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Too many nonprofits?

The Charity Governance blog points out that in fiscal year 2007, the IRS received 85,771 applications for 501(c)(3) status: Do we need 85,000 new charities? Somebody thinks so.

(Only 68,000 of those made it through the process to become IRS-recognized nonprofit organizations. Glad the gatekeepers are so rigorous!)

It’s not hard to throw up your hands and cry Enough already! We have too many nonprofits!

The down-side of there being so many nonprofits is easy to understand. It means:

  • Inefficiency.
  • Duplication of effort.
  • Lower level of professionalism.
  • Marketplace confusion.

On the other hand some of these new nonprofits are tiny, serving extremely narrow or localized niche issues that no one else is dealing with.

Others are smart, fast innovation factories that are unfettered by bureaucracy and limited thinking. These are the organization that will quickly be competing for donor dollars with established nonprofits — the organizations that will force us all to be smarter.

What do you think? Are there too many nonprofits already?

One thought on “Too many nonprofits?

  1. I agree there are way too many nonprofits in Austin and in our country. Seems as if there is a lot of overlap in services provided, hence a lot of wasted time, money and effort. I definitely support a macro approach, that is still low enough to stop things falling through the cracks, but large enough to leverage scarce resources and enjoy the economies of scale applied to do good.

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