How to Know When to Dissolve Your Organization

It’s never fun to think about the worst-case scenario. And if things are going well for your organization, it might seem to make little sense to do so. Often it’s clear when to dissolve, but other times the warning signs are more subtle. Here are some questions you should ask yourself if you think your organization might be in a pinch.

And hey, having to dissolve your organization isn’t the most awful thing in the world. It can actually be a really brave thing. After all, you were trying to do good for your community, and maybe there just isn’t a need for it anymore.

Are you financially stable?

As with any organization, dwindling funds is a tell-tale sign of trouble for nonprofits. If your donations have decreased, or if you’re not securing the grants that usually fund your programs, it might be time to reevaluate. Yes, there are always options for emergency funding, but relying on emergency grants and loans for an extended period of time is never advised.

A decrease in donations could indicate that members of your community no longer see the need for your cause. This could be due to a lack of marketing efforts on your end, or it could mean that you’ve done a great job alleviating a social problem in your community. If the latter is true, you shouldn’t feel bad about potentially dissolving—au contraire! You did exactly what you set out to do.

If you’re largely (or entirely) funded by grants, you might first consider diversifying your funding sources. What if those grants stop coming through? If you aren’t in a contractual agreement with a funder, there’s a good chance grantors will eventually look elsewhere.

If you see major funding issues on the horizon (say, you failed to secure a major grant), even if you’re relatively stable, it might be time to make decisions. It’s better to call it quits before you deplete your funds than to go into the red.

Is there market competition?

Examining other like-minded organizations is always healthy, whether you’re struggling or not. But if you are, and there are other nonprofits successfully fighting for your same cause, check out what they’re doing. How big are they? What kinds of campaigns do they run? How are they funded? If you can, adopt some of their strategies—it’s totally fair game. If you don’t have the capacity to do what those organizations are doing, collaboration could be an option. But if it becomes clear that your nonprofit doesn’t have the proper bandwidth to exist in the market, it might be time to consider dissolution.

Is there still a need in the community?

As mentioned, it’s possible that the cause you’ve been fighting for in the community has been solved, or at least alleviated significantly. This is less likely with larger, structural problems, but if you’re a niche organization with a highly specific mission, it’s completely possible. And again, this should be reason for celebration! Yes, your employees may have to search for new jobs, but being part of an organization that helped eradicate a community problem is quite the resume item. Plus, if you coordinate with your board well in advance, you may even be able to have jobs lined up before dissolution is final.

Are you still achieving your mission?

This is the question behind all the other questions. When it comes down to it, if you’re unable to do what you set out to do, even after a series of efforts, it’s time to consider throwing in the towel. It isn’t easy, especially with a staff, board and potentially volunteer base who care about your mission. But the longer you spin your wheels in their tracks, potentially amassing debt, the worse off you’ll be.

This also might not be an easy question to answer. How is your mission defined? Is it specific and goal-oriented? If you’re unsure about whether or not you’re achieving your mission, it might help first to rewrite your mission statement.

Don’t be afraid to ask yourself the tough questions. In the end, you’ll be glad you did.

when to dissolve

Randy Hawthorne

As the former Executive Director and Editor for Nonprofit Hub and a Professional Certified Marketer, Randy shares his passions of marketing and education with nonprofits to help them implement marketing and organizational leadership principles so they can grow their organizations. Randy lends his marketing and organizational leadership expertise to a number of nonprofits in his community. Outside the office, Randy works with high school and college students and mentors young professionals to develop their leadership and entrepreneurial skills.

May 28, 2019

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