• April 16, 2014

Calling All Boomers: Don’t Start More Nonprofits

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Many people probably rejoiced when they heard about a study released last week showing that 12 million baby boomers want to start their own nonprofit or socially oriented business over the next decade.

But it’s hard to imagine those findings cheered many people who understand the nonprofit world. More than a million nonprofit groups already exist, and plenty of for-profit ventures are dedicated in part to providing some social benefit. Adding millions more of such entities is not good for this nation.

Such a multiplicity of organizations would move America further away from developing coherent analyses of public problems. And it would lead the country to define and treat social concerns as fragmented individual or local matters. That would make it profoundly more difficult to mount any significant effort to advance the broad-based change needed in our social, political, and economic institutions.

While certainly the commitment and spirit of these baby boomers—and of the millions of others who contribute to improving conditions in the United States and around the globe—are to be lauded, the idea that everybody needs to start a nonprofit is incongruous with the joint action necessary today.

Just as disturbing are the numbers of entrepreneurs who want to do well while doing good and who think that starting their own operation is the way to achieve that goal. That individualistic approach is exactly what has caused so many of the problems we face and inhibited real progress toward the common good.

To be sure, the number of Americans in need has grown rapidly, and that is one reason so many baby boomers are moved to social entrepreneurship.

The middle class is in trouble. The median annual income for a male full-time worker, adjusted for inflation, is virtually the same as it was in 1973. For households, median income fell last year to levels not seen since the mid-1990s. It is the first time since the Great Depression that median income has failed to rise over such a long time. We are in the first recovery on record in which the median income of working-age people is lower than it was before the recession started.

Yet not all Americans are suffering. The share of after-tax income going to the top 1 percent hit its highest levels in the past 30 years while the portion going to the very middle of the income spectrum fell to its lowest level in that period. And with growing economic inequality, the top 5 percent now hold over 60 percent of all private wealth.

More Americans now are falling into poverty than at any other time in the past half century, and those already there are getting even poorer.

The declining income, increasing disparity in wealth, and growing financial, housing, and health insecurity of today’s families—and of future generations—have not come about because those suffering are doing the wrong thing. While existing organizations need to provide expanded services and economic opportunities, they have the capability to care for people in need, if given adequate money and creative support.

At a time when nonprofit organizations are being pushed to greater program efficiencies, mergers, and other administrative economies, why do boomer entrepreneurs seem to think that starting millions of brand-new entities is the most effective way to make a societal contribution? Why can’t they work through existing organizations to start their creative new programs, improve existing ones, or concentrate resources instead of multiplying administrative and overhead costs?

More important, instead of simply trying to relieve the suffering of the ever-growing number of Americans hurt by the failures of our economic, social, and political systems, we need to deal with the continuing causes of our problems—those systems themselves and the people who inappropriately profit from their undemocratic malfunctioning.

It was the failure of structural systems that precipitated the crisis we are in. The egregious and deregulated abuses of Wall Street and other financial institutions brought us to the brink of a second Great Depression, where we continue to teeter today. More than 75 percent of Americans recognize that the country’s economic structure is out of balance in favor of the wealthy.

Yet the situation still hasn’t been corrected. Through their political influence, financial institutions hold off fundamental change and significant reregulation. The greed and excesses of Wall Street are returning to—or even topping—previous record levels without effective public control.

Other kinds of corporations are holding over $2-trillion in cash (the highest level since 1963) while refusing to invest in jobs for Americans—a situation that remains beyond public influence. This is occurring while corporations also try to reverse years of hard-won public protections with false assertions that it is regulation, rather than their greedy, retrograde, and environmentally destructive business practices, that are killing off jobs.

It is these dynamics that must be changed if the decline of the middle class and the growth of poverty are to be reversed. And multiples of new nonprofits or socially oriented businesses would not begin to challenge that reality or stave off growing human need.

As the philanthropy consultant Christopher Harris observed, our society again needs activists, not entrepreneurs. We need nonprofit organizations and foundations willing to challenge the fact that right now America’s celebrated social mobility is only downward. That won’t change unless millions of baby boomers shift their social commitment from an ill-advised and self-centered ambition to start a plethora of new enterprises and instead work together, and with others, to build the social, political, and economic movement required today.

Mark Rosenman is director of Caring to Change, a project in Washington that seeks to improve how grant making serves the public.

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