Toward a Theory of Organizational Fragility in the Nonprofit Sector

In recent years there has been increased concern about the effectiveness of nonprofit organizations, particularly in the US. Foundations in particular have increased investments in what they call “capacity building” and have formed an affinity group called Grantmakers for Effective Organizations. Much of their increased investment has gone to consultants in a wide variety of interventions such as board development, strategic planning and information technology. Such one-on-one approaches seem unlikely to have a sectorwide impact on organizational effectiveness. To have such impact, we need first to understand systemic factors that could result in organizational weakness sectorwide. The proximate cause of that weakness seems readily apparent as soon as we seek for it: it is the limited funding available for administrative or infrastructure costs. A systemic explanation will seek more deeply for a causal matrix underlying the apparent paradox: why do funders who want grantee organizations to be successful fail to fund their administrative or infrastructure costs at levels that would permit them to be effective? After documenting the proximate cause with anecdotal evidence, this paper will offer a hypothesis regarding this deeper causal matrix by drawing on a variety of prior research and consulting experiences