Americans tend to assume that bigger is better, and they are often right. But in many cases, the job requires an advanced ladder, not a crane. Business ranges from multinational corporations with billions of dollars to individual companies, and governments from transnational nations to small villages. Nonprofits also come in different sizes, from those with thousands of employees to those with one or even no employees.
While many people preach to local government and commercial property, few people value small nonprofits and many disparage them for being ineffective or ineffective. Yet they are many. According to the US Bureau of Labor Statistics, the number of 501(c)(3) nonprofit organizations in America in 2017 was 166,046. Of these, 64,806 have less than 5 employees and another 28,999 work between 5 and 9 people.
Nano-NPOs’ share of total nonprofit employment and wages is negligible, but that doesn’t mean they are ineffective or insignificant. Indeed, less efficient nonprofits may reside in the midst of the sector, where inadequate scope frustrates some and mission creep affects others.
In this vast middle ground, some nonprofits employ great high-paying leaders and inhumane HR staff, whose main job is to make sure that the layers of unnecessary middle managers behave with volunteers. Many mediocre nonprofits sprang up from humble roots, had some success, and thought they should expand. So they bore all the trappings and costs associated with larger institutions, but didn’t generate enough funding for economies of scale. They spend good money, but not necessarily “moving the needle” as much as smaller organizations do, even in absolute terms.
Perhaps some of those mid-sized nonprofits should have received more donations, but for whatever reason they didn’t. Despite this, in many cases, the world would have been better off if they had stayed nano-sized, laser-focused on one core mission, and less vulnerable to funding shocks.
The Legal Rebellion Foundation, for example, does only one thing, and that is sponsor a blog and newsletter that provides news and analysis on government policies, especially higher education policies, that do not make national headlines. Few employees provide this valuable service to its grateful readers, who number in the hundreds of thousands a month.
Likewise, Historians Against Slavery focus exclusively on educating people about slavery, past and present, through conferences, books, speaker office, and social media. It has a “working” volunteer council and no staff. You never spend more than $15,000 a year, which keeps paperwork costs low. It outsources most jobs not directly related to its mission and has been able to hibernate at low cost during the pandemic.
Nor has COVID killed the International Insurance Corporation (IIF); The death of its chief employee, Robert J. Gibbons did it in. But for more than two decades, Gibbons and the Institute of International Finance have accomplished a specialized mission, helping educate insurance executives and policymakers in emerging markets, and they have done so well.
Many nano-NPOs are dying along with their founders, or other major movers and shakers. They can be susceptible to other types of external shocks as well, although their small footprint can make them agile in the face of changing conditions. The fact that nano-NPOs are more likely to shut down completely rather than run indefinitely is a good thing, from an overall efficiency standpoint. The hugely popular and well-talented American Colonization Society, for example, was able to cling to corporate life in the 1960s even though its main mission, sending former slaves to Liberia, ended a century ago.
Another highly successful nano nonprofit organization, Contributions to Business of America (FOWSAB), faded along with its founder, corporate activist and NBC radio show host Wilma Seuss (1900-1986). The topic of the new book fearlessSeuss formed FOWSAB in 1947 to educate female, and later male, individual investors and compile proxy ballots for use in corporate elections. It had several hundred dues-paying members in its heyday, mostly from the greater New York City metro area. But it employed no more than a few people, chief among them Seuss, who served as “Chairman of the Board,” public relations consultant, and educational program coordinator. Volunteers and outside contractors did the rest.
By the early 1980s, FOWSAB was moribund, but that’s true because the 1970s saw the waning of the small investor’s post-war foray into the stock market that Seuss helped bring about. Most investors had switched to investing via mutual funds by then.
Moreover, individuals who still preferred to buy at least some stocks outright had several other options, including the American Association of Individual Investors (AAII). Unlike FOWSAB, AAII was able to expand and outsmart its founder. It claims to have helped 2 million investors since its inception in 1978, based on a membership model similar to that of FOWSAB. Unlike FOWSAB, its founder was fully committed to expanding the organization, which included building strong local affiliates across the country. FOWSAB has also experimented with classes, but Seuss has been too pervasive with its corporate activism and national radio program to do more than just hope it pops up spontaneously.
Obviously, not all nonprofits should stay, or even start, at the nanoscale. But nano-nonprofits remain a focused and effective part of the third sector, a large, but unfortunately largely forgotten, part of America’s economy and civil society. I detail the rise and end of the multi-center voluntary system in Native America in my upcoming book, lost freedom (AIER 2022).
Today’s third sector is not as large or vital as it would be if governments at all levels did not intervene in nearly all aspects of people’s lives, taking money from taxpayers who are skeptical or unwilling to fund the imposition of large-scale programs and mandates that often exacerbate social problems rather than of mitigating them in the precise, local, and flexible ways that nonprofits do. If Americans can stop funding their governments, America’s multi-center volunteering system will flourish again as all nonprofits, large and small, compete for donor resources that are independent of government budgets and influence. By restoring the ability of its citizens to solve their own problems in their own way, the American nation will remain imperfect, but it is a much better place than it is now.