The First National Nonprofit Bank
Friday, October 31st, 2008Everyday, nonprofits go to the bank.
They deposit grants and manage their investments portfolios. They repay loans, draw down on lines of credit and make payroll. What they do not do however is recognize the social, political and economic power they could wield if their assets we aligned.
Nonprofits in America have $3 trillion is combined assets. In 2007, they received close to $300 billion in donations. And with almost 14 million employees in the sector, our bi-weekly payrolls could equal, if not surpass, the GNP of countless small nations.
Yet nonprofits in America have yet to take advantage of this staggering wealth.
This came up recently, following a speech I made concerning on the recent economic meltdown and the affect it might have on charities. During the question and answer session that followed, one audience member suggested, rather forcefully I might add, that now might be the time when nonprofits might finally be forced to consider merging. The questioner went on to suggest that, with so many groups competing for that city’s shrinking pool of grant funds, if groups did not merge, then too much of the money would have to be allocated just to keep the doors of thousands of struggling nonprofits from closing for good.
I suggested that this was a very important question……but that there were three kinds of mergers that needed to be considered.
The first, of course, is the classic interpretation of the concept of a merger—when two groups decide to become one. Indeed, all across the country, there are serious discussions going on between board committees and founders, funders and community leaders, all attempting to forge a consolidation of entities. This is a good thing.
Seldom considered though is another, more viable option; the merger of services or backroom operations. In this setting, groups that are evolving from organizations where one or two people raised the money, kept the books, and managed the PR while also delivering services would share the costs of hiring an human resource or finance professional who would serve all their organizations. In a more advanced variation of this theme, groups that might be seeking to develop a more formal relationship with decision makers in local government, might come together to share the costs of hiring an advocate who could better position their causes or clients when and where political decisions are made.
But what I suggested to them that afternoon, in that accordion walled hotel conference center room that was packed with concerned colleagues was that, if we were really smart, we’d open our own bank and merge our money.
And if we did—we’d be bigger than Bank of America.
In this current economic crisis, America has multiple opportunities to redesign our systems. As governments and businesses go about determining what new laws and policies need to be enacted to stem the current crisis, mitigate its impact or avoid future catastrophes, nonprofits are once again sitting on the sidelines, waiting to see how it will affect our sector. Worse still, we are reacting to this crisis not from a potential position of strength, but from a historic and unwarranted notion of weakness and inferiority. This must finally come to an end.
If we opened our own bank, and pooled our money….we could loan each other money, build affordable housing, issue credit cards, establish micro-credit as a force in America, reopen a million boarded up businesses, fund college education, make grants….in fact—-we could change the face of commerce in the world and finally eradicate many of the problems we now beg for money to semi-address.
THAT’S the kind of merger I’m interested in.
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