The Big Squeeze

When I was a kid, I loved the TV series “Batman.” There was a scene in every other episode, it seemed, where the caped crusader found himself trapped in a room with ominously spiked walls. The walls, of course, then started moving in to impale and crush him (“Holy chamber of death, Batman!”), while the Joker or the Riddler or another of the arch villains laughed maniacally. My nine-year-old self loved it, knowing all the while that Batman would somehow survive.

The nonprofit world finds itself in such a room right now – no spikes, and no special effects, but the big squeeze is on. It’s coming from four sides. And no one’s laughing.

The first squeeze is the rising demand for services. Times are tough. Particularly for those organizations serving basic needs – food, shelter, housing, medical care – there are significantly more clients than a few years ago. People are hurting, and they are turning to nonprofits for services.

The second squeeze is reduced funding. This is most clearly seen in government grants at the federal, state and local levels – and those reductions in turn have increased competition for grants and gifts from the private sector (foundations, businesses, and individuals). There’s less money to do more. Which means that each nonprofit has to spend more time writing more grant proposals and asking more people for money just to stay even.

The third squeeze is an increase in reporting requirements. Grants are coming with more restrictions and – in the name of accountability – more frequent and detailed reporting. This is certainly true at the governmental level, but there is also anecdotal evidence at the foundation level. (One foundation made a $10,000 grant to an organization I know – hurray! – but then sent a letter requiring the nonprofit to provide a detailed, updated work plan before it would release the first $5,000. The foundation then required an interim report six months later before it would send the second $5,000. These reports were labor-intensive and required filling out special forms that were not part of the organization’s standard financial and program reporting – all for what was, in truth, not very much money. Multiply these special reporting expectations times several funders, and you get a sense for the time and frustration involved.)

The fourth squeeze is the growing expectation, which I commented upon in an earlier post, that nonprofits spend as little as possible on fundraising and administrative costs. In other words, many of the same funders that are requiring frequent and specially-produced reports want to make sure that the nonprofit is directing as much time as possible toward direct program services. The ironies would be laughable, were the consequences not so serious and, for the nonprofit, infuriating.

And so nonprofits, already pressured and paying their staff too little, are being squeezed dry. It’s having an effect in the quality of the programming and the esprit of the field. You can only hold back those approaching walls so long before they crush you. This is not an episode in “Batman” with the inevitable triumphant ending.

I hope that funders and donors will recognize how they’re inadvertently contributing to the problems and try to ease the pressure.  Funders shouldn’t give their money away frivolously, but neither should they relentlessly hector the nonprofit. Ronald Reagan famously said that in dealing with international weapons treaties that you must “trust, but verify.” Funders need to trust a bit more, and verify with a bit less rigidity. And donors should help organizations they care about by jotting the happiest possible words on the memo line of their checks: “Unrestricted – for use where the need is greatest.”

Copyright Alan Cantor 2012. All rights reserved.

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