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Tuesday, January 23, 2018

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In the Titanic Recession, Which Nonprofits Get the Lifeboats?
Jan Masaoka

April, 2012

Now that we have all become experts on the Titanic, we all know that third-class (steerage) passengers died at substantially higher rates than first-class wealthier passengers. But did you know that nonprofits that serve poor people are failing at much higher rates than those that serve the general population?

In fact, nonprofits that provide "the most basic anti-poverty services for the poor and homeless failed at around twice the rate of more mainstream services," according to the UCLA Center for Civil Society in its recent report on nonprofits in Los Angeles County (and we have no reason to think that other areas are different). And even more telling is this: that among nonprofits serving the poor, those located in African American neighborhoods failed twice as often as anti-poverty organizations in other neighborhoods.

What a sad story this tells about our society in general, and about funders in particular. A sobering statistic is that in terms of foundations, fewer than 16% of grants are targeted to low income communities (National Committee for Responsive Philanthropy).

We suspect that one reason (of many) for the relative lower amounts of foundation funding is -- unexpectedly -- the focus on innovation, social enterprise, outcome metrics, and the coolness factor. Innovation: when serving the poorest in our communities, we know the answers; we just need more money. Social enterprise: in only very, very rare cases can a nonprofit make money by helping the poor. Outcome metrics: funder pressure for outcome metrics forces nonprofits to serve those who can most readily "improve" -- which means serving folks that are relatively better off. And the coolness factor: a start-up run by well educated, cool, high-energy young people is more fun to fund than a long-time provider run by community-embedded nonprofit staff.

Sometimes we need to choose nonprofits because they are doing the most important and pressing human work, not because they are the most innovative or have the best metrics, or because we know and like the leaders. 

We are please to have the opportunity to share this edtioral by Jan Masaoka. Something to think about. Please visit to read more of Jan's interesting work.


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