Facing Nonprofit Closure

Good Nonprofit Endings Part 1

Image description: a crowd of people holding lit candles at a vigil. Photo by Zach Lucero on Unsplash.

We are clearly in a turbulent and difficult time for nonprofits. Budget cuts across many fields of nonprofit service have been dramatic. Some larger agencies, particularly those who depend on government funding, have faced cutting millions of dollars from their annual budget, e.g. Treehouse facing over $7 million in state budget cuts. I am now hearing somewhat regularly about nonprofits here in Washington that are closing their doors or considering doing so, including major players like YouthCare (all programs suspended), 501Commons (the organization had announced that they were closing, but there is a fundraising campaign now being mounted to save them), and United Way of Spokane County (closed in July after 100 years of service). There are undoubtedly many other nonprofits closing that shutter quietly and escape notice except for the community they directly serve.

While I am outraged that critical services—both bread and roses—are currently being cut, I am not surprised given the shock waves coming from the federal government. If we look broadly at the sector, what is our best survival strategy? Given the cuts to revenue, it seems unavoidable that the sector will need to shrink substantially during the next few years. This will cause enormous damage—to people who are no longer served or important missions halted, but also to the nonprofit employees.

While many agencies will find ways to downsize and continue their work, others may not be able to continue. We have few tools to navigate the existential decision-making that some boards are facing now or may face in the future. We need to come together to identify useful tools or develop a toolkit that helps nonprofit board and staff leaders get through the process. There are practical tools available for assessing financial viability, but what about the skills and tools needed to approach the death of a beloved nonprofit organization with dignity and respect for the people involved? What moral issues attend the closure of a nonprofit? Can we do it in a way that is less traumatizing for those involved? Are there programs that can be transferred to other nonprofits so that they can continue? Intellectual property that can be salvaged, shared, or archived for future use?

I have some thoughts about this that I will share in future posts, and I’d like to be in dialogue with others and tap your wisdom: What would a toolkit or suite of supportive services for financially failing nonprofits look like? Can we as a sector afford nonprofit death doulas? Can we afford not to have them? What are the key questions that nonprofit leaders need to ask themselves to ensure a “good death”? What stages do nonprofits need to go through as they close?

Future posts in this series will cover practical considerations for nonprofit closure, applying hospice concepts to address the associated grief and loss, and placing blame appropriately.