Why should government invest in a strong nonprofit sector?

Let’s imagine for a moment our community without nonprofits: without libraries, museums, shelters, theatres, trees, places of faith, or health care services, to name just a few. While it’s not intentional, both government and citizens sometimes take nonprofits for granted even though these organizations contributes to their physical, mental and spiritual well-being. Nonprofits interact with people every day and are solution providers in communities. Critical to our collective success is working in partnership with government around funding reform, innovation, policy and recognizing the value of the nonprofit sector.

The current funding model for the nonprofit sector has similarities to a hamster wheel, where an organization continuously spends its human resources securing funding and reporting to funders. There is also a perception that the sector has its hand out and relies on government as its main funder. This is not the case. In fact 45% of income is generated independently from government funding and donations. There’s also the current focus by many funders on new programs rather than multi-year funding, leading to nonprofits repackaging the same program over and over with new names to keep it going. For example, Pillar Nonprofit Network’s board diversity program has had 10 different funders over the past eight years. The community likely is not aware that we have been offering the same services for eight years because we’ve used new branding, new programming, and new staff positions in each variation. Yet, there is change on the horizon: the City of London is taking an exciting step this budget cycle with a new multi year funding model that will contribute to better planning, delivery and evaluation among the nonprofits they fund.

So many of the big issues in our community are persistent and require new ways of tackling these issues. The hamster wheel is also a metaphor for the nonprofit sector going so fast in the same direction. The sector and funders need to have the flexibility and creativity to try new things and take some risks. This may sometimes lead to failures, but that’s where the learning happens! As nonprofits we need to be able to create the culture in our workplace for innovation- and failure. At Pillar Nonprofit Network’s bi-weekly team meetings we try to walk the talk by sharing one awesome win and one failure that has happened in the past two weeks, to take the time to celebrate our successes and learn from our failures. For the first time we had a Fail Forward section in our 2014 annual report.

Social enterprise and social finance are significant trends for the sector and communities and we are working hard to create a strong ecosystem in London in order to create increased impact and investment. Governments are exploring, supporting and funding these new tools and now we need government to look at the policies and structures that will enable this to have even greater potential and possibility. Yet, social enterprise and social finance should not be viewed as tools to reduce government spending. By working together nonprofits and government can create the environment for social enterprises and social finance to provide new solutions.

The sustainability and impact of the nonprofit sector and communities is dependent on the government and citizens recognizing the value the sector brings to our everyday lives and investing in ongoing programs and activities.

The nonprofit sector isn’t just a side actor in healthy communities. Our organizations will continue to be a significant social and economic driver in London and in communities across Ontario. It’s time for everyone to hear this, including government, funders and nonprofits ourselves. Our communities are counting on us.

About the author
Michelle Baldwin is the Executive Director of Pillar Nonprofit Network, a regional network for London that supports nonprofit member organizations in fulfilling their missions. Pillar believes fostering social enterprise, social innovation and cross-sector collaboration are key strategic priorities in building strong and more inclusive communities.