anything, to create an inclusive work environment – have proven eager customers.
Unfortunately, there is little evidence to suggest that these trainings make a difference. Indeed, anti-racist trainings, which many nonprofits have made compulsory for all of their employees, have engendered fierce pushback, with some critics contending that they actually make racial dynamics worse rather than better.
Instead of anti-racism trainings, nonprofits would be wise to make two different kinds of investments. The first is in leadership training and mentoring for mid-level and upper-level managers who are people of color. We need to prepare a new, more diverse cohort of people to run our nonprofit organizations. Programs like Leadership New York, which help to expand the networks of participants, are important building blocks. Crucially, efforts to groom the next generation of nonprofit executives should include providing emerging leaders with both mentoring and fundraising experience – the ability to raise money is an essential part of leading a nonprofit organization.
The second investment that nonprofits need to make is in collective advocacy. Despite the importance of nonprofits to the health and well-being of our society, they tend to punch well below their weight in terms of political power. Competition for scarce resources often prevents nonprofits from advancing their shared interests. Only by working together will nonprofits be able to press government and foundations to increase available funding. This should include ensuring that funders are providing adequate support for overhead costs like rent, supplies and utilities that are essential to sustaining any agency. As John MacIntosh of SeaChange Capital Partners argues, nonprofits should also be requesting more flexibility from government funders, allowing them to move money around more easily. In these ways, nonprofits can help ensure that they have the resources necessary to truly take care of their staffers, including improving salaries and benefits for those at the bottom of the wage scale.
In this moment of reckoning, many nonprofits will have to make hard decisions about how to improve their operations and advance racial justice. The stakes are high: Getting these choices right could well be the difference between those who survive and those who do not.