Why Charities Should Have an Expiration Date

When an organization accomplishes its goal, Nancy Lublin thinks it should consider shutting down — not finding another mission.

Vampires are real. I don't mean the bloodsucking immortals dominating your bookstore's romance-novel section. I mean the ones that masquerade as not-for-profits.

Companies aren't supposed to be immortal. For-profits go out of business all the time, for reasons good and bad, from fierce competition to poor management to an inability to adapt. Lehman Brothers. Circuit City. Linens 'n Things. All dead!

Now try to name a closed not-for-profit.

I'm waiting.

Still waiting.

It's okay. I'm an expert in this space, and I sat here for ages before I could think of one. So that must mean we're all doing incredibly amazing work, right?

Of course not. Just as in the for-profit sector, not-for-profits should have earthly life cycles. But it's actually hard for a not-for-profit to die, in part because, legally, dissolution "is still more onerous than it should be," says Sean Delany, executive director of the Lawyers Alliance for New York, which provides pro bono counsel to thousands of organizations. That aside, we all agree that, given limited funds and pressing needs, our common concern should be maximizing our resources. A not-for-profit exists to cure something, address an issue, or elevate the status of a group of people; if and when that's achieved, we should be done. This is a little different from the for-profit sector, where companies die of failure — I'm calling for death by success. In any case, simply put, the vampires gotta go.

I can think of one organization that laudably shut its doors: the September 11th Fund. Created jointly by the New York Community Trust and United Way of New York to help people and businesses affected by 9/11, the fund closed in December 2004 after distributing $534 mil-lion. That's right — a big, fat foundation achieved its mission, spent its money, and put itself out of business. "The purpose was to fill critical gaps, meet immediate needs, and help create systems to address long-term needs, not to duplicate existing public and private systems and resources over time," says Suzanne Immerman, who was the fund's deputy director. "The efficacy of the effort was directly related to its time-limited nature." If you know Suzanne or anyone else who worked there, kiss them.

On the other end, you have the March of Dimes, an organization created with a specific goal — to help find a cure for polio. Unlike most not-for-profits, it succeeded ... in 1955. What a huge, awesome, world-changing accomplishment! But today it suffers from mission creep, having broadened its agenda to "improving the health of babies by preventing birth defects, premature birth, and infant mortality." I like babies. I'm all for neonatal health. (I had a premature, low-birth-weight baby six years ago.) But I think the organization should have quit while it was ahead. Today, Charity Navigator gives it only one out of four stars for efficiency. I wonder if morphing from one cause to another has been part of the problem. And I think it's fair to ask, Would it have been better to celebrate the early victory and shut down?

I confess that I've been guilty of feeding vampires. Two years ago, DoSomething.org (and 200 other groups) joined a coalition trying to pass legislation that would fund community-service efforts. We believed in the spirit of the Kennedy Service Act, though I — and many others — suspected (ultimately, correctly) that these federal funds would go to a few well-connected organizations. Getting the legislation passed was a long shot, but amazingly, the coalition leadership rocked it. President Barack Obama signed the bill on April 21, 2009. Today, the coalition still exists (and Do Something is still on board). It may do great stuff, but I do sorta wish that it had celebrated the win and folded.

The broader principle here is that companies and organizations don't exist simply to exist. A not-for-profit should ideally be not-for-perpetuity. We should not be donor-funded jobs programs. People give not because they believe in us as employable human beings but because they believe in what we do. Once we do it, we should wear a termination notice as a badge of honor.

In other words, it's time we all invested in wooden stakes.

@nancylublin (Team Jacob) welcomes your tweeted thoughts.

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  • Marylee Raymond Diamond

    Not-for-profits should have well defined goals and realistic metrics. Open debate is a healthy exercise of judgment and strategic planning. MLRD

  • Josef S. Klus, CPCC, JSK Coach

    Yes, I believe that limiting an organizations' mission to attainable objectives would only serve to boost morale, serve the community, and foster success--by focusing on working oneself out of a job.

    This article would make a great discussion topic for OD/HR professionals in the non-profit sector! I'll suggest it. ...In a somewhat related topic, I am invited to facilitate at the ASTD-LA Nonprofit Professional Division's upcoming meeting on Wednesday, January 26, 2011 (7:00-9:00 pm, Antioch University, Culver City, 400 Corporate Pointe Culver City, 90230, Room B1070)

    Topic: What is the Future for Pro Bono (Executive) Volunteers in the Non-Profit Sector?
    Currently, the non-profit sector has seen an increase in transitioning executives who serve non-profits as pro bono volunteers. Many of them are keeping themselves busy in a down time and keeping their resume current, while also giving value to the community.

    -- How do we engage and retain executive volunteers?
    -- Why do we, or do we not, want to engage and retain executive volunteers?
    -- What impact hits the sector when executive volunteers leave?
    -- How will an economic turn-around impact the sector? What does the sector look like in the future?
    -- How do we prepare for our own transition? Whatever the upcoming (unknown) shifts will be, (e.g. ending interim work).
    -- How does the sector integrate pro bono work in the long term? We shift them/they shift out...
    -- How do we position our organizations, now, during a boom in executive volunteers?

    Presenter: Josef S. Klus, CPCC (Certified Professional Co-Active Coach)
    He transforms the leadership and communication of executives, management and immediate staff through individual coaching as well as supportive training. Josef coaches business leaders from diverse cultures & careers in their professional performance & personal achievement. An ex-expatriate from several years in Paris, he now works stateside in both English and French, with clients nationwide & internationally on 5 continents.

    RSVP: nonprofit@astdla.org.


  • Geri Stengel

    Yes, nonprofits that have accomplished their mission should close but many will never accomplish their missions. One batch of at-risk young people will be followed by another and another.

    In the example of the March of Dimes, the mission shift was from a particular disease (cured) to general neonatal health, a related and never-accomplished mission.

    Nonprofits should absolutely stay on mission until that goal is accomplished. But I think its resources -- contacts, skills, community respect -- can, if strategically appropriate, be used to address another related problem.

  • M Sanders

    Um... you have missed an entire segment of the non-profit world. Performing Arts. Which, in my opinion, does not fit into you wooden stake theory at all.

  • Scott Byorum

    That's right, because 'for-profits' are so good at addressing societal ills. You see, a real vampire sucks your blood and turns you into a vampire, under their spell. Kind of like how they crashed the economy and raided your 401K and then made you vote them back into office so they can do it again. No non-profit sucks your money against your will. ANALOGY FAIL

  • Leslie Forsyth

    It may be different in the UK but non-profits here close all the time. They may have been single issue or their funding stream ran out or policy changed or the refugee community went home or they've merged or whatever. If you look at a non-profit directory for a community from 10 or 20 years back you'll see lots of organisations that no longer exist. I agree that many non-profit organisations have an unspoken assumption that keeping going is a good thing and they should be challenged on that at least every time they are considering a new three year strategic plan. In reality things are usually much more complicated. Its not just about curing the disease, its about the people still suffering from it or disabled by it or living in poverty because they can't work or being at home as a frail informal carer looking after a partner with the disease. All of this work is as honourable as the original aim.

  • Brett@UndergroundElephant

    Wow. This is one of those concepts I never really thought about. But what is the point of a non-profit if it doesn't close its doors after achieving the overall goal? Thought you were spot on!

  • Chris Reich

    This is certainly worth considering.

    There are some charities that should probably go even before declaration of "mission accomplished".

    The American Cancer Society comes to mind. I doubt their money will even contribute to a cure for the myriad of cancers.

    Now we read that the cholera outbreak in Haiti was caused [probably] by UN workers. Doh!

    Chris Reich

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  • Larry

    I agree - non-profits should not exist forever but here's the rub. Even if they accomplish the goal, if they did it well and became a great running organization, at least in their minds, then moving into another area might at times be a better choice.

    They are effective, sometimes moreso than others. It may be their household name or the networks they've developed. But the more old horse organizations that keep going, the fewer new start ups that may be eventually better there are - limited pool of money many times from government and doners.

    So it's a double edged sword. Like politicians - the longer you're there, the more you get to know the system and learn how to work it and form networking relationships - but you may be less effective than the new nimble member who has a different vision. The world changes and though older organizations can change, they often keep the old attitudes that founded it and sometimes that is no longer useful in a diffferent era.

    Their drive to preserve themselves is a natural inclination - organizations composed of humans become living things. The private sector has the same inclinations but they often fight it out with competition. It's not the better ones that always remain, but those who find a way to survive at that time. It's not the same for government run or funded organizations. Some become pets and so they live.

    IBM lost the PC market but reinvented itself on its own terms and money. Montgomery Wards is gone, though it started to look good at the end - too little too late.

    I support non-profits and they are wonderful parts of our culture and economy but too many think they have a right and deserve to live another day - often as if no one else is doing the work they do or want to do. Sometimes we need large organizations but we still need new ones that are born out of the new mindset or view of the world and how to address old and new issues.

  • Suzanne

    While I agree that some not for profit organizations have lived beyond their useful 'shelf-life' (and I firmly believe those organizations should be purged from the public sector) I think that the article misses an important point: not every social problem has a one-time, finite solution.

    Some charities are founded to address social issues that are complex and open-ended: poverty, educational disparity, homelessness, or victimization. For these organizations, it is not as simple as saying "OK, the fundraiser for the shelter happened - time to close up shop!". Simply building one shelter, then another, then another will not address the systemic and pervasive nature of the homelessness problem. Complex social issues often require concerted, sustained efforts to even begin to address. These kinds of efforts should be valued for their broad vision, while at the same time donors and tax-payers should demand verifiable metrics to measure short term objectives.

    I also wonder what (if any) value we as a community place on the expertise and skill of those individuals who dedicate a life to service. Social problems are as (if not on occasion, more) complex than the problems faced by for-profit businesses. And, just like in the business world, some problems are solved by the genius of one college kid, while others require the collaborative and focused work people who have skills and insight gained by experience. Really making a difference in a community may require a deep commitment of time, expertise and skill that only long-time ventures can afford. This is not an argument to keep funding organizations that are not useful or irrelevant, but a request that we consider that complex social problems may require more than a one-time distribution of funds.

    The vast majority of charities are not the 9/11 fund. They are low-budget operations that are focused on community specific problems. The people who dedicate their lives to that work often do so at below-market wages (or often free), and routinely lack health care, retirement plans or other benefits that some in the labor force enjoy. That's not to say that you can't find CEO's and officers of several big-name charities that are making a better-than-decent wage, but I think you will find that is, by far, not the norm.

    I think the comparison to for-profits is not a good one. Almost by definition charities are created to serve markets that very few for-profits have the desire or will to address: the poor, the vulnerable, and the socially disenfranchised. These are sectors that for-profit companies have routinely ignored because there is not easy money to be made (or honestly, they would have already found it) and so our expectations (and yes, we should have them) should be adjusted to that reality.

    I do agree there is an innovation problem and the blame for this rests, in part, with charities who get uncritically caught up in their day-to-day work but also with funders themselves. Private donors and public agencies (and by-proxy the taxpayer) have a very low tolerance for extreme innovation or learning on the fly. Grant programs generally will not allow a charity to change course mid-stream if they have a radical new idea. High-dollar donors often significantly restrict the uses of the funds they give. Those that fund often say " we won't give money unless you can demonstrate that something already works" and while that makes sense at face-value, it also diminishes the possibility for bold new approaches that could benefit from the incubators and angel investors of the for-profit world. There are certainly courageous donors who fund innovative projects, but most prefer the already-tried approaches despite the potential benefits of untried, iconoclastic approaches.

  • Paul Carney

    You make some great points, Suzanne. Thanks for adding some knowledge with your follow-up.

    Perhaps one solution is that non-profits should not tackle large, open-ended issues like poverty, but instead focus on a specific goal: reduce poverty or homelessness in one specific place (city, county) that is manageable. Then, when the goal is accomplished, they show what they did and let others create smaller, community-based groups to do the same thing.

    I am an adamant supporter of more things local and community-based rather than large, national governments or non-profits that try to tackle everything. This will mean some disparity between localities, but we have to learn to live with that. We cannot expect all places to be the same - we don't have mountains in Florida and celebrate it!

  • Dave Smith

    The larger problem here is all about how nonprofits are funded vs. for profits. For profits are funded by investors who are looking for the highest possible returns married with relative safety of not losing their original investment. This means, when a company becomes complacent or even eases back their growth in a minimal way, investors run away and use that capital elsewhere. With the growth of venture capital in the past decade or so, we see the appetite for risk growing with the hopes of extreme profits.

    However, the largest funders in the nonprofit sector (government and foundations), have no appetite for risk, and individual donors generally invest in known brands regardless of impact. Therefore, an organization must be an institution before it can attract significant investment. These funders generally come in when the organization does not NEED the money anymore. Money follows money and ends up creating large organizations with more money than they know what to do with – and that leads to mission creep. The organizations who achieve some great feat are then rewarded to hang around and burn up money just to exist.

    In the private sector, money also follows money and you see larger corporations getting even larger. However, they are forced to still show significant returns to maintain their valuations. This is often accomplished through mergers and acquisitions. Perhaps the nonprofit sector (and its funders) should learn from the for profit sector and start investing in “buying” the good ideas produced by small, edgier, and nimble nonprofits who have talent and big ideas, but just lack the resources to scale their operations.