Too Many Nonprofits or Not Enough Relationships?

By Greg O’Neill, CICF Marketing & Publications Officer

At the June 2025 edition of the monthly networking event Creative Mornings, Kelly Doucet opened a series of Indianapolis “hot takes” with a whopper: The city has too many nonprofits.

While it wasn’t the first time somebody had made this observation about our region, her two minutes have continued to resonate to a surprising degree.

“I was at the Stutz literally just last week, and somebody came up and quoted it to me,” Kelly said recently. “I still hear about it pretty regularly.”

But the most surprising part of the reaction? The lack of disagreement Kelly received. “I didn’t really get any opposition to the claim itself,” she said.

What she got instead were leaders who often agreed but were concerned about the implications:

How many is too many?

Are you talking about my organization?

If needs are rising, is it even something to worry about?

What should be done about it, and who decides?

“Two minutes obviously aren’t enough to unpack such a multi-layered issue,” Kelly added. “It was really more a shorthand for the reality, all too common, where a new nonprofit gets started without enough resources or connection to the work already underway. We need more relationships and awareness from the outset, when it matters and when it can make a real difference.”

The “too many” dynamic is becoming a pressing issue as the sector faces increased demand for services and reduced funding sources in the wake of state and federal budget cuts. In a follow-up to this article, we’ll hear from groups and individuals who found economically viable solutions to this pressure.

But with Kelly now serving as Senior Community Leadership Officer at CICF’s next-door neighbor, Women’s Foundation of Indiana, we thought the time was right to revisit the topic.

HOW MANY IS “TOO MANY”?

This criticism may land harder in Central Indiana, home to a relatively dense nonprofit sector. However, “too many” is a familiar criticism across the county. National studies have even sought to quantify the reality behind the perception of an America increasingly overflowing with nonprofits.

Unfortunately, there is no formula to determine the “right” number of charities for a region. Some even argue that, with rising need, the country may actually need more nonprofits.

Ultimately, organizations thrive (or fail) depending on a set of ideal conditions, the two most obvious being “demand for services” and “availability of funding.”

In an environment with limited funding sources and increasing demand for services, the worry is that overlapping providers may overwhelm residents and funders alike, even diluting financial support and overall impact.

As Kelly put it: “Every new nonprofit started within the same number of funding sources means we’re slicing the pie into thinner and thinner pieces. Eventually, nobody’s full, and our impact suffers.”

In her prior roles, Kelly managed charitable contributions for major corporations. There, she experienced firsthand Central Indiana’s vast array of both issue areas and funding targets. Some budget years were leaner than others, which led to difficult decisions regarding grantmaking.

2025’s cuts to public funding have increased that pressure for nearly every donor and nonprofit. However, expiring COVID-relief dollars and a volatile post-COVID economy were already making things difficult.

From a donor perspective, Kelly identifies two bad options: “Do we give smaller grants to more organizations and hope that they can each do at least a little something with it, or do we do the hard job of giving more money to fewer organizations, hoping for a deeper impact?”

WHAT CAUSES “TOO MANY”?

One of the more difficult aspects of the claim is identifying the cause. Or, more likely, causes.

Some have said a small-government state like Indiana requires a robust nonprofit sector. But while it is true local governments in our state rely on nonprofit partners to deliver essential services, that isn’t evidence for “too many.”

Others point to a nonprofit version of “Founder’s Syndrome,” where new organizations are founded or maintained for personal reasons despite pre-existing service providers or partnerships. Kelly nodded to this in her original 2025 presentation by noting that “some would rather start something new than strengthen what already exists.”

She sees additional factors that are likely just as important. A big one is the simple fact that Central Indiana faces many challenges we urgently want to address. Whether it’s food access, safer neighborhoods, childcare, or affordable housing, residents understandably want to do something when they see or experience hardships.

What many find, though, is that getting good results can take much longer than successfully applying for a 501(c )(3) tax status.

So the question remains, why not join or contribute to a preexisting effort, strengthening what already exists? Why try to start something from scratch? Sometimes, founders may not have taken time to research similar organizations beforehand. But there may be more to it than that, and this is where larger organizations come under scrutiny.

Kelly pointed to the potential for distrust and exclusivity between institutional charities and communities: “Some of our long-standing organizations have become exclusive clubs. And if you don’t already have a seat at the table, good luck. So, as a result, people build their own tables. They bring their own chairs. They bring their own utensils. They bring their own people. And ironically, some of those who feel excluded may be those who are closest to the issues that large nonprofits are looking to address in the first place.”

This can lead to duplicative efforts and reinforce a hesitancy among smaller organizations to approach larger ones for partnership.

Gaining trust and proactively welcoming more motivated and knowledgeable neighbors into major strategies will be essential for larger stakeholders who want to see broader collaboration and better outcomes.

Given the funding outlook, many smaller nonprofits will be motivated to engage in those dialogues and partnerships.

In a future article, we’ll look at examples of this kind of collaboration as well as alternatives for neighbors who want to have an impact without the administrative and economic burden of starting up a nonprofit.

STAYING COMPETITIVE

No matter how many partnerships or collaborations, nonprofits will always need to distinguish themselves to grantmakers. Kelly notes that better storytelling is key, and she highlights the use of measurable data alongside specific, tangible impact.

She cited the example of a charity she worked with that began keeping a monthly service tally at the onset of the COVID pandemic. They never stopped, and now that monthly tally has become yearly totals, demonstrating who was served and how. They can present years of data-backed results to their board, funders, and even media outlets to show progress or an increase in demand.

“But,” Kelly added, “smaller nonprofits may not always capture enough data because they’re just trying to keep their head above water.” Kelly sees this as another opportunity for partnership with larger orgs that have the capacity and knowledge. “If we’re going to collaborate, it doesn’t always mean we have to literally provide services side by side. It can be about a larger nonprofit saying, ‘I’ve got software or institutional knowledge or connections and a skill set that I can share with grassroots-level organizations.’”

Kelly highlighted another aspect of more compelling storytelling: literally defining success.

“Success has to go beyond ‘We want to help people,’” she said. “That’s a great place to start, but then, what does that mean specifically for your mission? What are the actual numbers or levels you’re trying to reach? Goals matter to people. Set a goal so that potential funders – and even other people in your organization – can measure progress and know where you are.”

GETTING TO KNOW EACH OTHER

In each of the above scenarios, the circumstances improve as we create more authentic relationships.

As Kelly put it: “It’s not that we need fewer organizations doing good, it’s that we need more of them to thrive. Right now, too many groups are duplicating efforts, stretching limited resources, and working in silos. At Women’s Foundation, we believe lasting impact comes from collaboration and sharing our strengths. So for our mission, that interconnected effort is how we ensure every woman and girl can live life on her own terms.”

Here are three ways relationships can help our sector, whether you work at a major nonprofit or are a mighty organization of one:

• Better relationships allow nonprofits to see where their work overlaps or where it might complement another group’s; that saves time, money, and confusion.
• Authentic relationships help larger institutions identify neighborhood leaders before those leaders feel forced to build something on their own.
• Relationships allow residents to trust that the work intended to serve them is being shaped by their community, not imposed on it.

The more we know one another, the easier it becomes to reduce unnecessary duplication, share resources, build credibility, and recognize when partnership is the better path.

NEED AN INTRODUCTION?

CICF has been making regional nonprofit connections for nearly thirty years. Have any questions about who’s doing what where? Drop us a line below, or better yet, register for an upcoming installment of our free Office Hours, open to any Central Indiana nonprofit. These peer learning sessions have doubled as a great way to meet others in the region’s nonprofit space, compare notes, and create partnerships.