Thank you for this Kelly. Your words helped me get my head around the crisis I knew we were in but didn’t understand the scope or scale of. I feel like I have something I can share to explain the problem now. And thank for ending things on an actionable note, it’s hard to see ways forward through all that is happening. This shines a light on a path to travel through the current darkness.
Thank you for taking the time to leave this comment, it's so encouraging as this is exactly the value I hope to provide. Truth, clarity, direction. Thank you for being part of this community.
Kelly, thank you for your terrific coverage of this funding crisis that is sucking the air out of our communities and future. Terrific contextualism of the CSF crisis within the bigger picture of what is being done to our collective well-being. And Carlos, thank you for your observations and analysis… Both provide grist for the necessary conversations that are taking place to ensure about the continuation of important work being done and a more stable funding base.
Virginia, you are such a source of inspiration and courage for me. Thank you for your encouragement and support, and for also being such a champion of equity and education.
Thank you, Kelly—another great read! This topic is especially close to my heart. I’ve spent over a decade in the nonprofit space, serving as an advisor, consultant, leader, volunteer, and board member. Unfortunately, this issue is not new to the nonprofit world and highlights many of the sector’s systemic challenges.
One of the most persistent hurdles I face when consulting for nonprofits is helping them understand that “nonprofit” is a tax designation—not a business model. In my experience, many nonprofits are founded by passionate individuals with deep connections to specific issues, but often without a business background. Successful nonprofit leaders typically approach the organization like a business, applying fundamental principles of sustainability and strategy. Here are a few core examples:
Market Saturation: The nonprofit space is severely overcrowded. Creating a nonprofit has a low barrier to entry, which has led to an overabundance of organizations. I’ve been asked to help start new nonprofits more than a dozen times, and I’ve declined every invitation. While I’m genuinely honored to be asked, I always explain that my decision stems from a belief that there are already too many nonprofits in that given cause area. I encourage people to channel their energy and passion into existing organizations. If none align with their specific vision, they can still contribute by helping an existing nonprofit diversify or evolve its approach.
Economies of Scale: Managing nonprofit funding is challenging—not just because it’s limited, but because overhead costs are real and substantial. When you create a new nonprofit, a portion of every dollar raised must go toward infrastructure—accountants, rent, legal fees, IT, and more. If, for example, there’s $100 available for nonprofits in a community and it's split among five organizations, the impact of that $100 is diminished. Five different overhead structures mean diminished overall efficiency. Consolidating efforts and resources would allow fewer nonprofits to stretch funding further and achieve greater impact.
Diversification: As we saw with CSF, nonprofits often lack diversified funding streams. Many rely disproportionately on one source, simply because they lack the staff or resources to pursue alternatives. This ties back to the burdens of overhead and capacity.
Financial Impact & Restraint: Occasionally, I see calls on social media encouraging people to give to small nonprofits instead of large ones because "a larger percentage of funds goes directly to the cause." While well-meaning, this argument overlooks the efficiency and reach of larger nonprofits. Moreover, many grants restrict funding to specific programmatic outcomes, which means nonprofits often struggle to cover essential operational expenses. It’s not unusual to find organizations that are technically cash-positive yet unable to pay salaries or rent because those funds are restricted. (Before the pandemic, a few of the country’s largest philanthropies recognized this issue and agreed to shift their funding models to allow more of their grants to support general operating costs.) Too often, nonprofits overextend themselves and are unprepared for lean periods.
I could go on about the structural challenges of the nonprofit model, but I also want to highlight something more insidious at play. Ending federal funding so suddenly and dramatically is a deliberate political strategy—one designed to push blue states toward purple. Blue states typically offer more state and local funding to their residents, but when federal funding disappears, those governments are forced to make impossible decisions. CSF is a direct example of this. It’s easy to blame Washington state for the program’s collapse, but we must consider the broader strategy—and recognize the deeper, more dangerous motives at play.
So thoughtful, yes completely, I use the term “nonprofit” quite loosely here. This is so thoughtful and I love what you said at the end, it’s so important:
“Ending federal funding so suddenly and dramatically is a deliberate political strategy—one designed to push blue states toward purple. Blue states typically offer more state and local funding to their residents, but when federal funding disappears, those governments are forced to make impossible decisions. CSF is a direct example of this.”
One last example: In 2018, I was leading a local nonprofit and attended my first Women in Tech Regatta (https://www.womenintechregatta.com), organized by Women in Tech (WiT). Our organization was invited to a partner reception where we were given space to host a table and share information with attendees about our work. I took a break to network and connect with other partners—and I was blown away to see that there were over a dozen organizations focused specifically on getting girls, mostly high school-aged, into technology. There’s no question that the need is critical, but this was a prime example of how crowding can create larger challenges and unintended risks.
Thank you for this Kelly. Your words helped me get my head around the crisis I knew we were in but didn’t understand the scope or scale of. I feel like I have something I can share to explain the problem now. And thank for ending things on an actionable note, it’s hard to see ways forward through all that is happening. This shines a light on a path to travel through the current darkness.
Thank you for taking the time to leave this comment, it's so encouraging as this is exactly the value I hope to provide. Truth, clarity, direction. Thank you for being part of this community.
Kelly, thank you for your terrific coverage of this funding crisis that is sucking the air out of our communities and future. Terrific contextualism of the CSF crisis within the bigger picture of what is being done to our collective well-being. And Carlos, thank you for your observations and analysis… Both provide grist for the necessary conversations that are taking place to ensure about the continuation of important work being done and a more stable funding base.
Virginia, you are such a source of inspiration and courage for me. Thank you for your encouragement and support, and for also being such a champion of equity and education.
Thank you, Kelly—another great read! This topic is especially close to my heart. I’ve spent over a decade in the nonprofit space, serving as an advisor, consultant, leader, volunteer, and board member. Unfortunately, this issue is not new to the nonprofit world and highlights many of the sector’s systemic challenges.
One of the most persistent hurdles I face when consulting for nonprofits is helping them understand that “nonprofit” is a tax designation—not a business model. In my experience, many nonprofits are founded by passionate individuals with deep connections to specific issues, but often without a business background. Successful nonprofit leaders typically approach the organization like a business, applying fundamental principles of sustainability and strategy. Here are a few core examples:
Market Saturation: The nonprofit space is severely overcrowded. Creating a nonprofit has a low barrier to entry, which has led to an overabundance of organizations. I’ve been asked to help start new nonprofits more than a dozen times, and I’ve declined every invitation. While I’m genuinely honored to be asked, I always explain that my decision stems from a belief that there are already too many nonprofits in that given cause area. I encourage people to channel their energy and passion into existing organizations. If none align with their specific vision, they can still contribute by helping an existing nonprofit diversify or evolve its approach.
Economies of Scale: Managing nonprofit funding is challenging—not just because it’s limited, but because overhead costs are real and substantial. When you create a new nonprofit, a portion of every dollar raised must go toward infrastructure—accountants, rent, legal fees, IT, and more. If, for example, there’s $100 available for nonprofits in a community and it's split among five organizations, the impact of that $100 is diminished. Five different overhead structures mean diminished overall efficiency. Consolidating efforts and resources would allow fewer nonprofits to stretch funding further and achieve greater impact.
Diversification: As we saw with CSF, nonprofits often lack diversified funding streams. Many rely disproportionately on one source, simply because they lack the staff or resources to pursue alternatives. This ties back to the burdens of overhead and capacity.
Financial Impact & Restraint: Occasionally, I see calls on social media encouraging people to give to small nonprofits instead of large ones because "a larger percentage of funds goes directly to the cause." While well-meaning, this argument overlooks the efficiency and reach of larger nonprofits. Moreover, many grants restrict funding to specific programmatic outcomes, which means nonprofits often struggle to cover essential operational expenses. It’s not unusual to find organizations that are technically cash-positive yet unable to pay salaries or rent because those funds are restricted. (Before the pandemic, a few of the country’s largest philanthropies recognized this issue and agreed to shift their funding models to allow more of their grants to support general operating costs.) Too often, nonprofits overextend themselves and are unprepared for lean periods.
I could go on about the structural challenges of the nonprofit model, but I also want to highlight something more insidious at play. Ending federal funding so suddenly and dramatically is a deliberate political strategy—one designed to push blue states toward purple. Blue states typically offer more state and local funding to their residents, but when federal funding disappears, those governments are forced to make impossible decisions. CSF is a direct example of this. It’s easy to blame Washington state for the program’s collapse, but we must consider the broader strategy—and recognize the deeper, more dangerous motives at play.
So thoughtful, yes completely, I use the term “nonprofit” quite loosely here. This is so thoughtful and I love what you said at the end, it’s so important:
“Ending federal funding so suddenly and dramatically is a deliberate political strategy—one designed to push blue states toward purple. Blue states typically offer more state and local funding to their residents, but when federal funding disappears, those governments are forced to make impossible decisions. CSF is a direct example of this.”
One last example: In 2018, I was leading a local nonprofit and attended my first Women in Tech Regatta (https://www.womenintechregatta.com), organized by Women in Tech (WiT). Our organization was invited to a partner reception where we were given space to host a table and share information with attendees about our work. I took a break to network and connect with other partners—and I was blown away to see that there were over a dozen organizations focused specifically on getting girls, mostly high school-aged, into technology. There’s no question that the need is critical, but this was a prime example of how crowding can create larger challenges and unintended risks.