August 6, 2012

Take the Quiz: Six Signs Your Nonprofit is Stuck in a Codependent Relationship with Government

Many human services nonprofits increasingly find themselves caught up in codependent relationships with government funders that erode their sustainability and impact.  Bridgespan Partner Daniel Stid poses six questions that nonprofit leaders and board members can ask themselves to diagnose the extent of the problem and begin determining what they can do about it.

By: Daniel Stid

Merriam-Webster defines codependency as “a psychological condition or a relationship in which a person is controlled or manipulated by another who is affected with a pathological condition.”  Though it may stretch the definition, “codependency” strikes me as an apt description of many relationships between human service nonprofits and government agencies funding their work. I am not suggesting that government agencies are pathological, only that they have become so cash-strapped that, more and more, they are effectively manipulating the nonprofits they rely on to deliver services. For their part, the nonprofits, driven by their mission to serve, are putting up with and enabling this controlling and ultimately destructive behavior.  If you are a nonprofit leader or board member, here are six questions to ask yourself and colleagues to test whether your organization is caught up in codependency:

1) Is your organization routinely seeking out government contracts and grants that are funded at levels that put your longer-term financial health at risk?

2) Does your organization have to accept recurring payment delays and / or restructuring of existing contracts and grants that further jeopardize its financial health?

3) Is your organization so reliant on one or more sources of funding that, no matter how bad things get, you wouldn’t be able to walk away?

4) Is your organization bidding on contracts or writing grants to deliver services in program areas where you don’t believe yours are the best available?

5) Do you find yourself changing your programs to comply with government requirements in ways that undermine results for the people and communities you serve?

6) Do most if not all of your interactions with government officials involve questions of contracting processes and financial reporting as opposed to outcomes and how to improve them?

Surveys conducted by the Urban Institute and the Nonprofit Finance Fund suggest that most nonprofits will need to say “yes” to at least one of the first two questions. If you end up answering “yes” on two or more of the six questions, you really should step back and assess the sustainability of your mission. In an article published earlier this year, my colleague Willa Seldon and I mapped out Five Ways to Navigate the Fiscal Crisis. Adopting some of the approaches we discuss could help you escape the more debilitating aspects of your codependent funding relationships. You may also be able to identify additional solutions that work in your particular situation.  But as government budgets continue to tighten, simply accepting and scrambling within the status quo is not going to be a recipe for success.

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