The non-profit sector in America is massive, by any measure. In 2021 there were 1.54 million non-profit organizations, with total revenues exceeding $2.62 trillion. And this list excludes universities which would add another $900 billion. As with household wealth, or donor lists, we can think of America’s nonprofit organizations as a pyramid:

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Many of the national non-profit organizations in the top tier are household names: the Mayo Clinic, Easter Seals, The Nature Conservancy, and the American Red Cross. Many of them use fees, reimbursements, and contracts to sustain them, but the thing that keeps them elevated is their connection to high net worth individuals who can make transformational gifts.. 

What does it mean to operate a local or neighborhood non-profit in this environment? How can an all-volunteer organization or a group with a handful of paid staff power their flywheel of success when others are talking to, and securing gifts from, extremely high net worth individuals?  How can a group, organized in a low-wealth setting, break out of its local financial constraints?

I wonder about the value of mergers among nonprofit organizations, as a way to scale and to present a “bigger” success story to potential donors. Donors give to “winners” and donors typically define winners as, rightly or wrongly, those with the most money and impact. Many local and neighborhood nonprofit organizations also work in communities of color but are not lead by people of color. Can a merger elevate people of color into new leadership positions? Donors may prefer to give to an organization that is authentic about its commitment to anti-racism. Mergers might also make an organization more efficient, centralizing services such as accounting or IT.

I also wonder about adding in funding arrangements into partnerships with large nonprofit organizations? They cannot usually be as responsive to local and community needs, and they require other nonprofits to fill that blind spot for them. Partnerships between large and small nonprofits without financial support in return perpetuates the imbalance between wealthy and other organizations. Or could those arrangements be another form or merger?

Finally, as a little guy throwing stones at a few Goliaths; according to the Institute for Policy Studies, in 2022 an estimated 41 cents of every 2022 individual donation going to charity went to either a private foundation or donor advised fund. Donor advised funds are on the rise, now making up roughly 25% of all gifts. The dynamic is, a donor gives a $1 million to their donor advised fund, which then sits on the money, pays some fees to an administrator, and gives out $50,000/yr. The donor takes the $1 million tax deduction even though $1M does not make it to people doing the work for another 20+ years. This parks wealth on the sidelines, but is “counted” as philanthropy. Imagine the impact these trickling gifts would have on local and community non-profits if they were made directly. Their revenue would double!

Maybe it is time to rethink billionaire philanthropy, while doing some hard work among the nonprofits to raise the profile of the work going on to make neighborhoods livable every day.