Canary in the Coal Mine

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Citing redundancy and the extreme growth in the nonprofit sector over the last two decades, it has become in vogue to talk about the need for merger activity in the nonprofit sector.  While the number of nonprofits in this country has grown close to 70% in the last decade, focusing on mergers distracts us from addressing one of the most significant reasons for the growth.  

Having interviewed hundreds of nonprofits across the country over the last seven years, it is evident to me that the rise in the number of nonprofits is largely correlated to a decrease in the effectiveness of public policy.  The increase in nonprofits should be a barometer for society, telling us that we need to have the courage to demand better public policy to ensure the sustainability of our way of life.

Our local, state and federal governments are not effectively meeting the needs of society.  Fortunately, we are a country of entrepreneurial and compassionate people who step up and try to solve problems on their own when they see them.

An Example:

A couple of recent graduates from the Goldman School at UC Berkeley realized that foster youth in this country are "aged out of the system" at 18.  On their 18th birthday they are given a garbage bag with their belongings and a pat on the back and sent out on the street.  Within two to four years of aging out of foster care in California, over 50 percent of former foster youth are unemployed, 40 percent are homeless, and 20 percent will be incarcerated.

Faced with these grim statistics, these social entrepreneurs started the First Place Fund for Youth to provide a range of programs to serve these recently emancipated youth.  They helped them establish credit, get housing and build a social network to support them as they struggled to make the transition to independent adults.  Programs like this are now popping up across the country as others see the need and are inspired by the Fist Place Fund for Youth.

This shouldn't be a partisan issue.  Nearly all Americans agree that foster youth, children who have often been abandoned by their parents, are the collective responsibility of society.  When they are abandoned, we all become their new parents.  How many of us would boot our child out of the house with a garbage bag and a pat on the back?

Even for the few of us out there who don't feel that we are responsible for these children, the simple economics of the situation make this a cut and dry case.  Not only do these youth end up costing society a lot of money, whether it's requiring public services or entering the prison system at a cost of $31,000 per year (data from California), but we also lose out on income tax to support our society (roughly $10,000 per person per year). The math is compelling.

The First Place Fund for Youth is a canary in the coal mine.  The need for this organization is a clear sign that our foster youth system needs to be redesigned not just to keep these youth out of trouble until they turn 18, but to create a gradual and thoughtful process for slowly aging them out of the system until they are truly set up for success as independent and productive members of society.  Most parents remain involved in supporting their children well past their 18th birthday; they provide financial support, a fall back that enables their children to take risks, mentorship and advice, emotional support, and all the other things that I know I took for granted.  We collectively need to take responsibility for foster youth beyond their 18th birthday.

As we learn about the need for First Place Fund for Youth we should be asking why our public policy has failed our society on this issue and how we can right our path.  The solution is not simply to merge them with other nonprofits serving foster youth.  It is to change public policy.

This is one of the most critical roles of the nonprofit sector in our society.  We need the canary to keep our mine safe and to keep it running.

The challenge today is that we are not listening to the canaries.  As Al Gore wrote in "The Assault on Reason", our government is not focused on setting policy based on reason and evidence (he also romanticizes that we once did, which is questionable).

A Proposal:

What if we regularly surveyed all nonprofit leaders (the canaries) and asked them what change in public policy would enable them to happily close their doors?  We could then take the most frequently cited suggestions and develop a "canary report" for the media and government that identified 10-15 key bi-partisan policy changes that would strengthen society and celebrate these canaries as heroes in improving our communities.

The Role of the Nonprofit Sector:

Clearly nonprofits do not exist solely to act as canaries.  This is the first in a series of posts about the numerous critical roles that nonprofits play in our society.

5 Comments

Betsey McGee said:

Bravo! Speaking truth to social sector activists and offering a clever proposal to boot is a wise way to advance an important dialogue.

Great suggestion for the first step, that is, identifying info sources and problem definition.

The second step is determining the right organization to process the incoming canary data and launch the necessary advocacy campaign. Would this be a Taproot role or do we need to find it a home with an community policy or advocacy group?

Jill Blair said:

Great thought...great story...here's a couple of rubs...one is that we still may benefit form a consolidation within the sector to achieve more power and impact...specific to your call to action that shouldn't damper our enthusiasm for the intention or the strategy you propose...many nonprofits don't operate in the public sector place - nor do they possess the skill to do so. I think you are right that the proliferation of nonprofit, independent and now more recently even private sector efforts to address pressing public problems is in some cases a reflection of failed government effort and in other cases a misalignment or fundamental disagreement about the nature and content of the social contract between citizens and government. So part of the solution is to ask the canaries...but there's a larger frame to find as well. IN either case, it's time to yank on the chains of leadership...

Jason said:

It's a very interesting hypothesis and the solution is compelling too because its so innovative.

Two thoughts I had:

1) Governments are supposed to correct market failures, broadly defined. If there are services/goods that the private/non-profit sector can provide more efficiently or cheaply, than the government should in fact step out of the way and let these entities function. Example numero uno is the fact that we have a deregulated telecomms system in this country. Simply put, AT&T and Comcast can provide infrastructure and customer service "better" than the government could, so Uncle Sam steps out of the way. In your blog post, you use the extreme example of child protective services, which I think makes your point very clearly. But take a more gray area, say, environmental clean-up, a company like TerraPass. Maybe it is the case that organizations targeted to one issue are in fact better suited to deal with that issue, and if the government were to try to intervene with new policy, it would muck up the whole thing, introduce inefficiency, and be a net negative. Maybe specialization by non-governmental groups isn't necessarily a bad thing. This hypothesis supposes that there are some functions of public life (maybe carbon offsetting being among them) that should not necessarily be entrusted to public officials. Again, in your example of CPS, I think we agree that it is so direly important that its existence must be underwritten by the permanence of government. But think about less socially necessary services, sort of like what Taproot does. The added value you provide is probably immeasurable, or at least astoundingly large. It's better, in my opinion, that you're running that ship as a non-profit CEO than as a congressman. You can focus your efforts. You don't have to play to overtly hostile constituencies. And in the case of an inarguably good service like the one your provide, operating extra-governmentally is, I think, a good solution. But turning to more contentious services and profit-making services, such as CPS and the Postal service, respectively, maybe governments are the best entities to operate these. But there are two distinct groups -- services suited for "outsourcing" as it may be, and services best kept in the portfolio of governments.

2) Oversight. Accountability. While you and the non-profit people you run with are probably better intentioned and more effective than most of the Congressmen, mayors, and state legislators in this country, you don't stand for public election every two or four years. You do not have to release your own tax returns. You don't have to publicly debate other non-profit leaders. So save the fact that you're maybe more committed and certainly more efficient than our governmental leaders, you're not nearly as accountable. For this reason, I think that your idea has another reason, unexplored in the blog, for why it should be adopted: accountability. While, as argued above, some services are better performed by non-governmental entities (and I do believe this), there is a tradeoff between efficiency and transparency. Furthermore, we can assign relative, if subjective, values to these two concepts, and weigh them against each other appropriately. We all forego a bit of efficiency to know precisely what goes on in Cabinet meetings in the White House. The government would run more smoothly if all business were conducted in secret, but that's not really in line with our Constitution or conception of democracy. Back to non-profits ... you could argue that we really do need to have a canary report because some of the offerings being provided, particularly in the realms of social services, are wholly inappropriate for entities with so little accountability, relatively speaking. You could argue the imperative nature of removing these services from the canaries, or first movers, and put them safely and firmly into the hands of people who do have to stand for election. This, in turn, frees up non-profit entrepreneurs to set off in search of the newest coal mine -- maybe it's the global water shortage or green job training. By taking away from the non-profit sector those activities which are too sensitive or critical to remain in the hands of unelected, albeit dedicated people like yourself frees your minds to explore tomorrow's challenges instead of orchestrating yesterday's solutions. You can maximize efficiency by leveraging the power of the government to run things ad infinitum while creative minds anticipate tomorrow's policy challenge.

Virginia Edelstein said:

While you make a compelling point on the learning we can take away from the proliferation of nonprofit organizations, I can't help but wonder if you haven't left out half of the story. Which is the fact that many of those newly created nonprofits are offering overlapping services to organizations already in existence.

I've most notably seen the coverage of this trend in articles about demographics. These articles frequently talk about Gen Y and Boomers as people who are highly motivated to tackle issues of the world, but want to do it in their own ways. So if existing agencies don't have a program that exactly match their particular idea, they start a new nonprofit. I've been shocked that some of the articles I've seen seem to laud this behavior. Yikes! This kind of proliferation is very detrimental to the sector, in my opinion. They compete for limited dollars and make it even harder for funders to identify which programs are achieving the best outcomes. Not to mention the loss of economies of scale in overhead, etc.

Personally, the number of nonprofit organizations I've seen start-up in the past few years have seemed like they would fit as PROGRAMS of an existing agency rather than organizations out on their own. I think it's a small number that have found a true gaping hole in services offered in their community.

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