I have worked in the nonprofit sector all my professional life. From my early days as a direct service provider to people with intellectual and developmental disabilities to my current role leading Inperium, where every year I analyze the finances and audit the operations of hundreds of health and human services providers, I have witnessed tremendous resource waste. Given the people-focused nature of the services they provide—like substance abuse counseling, foster care, and mental health services, to name just a few—resource waste isn’t only measured in dollars but in people and systems. It shows up in a lot of different ways: back-office function duplication, inefficient accounting systems, personnel in roles that don’t suit their skills, and high administrative costs. The list can be substantial. Waste is wasteful in any business. But in human services, poor resource utilization creates consequences for the individuals who rely on our services, and ultimately, they end up paying the price for our waste.

People-helping organizations that serve the most vulnerable in our communities don’t intend to be wasteful. More often, typically because of slowly eroding oversight or achieving scale that bloats bureaucracy, organizations fall victim to complacency. Because most of these organizations are funded by government reimbursement and/or philanthropy, experience has taught them that when circumstances get dire, a government bailout will arrive or some entity will take a leap of faith to rescue them. In the past, such belief has proven accurate. Local communities may not have consistent funding or answers for how to house the unhoused, treat those with mental health conditions, or assist people with disabilities, but anyone with a conscience and a heart knows people need help. And thus, most of the time, someone provides the money to organizations so that they can limp along, even if doing so means being wasteful.

This must stop.

Failure of Oversight

While there have been instances of nonprofits wasting resources in ways that make headlines, it isn’t typical. Far more often, waste happens through the duplication of overhead services, misuse of subject matter experts, dependence on slow decision-making frameworks, and other procedural flaws. Such waste contributes to lagging mission sustainability. It is exacerbated by leaders’ failure to take timely corrective actions. Complacency fully takes root, and leaders underdeliver without consequence. Waste balloons without anyone being held accountable.

Because the missions of people-helping organizations are so transformative for those who depend on them, all waste harms them. People fall through the cracks. Programs are cut in the name of “resource limitations.” Inefficiency results in offering fewer services or reducing the numbers of individuals served. Providers cut corners. Fiscal and physical conditions worsen. Bad actors go unchecked. In the worst-case scenarios, consumers give up hope, some get injured, some die. The environments in which we work have very real consequences. Translation: a mission with no meaning.

We must do better. Not doing better isn’t an option.

Some of the reasons this wasteful pattern repeats can be structural, such as constrained access to capital, difficulty sourcing talent, or limited access to best-in-class infrastructure. Another reason is selecting leaders who are dedicated to mission but lack expertise in the processes required to run complex organizations or the knowledge to manage their finances. Even in the face of such constraints and limitations, many organizations express trepidation about exploring business partnerships, affiliations, or consolidations, despite the savings and efficiency benefits of scale. Perhaps the explanation for such trepidation is a simple and ironic one. Throughout the health and human services sectors, providers consistently counsel their clients that asking for help is a strategy, not a weakness. We share this wisdom with our clients but fail to recognize it for ourselves.

How do we account for the belief in so many organizations that admitting they need help is a sign of weakness? One contributor is found in nonprofit boards that are poorly structured to fulfill their governance responsibilities. Most are not equipped to partake fully in information sharing with management, and too often boards don’t ask the right questions of C-suite leaders. There is a pervasive failure by many nonprofit boards to hold management accountable to clear expectations tied to mission, including financial performance. You cannot root out waste without meaningful, accountable financial oversight. Responsible governance requires more than good intentions or attendance at board meetings. At a minimum, it requires a board, along with the organization’s executives, to be able to set measurable performance expectations, benchmark outcomes against comparable organizations, and intervene promptly when goals fall short.

The emergence of national nonprofits, like Inperium, which operates at a billion-dollar scale, should make it obvious that we can no longer realistically rely on governance models designed for smaller, simpler organizations. We live in an era when nonprofits, like their for-profit cousins, must grow to survive. And yet, missions must be sustainable, or they wither and die. The demand for services grows continuously, while the resources to meet that demand shrink each year. One result is that the role of nonprofit governing boards has not kept pace with the requirements for achieving sustainability. Failing to acknowledge this reality is one of the greatest obstacles facing us as we focus on improving service delivery with fewer available resources, and ultimately, it becomes an important contributor to waste.

Waste is not an option. The consequences are too profound, the human cost too great.