5 Benefits to Government Cutbacks

Government cutbacks to charities and non-profits will likely do a lot of harm and undermine many aspects of what makes Canada such a special place.  However, in a contrarian way I can argue there will be some benefits.

1. While it won't happen overnight, eventually the pendulum will swing the other way.  As valued charitable services and societal supports erode and disappear, the problems they currently address will get worse. Ultimately there will be a clamour to support (either through donations or "forced donations" via government financing) the highly cost-efficient solutions that charities bring to problems.  And when this happens we'll be less likely to forget their value again so soon.
2. There are too many charities. The bad news is that due to cutbacks some fabulous and innovative new organizations won't survive (or ever see the light of day), but without the fertilizer of government funding at least some portion of the over-abundance of charities will diminish.  Think of it as a very haphazard and unwieldy pruning if  you will.
3. Lean times will force innovation. Fact is, charities by their nature are driven by passion, and that same passion to help others and make the world a better place won't be stopped for long by fewer dollars.  Volunteers, Board members, staff and supporters will (like they always do) step in to help pick up the slack. In so doing they'll all learn new skills, and the organizations still standing will be that much more resilient.
4. Cutbacks will actually allow for greater freedom of opinion and unfettered voices for change. We all know the expression "don't bite the hand that feeds you", and very few organizations that receive government funding are eager to risk offending this funder.  Some do and have clearly been targeted for cutbacks (e.g. women's advocacy groups). However, for organizations that can survive they will less constrained in their ability to speak.  Greenpeace certainly is a good example of this freedom provided by how they're funded.
5. Diversified revenue streams will have a positive effect in the long-term.  Once a donor (or company) is engaged in giving, in my experience they generally enjoy the experience and continue to be philanthropic.  So if the cutbacks encourage entirely new donors to ultimately step in, then we'll see new faces at the funding table once government does come back.

Painful? Yes, and likely hurting a lot of people who most need the help in the first place.  But not without some benefits.

Top Three Charity Trends in 2012

Here are the top three trends to watch for in the charitable world in 2012.

1. Many small and medium sized charities will disappear in 2012.

As all three levels of government reduce spending, charities that have relied for much (or even all) of their funding from government will feel the pinch.  Sadly, some will actually go "out of business", but others will come up with creative solutions to continue their Mission. I'm already seeing (and have been part of) mergers, innovative funding models, partnerships, co-location, hubs, cost sharing, virtual offices, restructuring and other concepts. So your favourite small or medium sized charity might disappear, but actually still exist in some new form within a new organization or space.

2. Big Charities will get bigger in 2012.

The obverse of the first trend is that larger, better-funded and more media-savvy charities will continue to find ways to grow and fill social needs. The good news is that as the big charities get bigger their ability to weather economic turmoil usually gets stronger, and as they see service needs that are related to funding opportunities they generally seek to fill them.  The bad news is that larger charities often struggle with the balance of healthy reserves and program funding, and that their very marketing and fundraising strength can help force the demise of fledgling, smaller charities.

3. Charities will continue to think and in some ways act more like for-profit businesses in 2012.

As you’ve read in my posts, charities for years have tried to imbue themselves with the best practices of the for-profit world (often with mixed results).  This trend will accelerate in 2012 as two influences come to the forefront.  First, increasing numbers of for-profit talent joining charities will soon reach a critical mass, and second charities will increasing desire to show “impact”.  Charities are already starting to “sell” their impact, moving beyond merely quantifying results, to now pitching their value in creating a better society in a very direct way.  It’s worked in the for-profit world for generations, and now with staff that think this way already charities are increasingly giving this mindset a try as well.

I’ll keep you updated on examples and stories behind these trends all year.