Point: The nonprofit model doesn't serve the public and should be changed

Alexis Clements, Hyperallergic.com, 9/4/12

Our society applauds and encourages growth at every level -- despite the increased time and resources that growth demands. And many people in the US take the corporate structures of most nonprofits for granted, without questioning the ways that hierarchical models concentrate power among small groups of people and can easily get in the way of achieving goals and benefits for society. The book that's got me thinking about all this is The Revolution Will Not Be Funded: Beyond the Non-Profit Industrial Complex. Edited by members of INCITE! Women of Color Against Violence, a social justice organization, the book was published in 2007. The essays are organized into three sections, one that discusses the rise of the nonprofit model, another focused on the ways that nonprofit structures and funding influence and affect those who seek to make change in the US, and a third that puts forth ideas and examples of how to work with or around nonprofits in order to maintain a radical agenda. Why am I talking about a book focused on radical political work in an arts context? Because I know that for many people there is a lot of overlap between social justice and art (which is starting to be studied and/or proven by research). And also because the arts in the U.S. today are almost entirely enmeshed within the nonprofit system. So, what are the particular lessons from the book that can be brought into an arts context? Below are some of the most prominent ideas that relate directly to the arts sector today, in an abridged format:

1. The corporate model imposed on nonprofits forces arts organizations to take on a hierarchical structure, where CEOs and board members hold much, if not all, of the decision-making power within the organization. Which, by the statistics, means that wealthy white folks control most nonprofits. This should raise questions about whether or not the people that these organizations claim in their mission statements and grant proposals to be serving are actually represented when it comes to decision-making.
2. The effort to win and maintain funding can cripple if not completely overshadow the mission of an organization for two reasons:1) as an organization grows, [this requires expanding] the staff, programming and fundraising; and 2) almost none of the avenues that provide major support allow any of that money to be spent on operating expenses. Add to that the dramatic expansion in the number of nonprofits and you inevitably end up with a dramatic increase in competition for the small pots of money in a given field. Throw in the fact that foundations follow trends almost as readily as your average teenager, changing their funding objectives and programs so quickly that organizations can't keep up programmatically, and you are faced with a completely unsustainable and fickle funding structure that favors those who can craft the best language, above those who do the most work or actually succeed in serving their communities, even if on a modest scale.
3. Foundation, and much of nonprofit, funding is money that would have been public money but is now maintained and controlled privately. The primary reason is that wealthy individuals can avoid being taxed on the money they put into them. There's also the benefit of being able to funnel that money to organizations that will uphold their personal beliefs... above the beliefs of anyone who can't afford to make the same kind of donations -- i.e. the majority of Americans. This is where there's a direct link between the nonprofit industrial complex and the perpetuation of racism, sexism, religious ideology, etc.  While it's tempting to believe that the arts are of universal value, and so existing outside [these] problems, when you start digging into the actual work and machinery of many arts institutions, big red flags start to pop up.
4. By focusing so much time and energy on staying in the nonprofit game (i.e. chasing funding opportunities, filling out annual reports, preparing for audits, maintaining a fundraising staff, etc.), those involved have little to no time or energy to devote to changing the model or operating in a completely different way. It is crucial to stop and ask if the structure of your organization is enhancing your goals or standing in your way. The tacit acceptance over the past three decades that the nonprofit system is the best one to serve the arts is becoming more and more problematic as the nonprofit industry grows, despite reductions in philanthropy and continued government cuts.

The final section of the book prompts some important questions: Why does the nonprofit structure have to mimic corporate structure? Could you work within that structure to place artists and community members on the board and in leadership roles? Are you working to preserve a salary or to pursue a mission? And are your goals served by having to maintain a staff, be subject to the demands of funders, and adopting someone else's leadership model? Certainly these are difficult questions, but they're worth asking rather than accepting a status quo that seems to be driving many organizations further from their missions.

Counterpoint: Nonprofits serve public but need to change way they are perceived  Dan Pallotta, Harvard Business Review blog, 9/5/12

The nonprofit sector builds movements that rally people to action against some of the greatest problems facing humanity. But it has no movement to support itself. The sector speaks for the voiceless. But it remains silent on the systemic misperceptions that undermine its own potential. It defends the weakest among us. But it takes punches to the face when it comes to the issues that affect it directly -- issues like spending on overhead and infrastructure, investment in talent, risking donor dollars in the present to achieve a brighter future down the road. It's time to change all that. It's time for a movement for the movement-builders. It's time for the sector to stand up for itself, speak up for itself, defend itself, organize itself, and advertise itself with the same sense of mission and purpose with which it has long subjugated itself to the sacred canons of frugality and martyrdom. In my new book, Charity Case: How the Nonprofit Community Can Stand Up for Itself and Really Change the World, I and a number of pioneers in the field have outlined plans for a national Charity Defense Council which will serve five vital grassroots organizing functions essential to the creation of any movement. The nonprofit sector currently lacks each of them:

Anti-Defamation Organization: Unbelievably, the nonprofit sector has no anti-defamation mechanism. But in the face of routine and malicious attack by sensational media with zero understanding of what makes a successful nonprofit thrive, the sector has no legitimate, respected, sanctioned national voice to offer an alternative view, or tell the public the truth.

Legal Defense Fund: Freedom of speech is as much about having the right not to say things you don't want to say as it is about being able to say the things you do. So, when nonprofit organizations are forced to speak to the donating public - in all manner of federal, state, and local tax and reporting forms - in the language of overhead percentages, instead of in plain English, and instead of in terms of impact or aspirations, its First Amendment rights are infringed. Also unbelievably, the sector has no well-funded legal defense resource. The nonprofit sector has two pro bono attorneys -- organized as American Charities for Reasonable Fundraising Regulation. Their last tax form was filed in 2007 and showed a budget of less than $3,000.
National Civil Rights Act for Charity and Social Enterprise: It's time the people who are trying to change the world had a statutory code that actually supported them in that endeavor. Instead, we have a fragmented code, written for another age, to address issues no longer relevant. That fundamentally undermines our ability to create real change. We need new corporate structures, merger incentives, tax incentives, marketplaces, and oversight apparatuses. Yet it has never dawned on the sector that it could play a proactive role in determining the legal context in which it will perform. In my book, 16 leaders in the field begin a discussion that will culminate in a sweeping national act to transform that context.

Advertise to the Public: It is mind-boggling the nonprofit sector has never run a single ad -- not one -- to try to cure the public of its misperceptions and hallucinations about charity and about how change actually occurs. If the pork industry could correct the public's misperceptions about pork as a fatty, heart-attack-waiting-to-happen meat with its "Pork, the other white meat" campaign, then we can change the way people think about charity. We can change perceptions about issues like overhead. It's no wonder the public demands low overhead instead of impact. We've never told them the two things are not correlated.

Organize Ourselves: It's time we organized ourselves to work on the structural issues that affect our work directly. The Charity Defense Council will do these things. It's not just an idea. It is incorporated, has its tax exempt status, and has convened a powerful advisory board. The council intends to fight for the people who fight for the dreams that brought us all into this work in the first place. Dreams that have too long been trampled. Robert F. Kennedy Jr. has called the effort "An Apollo program for American philanthropy and the nonprofit sector."