Appeal to Authority: Loss of 100,000 or More Nonprofits
Post #2 – On what basis does the Irvine Foundation report assert that 100,000 or more nonprofits will be lost to the recession?
The November 2009 report, “Convergence: How Five Trends Will Reshape the Social Sector,” [PDF] commissioned by the James Irvine Foundation, forecasts that the economic crisis will bring about the loss of 100,000 or more nonprofits. The prediction appears in the second paragraph of the report’s introductory section (immediately following the Forward) titled, “What’s Next? Moving at the Speed of Change.” To put things into perspective, let’s begin with a look at the first paragraph of this introduction. It reads in full:
“The nonprofit sector, like the rest of the nation, has been riveted by the first great economic crisis of the new century. This response is only natural, as the crisis threatens large numbers of organizations with, at the least, hard times, and at the worst, extinction. But this story is not about that crisis. The nonprofit sector is at an inflection point that will fundamentally reshape it long after the recession, when surviving nonprofits find themselves in a new reality – not just economically, but demographically, technologically and socially. We call this shift NonprofitNext.”
The next paragraph – which features the forecast – begins:
“Already, national and global trends are changing the environment for nonprofits. Thoughtful observers recognize that five years from now the sector will not simply have returned to its previous, pre-crisis state. They know that a fundamental change in Americans’ attitudes toward credit, debt, risk, work and philanthropy, coupled with the loss of 100,000 or more nonprofits, will permanently change the landscape.”
In this passage the Irvine Foundation report embraces (though cast as the recognition of thoughtful observers) the predicted “loss of 100,000 or more nonprofits.” The quoted phrase, in this amply documented report, is footnoted; the footnote reads in full:
“3 In 2008, NYU Wagner Professor Paul Light forecasted the closure of as many as 100,000 nonprofits in the coming year. (See: Paula Wasley. “100,000 Nonprofit Groups Could Collapse in Next Two Years, Expert Predicts.” Chronicle of Philanthropy 21 (4); 19.) In May 2009, United Way of the Bay Area reported on survey findings suggesting that one-third of Bay Area nonprofits fear they may cease operations within the next year. (See: “One-third of Bay Area Nonprofits Struggling to Survive, According to United Way Survey.” Press Release: 5/28/09. United Way of the Bay Area. Available at: www.uwba.org) And in July of this year, the Urban Institute reported that 57% of Washington-area nonprofits had less than three months of operating reserves (the industry standard) in the bank in 2006, indicating the vulnerability of many organizations even prior to the recent downturn. (See: Amy Blackwood and Thomas H. Pollack. Washington-Area Nonprofit Operating Reserves. The Urban Institute. July 2009.)”
This footnote cites three bases of support for the “loss of 100,000 or more nonprofits” assertion: a forecast by Professor Paul Light, a survey by the United Way of the Bay Area, and a report by the Urban Institute. I will examine the latter two bases in a future post; right now, let’s turn to Mr. Light’s prediction (clearly the primary basis for the report’s embrace of the “loss of 100,000 …” assertion).
Paula Wasley begins her Chronicle article [subscription required] with this sentence, “More than 100,000 nonprofit groups nationwide will fail within the next two years, including a few ‘big brand-name nonprofits,’ a scholar of philanthropy and government told charity leaders assembled here to discuss the fallout from the nation’s financial meltdown.”
The scholar, of course, is Paul C. Light, Paulette Goddard Professor of Public Service at NYU’s Wagner School of Public Service. Several related claims – all featuring the 100,000 figure – have been attributed to him. The assertion that 100,000 nonprofits will fail has been widely quoted in the popular press, business media, and many nonprofit sources over the past year. (Virtually everyone in the philanthropic community likely to read the Irvine Foundation’s “Convergence” has probably seen Mr. Light’s forecast – in one guise or another – during the past year.) It is easy to see why Mr. Light’s forecast, which acquired an emblematic status, has become so well-known: Mr. Light is a well-recognized authority, frequently cited in the media with crisp, clear quotations illustrating policy and providing perspective; the simple clarity and economy of expression of the ‘loss of 100,000 …’ quote (in its various forms) became an illuminating short-hand for the challenges the economy has posed for nonprofits; and 100,000 is a nice – and scary – round number.
When push comes to shove, the report’s authors’ strongest justification for embracing the “loss of 100,000 or more nonprofits” assertion comes down to an appeal to authority: a respected scholar of philanthropy and government (aka a thoughtful observer) said it.
That would be fine (as far as it goes), except the scholar, Professor Light, has had occasion to reconsider the 100,000 figure. In other words, whatever justification Mr. Light had for offering his prediction in November 2008 may not be available to the Irvine Foundation in November 2009. In my next post in this series, I will look more closely at Mr. Light’s forecast and at his reassessment of the risks to nonprofits resulting from the ongoing recession.
Editor’s note: The monograph “Convergence” was commissioned by the James Irvine Foundation and written by Heather Gowdy, Alex Hildebrand, David La Piana, and Melissa Mendez Campos of La Piana Consulting; the report invites readers to comment at NonprofitNext. (The image is from the report.)
Next post: Emblematic Forecast: Loss of 100,000 or More Nonprofits
Initial post in this series:
