The Jane Addams Hull House – an iconic and historic social services agency in Chicago – announced its closing/bankruptcy in recent weeks. This shook many in the nonprofit community. Why? Many assumed that some of the "old guard" agencies were untouchable. "Too big/too important/too historic" to fail? Not so. The question now is what lessons can be learned from their story. Understanding what went wrong with Hull House could guide others in what actions not to take.
In a recent Crain’s Chicago column, Terry Mazany, CEO of The Chicago Community Trust, said that the Hull House situation is our "canary in the coal mine". In other words, we should take heed, so that others don’t fall victim to a similar fate.
I’ve heard some large social service nonprofit leaders say that obtaining funding to support social services is no easy task. They say that only governmental entities will fund services for those populations who are "truly" in need. That rationale was used to explain why having upwards of 85 and 90 percent of revenues coming from government sources was the only feasible funding strategy. Is that the commonly held view?
I remember back in the Reagan era, when he declared the need for private funders to step in to support nonprofit programs in lieu of government. In the 1980s as well, there were many nonprofits that received upwards of 85 and 90 percent of their revenues from government sources. Do you remember those days? What happened? Why is it that many nonprofits are still overly dependent on a few funding sources? Now that we are having serious economic difficulties – from all directions – those dependent on a few funding sources are being caught. It is often those organizations that have failed as a result.
So what to do? How can we learn from what happened to Hull House? It would be helpful to be able to explore what exactly occurred. What decisions were made along the way? Were there financial indicators that were missed? When you have a committed board, and executive leadership who are involved, how does this happen? Was it the case of some key funders pulling out at the same time? Is this a lesson that having high quality programs isn’t enough? Is it a matter of the increased competition for scarce resources? Is this a sign that the old guard relationships are no longer sufficient to ensure the continued funding stream that’s always been there?
These questions and more merit exploration. I’d love to join with some of my faculty colleagues to do such an exploration. (In fact, this idea just came up.) Hopefully Hull House will be open to sharing information so that others can learn. We need to be shaken up from operating in a status quo fashion. Perhaps the Hull House story can be a lesson to help us. What are your thoughts?
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