Opinion: Eric Adams has some misconceptions about nonprofits and why they haven’t come together

Here’s clarification and what can be done to achieve that goal.

Mayor Eric Adams attends a “Talk with Eric: A Community Conversation” at  Canarsie Educational Campus in Brooklyn on February 26, 2024.

Mayor Eric Adams attends a “Talk with Eric: A Community Conversation” at Canarsie Educational Campus in Brooklyn on February 26, 2024. Ed Reed/Mayoral Photography Office.

The New York Merger and Collaboration Fund is a philanthropic resource to help nonprofits explore various forms of mergers, partnerships, and collaborations. Since inception in 2012, the fund – which is managed by SeaChange – has made 82 grants totaling $2.6 million, and has engaged with hundreds of nonprofits as they explore whether by coming together in some way they might be better able to advance their missions. The fund makes the exploratory and planning processes easier for nonprofits by offering them a safe, confidential space for discussion and grants to help defray the associated costs.

So, I was overjoyed when the mayor recently asked about nonprofits, “Why is everyone not coming together?” (See the Community Conversation in Canarsie starting at 1:05:30) This is the first time that any New York mayor has publicly expressed interest in the topic. But while I appreciate his curiosity – why indeed! – his comments suggest that he may be under some misconceptions. So, I’ve taken the liberty of addressing them one by one:

“One of my pet peeves that I talk about all the time. . . you can’t have five nonprofits on the block that does financial literacy.”

Actually, you can. In this country, nonprofits are easy to start and there are a lot of good reasons why people choose to start their own nonprofits rather than work for existing organizations. Nonprofits are vehicles through which the people involved express their values and seek – as leaders, staff, funders, and board members – to make change in the world. Once started, even the smallest nonprofits can continue for a long time because of the mission orientation of their leaders, their relatively low fixed costs, the strong pull many funders feel toward small organizations, the willingness of their boards and staff to do almost anything – take reductions in pay, accept furloughs, miss payrolls – to continue the mission.

“We have to consolidate.”

If “we” means “New York City” the fact is that contracting is already very highly consolidated. According to CheckBook NYC, the city spent $9.3 billion on human services in FY2023: 50% of the spending went to the largest 63 nonprofits (1.8%), 80% went to the largest 275 (8%), and only 5% went to the smallest 80% (around 2,750). So even if the city redlined 80% of its partners – which would be very troubling for all sorts of reasons, as well as politically infeasible – it would only save 5%. Furthermore, this would not really be “savings” since these groups are providing critical services that would need to be replaced.

“Why is everyone not coming together to do this?”

This is a great question. There is no outside power that can make nonprofits come together (the Office of the New York State Attorney General could in response to malfeasance, but “insufficient interest in consolidation” is not a crime). If nonprofits are going to come together successfully it must be of their own volition. They need to believe – based on a thoughtful case-by-case exploration – that by joining forces they will be more efficient, effective, or stable in pursuit of their missions. While there are certainly many unexplored opportunities where this would be true, consolidation and scale do not guarantee more impact since smaller organizations, while perhaps less efficient as measured by something crude like “overhead ratio” (though even this must be considered on a case-by-case basis), can be more resilient (they tend to have more donations as a portion of their budget), are less complex to run, and are often closer to the communities they serve.

So rather than, “Why is everyone not coming together to do this?” the better question might be “What can the city do to encourage and support nonprofits in exploring how they might come together?” Here are a few things. 

  1. Run sessions for would-be nonprofit founders introducing them to existing organizations doing similar work, educating them about the real-world hassles of running a nonprofit, and connecting them with fiscal sponsors like the Fund for the City of New York.
  2. Create a single point of contact within Mayor’s Office of Nonprofits Services so that, when nonprofits with city contracts are considering coming together, all the agency-by-agency work associated with transferring contracts is more easily navigated. Ensure that when nonprofits merge, their existing contracts do not have to be rebid.
  3. Offer technical assistance to nonprofits interested in exploring joining forces with others.
  4. Arrange “mixers” where the city’s nonprofit partners can get to know one another based on neighborhood or program area.
  5. Pay nonprofits on a timely and predictable basis. Nonprofits cannot explore how they might work together while at the same time worrying about whether they will get paid in time to make payroll.

If the city did these things, I am confident that serendipity would do its magic and more organizations – though not “everyone” – would explore coming together, and some of them would decide to do it. This would be exciting to watch and to be part of. So rather than just “talking all the time” about his pet peeve, I hope the mayor acts on it.

John MacIntosh is the Managing Partner of SeaChange Capital Partners, which offers grants, loans, financial analysis, and strategic advice to nonprofits navigating complex challenges.

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