Not long ago, I sat down with the director of a small nonprofit working on food insecurity in a mid-sized city. The organization was lean, focused, and well-respected in the community. They had strong relationships with local families, a steady roster of volunteers, and real outcomes to show. Still, they were scrambling, again, for summer funding. They’d just lost out on a $15,000 grant to another nonprofit with a nearly identical mission.
There was nothing unethical about the process. In fact, the competition was encouraged by the funder. But the result felt familiar: multiple organizations duplicating services, chasing the same money, all while trying to solve the same stubborn problems with shoestring budgets and overlapping staff.
This isn’t a one-off example. It’s how the system works.
The nonprofit sector in the United States has grown to over 1.5 million registered organizations. On paper, that looks like civic vitality. In practice, it often leads to redundancy, fragmentation, and burnout. Organizations compete for grants, talent, board members, attention, and increasingly, survival. What’s missing is an honest acknowledgment of the structure we’ve created, one that behaves like a market but refuses to name itself as one.
We still speak of nonprofits as if they exist outside the incentives that shape every other sector. As if the presence of a mission statement cancels out the need for competitive advantage. But the reality is clear. These organizations are rewarded not for collaboration or efficiency, but for visibility. For novelty. For telling the most compelling story about a problem that, more often than not, is being addressed by half a dozen other groups within a ten-mile radius.
The result is a sector flooded with small, undercapitalized nonprofits that must constantly prove their relevance, not by solving the problem, but by justifying their continued existence. We don’t fund shared infrastructure. We rarely reward mergers. And we almost never build incentives for organizations to sunset after fulfilling their mission. Instead, we expect nonprofits to stay lean, stay humble, and stay alive, forever.
It is time to admit that we have too many charities. Not too many causes. Not too much need. But too many parallel efforts all attempting to patch holes in systems that require coordinated repair. We have too many executive directors spending their evenings editing newsletters and too many back-office teams reinventing HR policies that could be shared across five organizations. And we have too many communities that still aren’t getting what they need, because the system isn’t built to deliver at scale.
This is not a call to dismantle the nonprofit sector. It’s a call to rethink how we fund, structure, and measure it. A call to reward outcomes instead of origin stories, to support partnerships that actually integrate services rather than just co-brand events, and to design systems where good ideas can grow without having to form a new 501(c)(3) every time.
Doing good is not enough. It has to be done well. And doing it well, at this scale, requires a new playbook. The first step is telling the truth about what this sector really is. It’s a market. A messy, underregulated one, but a market all the same. If we can start there, we can begin to build something better.
