What's Wrong with Nonprofits?

What's Wrong with Nonprofits?

The nonprofit sector is facing a massive trust crisis.

Not because people doubt the intentions of those doing the work. Most nonprofits are staffed by people genuinely trying to solve problems.

The issue is structural.

I read an interview between Santi Ruiz and Greg Berman (linked in comments) about the state of nonprofits in America. It covers the erosion of public trust, mission creep, and how funding dynamics have reshaped the sector over the past two decades. For those of us working in the sector, I recommend reviewing it.

The interview asks: what's wrong with nonprofits?

I would argue nothing. Individual nonprofits are rarely the problem. But the dynamics of our sector are.

Heavy reliance on government grants creates financial risk in a volatile political environment, but it also creates a perception problem. Nonprofits appear politically aligned when they are simply following where funding is available.

This connects to the deeper structural problem: Too many nonprofits are optimized to survive funding cycles rather than solve problems. 

Short-term grants and fragmented funding push toward continuity over effectiveness.

I've found that the constraint is usually capacity. Without modern systems, clear incentives, and meaningful feedback mechanisms, even committed organizations struggle to adapt and improve.

Rebuilding trust requires confronting these structural incentives head-on.

Full interview here: https://www.statecraft.pub/p/whats-wrong-with-nonprofits