We have too many nonprofits. Here’s why that matters.

By Lisa Bertagnoli, Chicago Business

Want to help people learn to read? Literacy Chicago, Literacy Works and Children’s Literacy Initiative can help, along with 100-plus other organizations in the Chicago area. Both Bernie’s Books and Open Books distribute used books. Family Matters and Family Focus help families, though neither should be confused with Focus on the Family.

The nonprofit landscape here is crowded with organizations, many similarly named, with similar missions. The increasing number of nonprofits competing for finite resources and attention stresses all involved. In a 2015 study by the Nonprofit Finance Fund, 73 percent of Illinois nonprofits reported an increased demand for their services, but only 53 percent said they had the ​ funding to meet that demand. Since then, the state’s budget crisis has only worsened, and that has left dozens of organizations unpaid for their services.

For the 10-year period ended April 30, the number of registered charities in Illinois grew 22.5 percent to 35,473. Nationally, the number of registered public charities grew 28.4 percent between 2005 and 2015, according to IRS data.

Why so many? Mainly, it’s easy for anyone with an idea to launch a nonprofit. “There is no barrier to start fundraising or putting a board together,” says Shena Ashley, director of the Center on Nonprofits & Philanthropy at the Urban Institute, a Washington, D.C.-based think tank. New nonprofits don’t have to apply for public charity status, unless they want donations to be tax-exempt.

Debate It Forward co-founders Leah Shapiro, center, and Josh Aaronson, right, with kids from  various South Side schools. - Manuel Martinez

Photo by Manuel Martinez Debate It Forward co-founders Leah Shapiro, center, and Josh Aaronson, right, with kids from various South Side schools.

Want to help people learn to read? Literacy Chicago, Literacy Works and Children’s Literacy Initiative can help, along with 100-plus other organizations in the Chicago area. Both Bernie’s Books and Open Books distribute used books. Family Matters and Family Focus help families, though neither should be confused with Focus on the Family.

The nonprofit landscape here is crowded with organizations, many similarly named, with similar missions. The increasing number of nonprofits competing for finite resources and attention stresses all involved. In a 2015 study by the Nonprofit Finance Fund, 73 percent of Illinois nonprofits reported an increased demand for their services, but only 53 percent said they had the ​ funding to meet that demand. Since then, the state’s budget crisis has only worsened, and that has left dozens of organizations unpaid for their services.

For the 10-year period ended April 30, the number of registered charities in Illinois grew 22.5 percent to 35,473. Nationally, the number of registered public charities grew 28.4 percent between 2005 and 2015, according to IRS data.

Why so many? Mainly, it’s easy for anyone with an idea to launch a nonprofit. “There is no barrier to start fundraising or putting a board together,” says Shena Ashley, director of the Center on Nonprofits & Philanthropy at the Urban Institute, a Washington, D.C.-based think tank. New nonprofits don’t have to apply for public charity status, unless they want donations to be tax-exempt.

The stress on the sector—in addition to that caused by the state budget crisis—is beginning to show. In early June, United Way of Metropolitan Chicago shed 22 staff members, citing a reorganization as it posted a $1.9 million operating deficit for fiscal 2016. This spring, Lutheran Child & Family Services of Illinois laid off 100 people and cut nine programs, attributing the retrenchment to lack of state funding, budget cuts as well as a desire to reorganize and refocus. Boston-based Citizen Schools shut down its academic enrichment program in Chicago, saying that corporate and school support “wasn’t enough to overcome the dearth of public investment in educational innovation.”

It’s not just funding, either. It’s finding volunteers and even qualified board members. With startups, “you have great fans of your work but not necessarily folks who are wildly experienced at helping you grow your organization,” says Claire Rice, executive director at Arts Alliance Illinois, an arts advocacy group.

Jenne Myers, CEO of Chicago Cares, sees the abundance of groups as she vets organizations for her nonprofit’s annual Find Your Cause event, which matches volunteers with organizations. Myers, who turned away 50 nonprofits for last year’s event, says the proliferation confuses volunteers. “If they want to mentor, I could give them a list of 50 organizations,” she says. “People start nonprofits, but that doesn’t mean they have the leadership or resources to sustain them.”

Chicago Literacy Alliance, an umbrella for literacy-oriented organizations, launched two years ago with 18 members. (There’s also the Chicago Citywide Literacy Coalition, which represents nonprofits concerned with adult literacy.) Today, it has 108 members and a waiting list for offices and cubicles at its West Loop co-working space. Even with the number of literacy nonprofits, “we’re not a 100 percent literate Chicago,” says Stacy Ratner, the alliance’s founder. “It’s not like we’ve solved the problem.”

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