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Culture of Scarcity is Crushing the Nonprofit World

In another sector, alarm bells would be going off – talent is not keeping pace with technology and the strategic skills needed in a competitive, knowledge-based climate. Innovation is stifled, if alive at all. Spending is a bad word.

We’ve starved the nonprofit sector in the name of fiscal prudence grounded within the myth that running lean is a virtuous strategy. In the for-profit realm, we would expect overly anemic organizations to fold or completely reinvent themselves to oxygenate back to health. In the nonprofit world, we consider it a badge of honor to do more for less, chase our tails for a pittance, and live with the insecurity of our livelihoods failing to be renewed in the next grant cycle.

In their book Scarcity: The New Science of Having Less and How It Defines Our Lives, Sendhil Mullainathan and Eldar Shafir claim, “Scarcity captures the mind…. when we experience scarcity of any kind, we become absorbed by it (7).” The scarcity mindset, as they call this phenomenon, becomes a perpetual state of living one step behind, patching together short-term solutions to immediate problems and juggling a chaotic web of urgent fires: all of which obstructs the ability to think long-term, problem solve creatively, or map out a plan to escape the bonds of scarcity.

What I’ve observed in the nonprofit world is not just an individual or a single organization with a scarcity mindset, but an entire culture of scarcity that perpetuates this devotion to continually doing more with less and which reinforces itself through; funding systems that enforce caps on operating costs, boards who expect organizations to “run lean” in the name of good stewardship, executive directors and other nonprofit leaders who buy into the mentality of scarcity and quickly learn to say no to innovation, staff growth, and fair compensation believing they are being fiscally responsible. And yes, even nonprofit employees who accept the stress and heavy workload in return for barely sustainable wages in the name of passion and mission are complicit in enabling this culture.

The culture of scarcity is placing the nonprofit sector at risk of becoming irrelevant. Yes, I believe the sector could starve itself to the point of extinction while other sectors leverage technology and innovation to take over the work of the nonprofit realm. Unless the nonprofit world changes the way we work and begins to invest in talent and innovation and take some big risks, for-profits will fill the void with new business models that deliver similar services, perhaps with less human touch (think drones delivering meals to seniors). In order to invest in new ideas and great talent, we have to eliminate our cultural dependence on the concept of scarcity.

To remain sustainable, defined by Kate Barr as “fresh, vital, relevant, and healthy,” the sector must stop impeding its own progress. To do so, we must debunk the myths that uphold the culture of scarcity and change the way we practice decision making and resource allocation.

Let’s stop telling ourselves and each other that:

  • Good stewardship requires running an anemically lean organization that overworks its people and can’t possibly do its best work
  • If you’re passionate about the mission, it’s okay to work more for meager compensation
  • We can’t afford new computers, to invest in marketing, to add to our staff, to provide professional development, or to grow our programs
  • We can’t afford to take risks
  • We can’t afford try new things
  • We can’t afford the best talent to really do our best work

Executive Directors are so mired in the culture of scarcity, that as Mullainathan and Shafir assert, they can’t imagine and implement the strategies to get their organizations out of the cycle. I hear EDs repeat the mantra, “my board will never go for that” with such regularity that it’s clear they are caught in the scarcity loop, unwilling to even entertain or push forward new ideas.

To their credit, funders have begun to look critically at their funding models and have started to make changes that better support nonprofits to do their work, including more support for operating budgets and capacity building. However, there is still a way to go.

Ultimately, due to their unique insider/outsider position and powerful role, I believe it’s the nonprofit board that’s in the best position to start moving the sector from a scarcity to a growth and innovation culture. Boards live with one foot in the nonprofit sector and the other outside it in the world of their day jobs (except for those who serve the nonprofit world in both capacities). With their insider vantage point combined with their experience with how the world works outside the nonprofit lens, they have the capacity to view the sector with a critical eye and ask the essential questions to start making changes and spin a new cultural narrative. They also have the power to effect real change within the organizations they serve.

Board members: put on your strategic hats and ask questions such as, “are we paying our employees a wage that recognizes their skills, work and value to our organization and that also affords them a sustainable livelihood?” “Are we paying to attract the talent we truly need to not just get the job done, but do it with excellence?” “Where are we investing in innovation to stay relevant as an organization for the long term?” “What’s our next big idea and what do we need to resource now in order to get there when we’re ready?”

The knee-jerk nonprofit leadership (executive and board) mantra that we can’t afford X or Y or that nonprofits simply need to do more with less will not keep your organization afloat for too much longer. It’s time to ask and answer these questions and more the way we would in a for-profit boardroom: with a critical and strategic lens and an eye toward growth and long-term vitality. It’s also time to give your ED permission to spend appropriately and take some risks.