When It's Time to Say Goodbye

by Mike Grogan, President & CEO of IntegralOrg

All nonprofits begin with a dream. Whether an organization has been around for decades or is just starting out, the journey of becoming a nonprofit begins with a small group of people deciding they want to do something to improve community. This is something that we sorely need in a world that, at times, is seemingly more focused on self-interest and tearing down, than it is on building up. We need dreamers that have the courage to step forward to try to make the world a better place for others.

However, the journey to becoming a sustainable nonprofit comes with many challenges. As the adage goes, starting a nonprofit is easy, sustaining it is hard. It is tough work to keep a nonprofit going, but even more so to do so in an effective, sustainable, and compliant way. This is why IntegralOrg exists – to walk alongside charities and nonprofits as they navigate the journey of starting, growing, and sustaining their organizations.

What does not get talked about very often is the work at the end of the journey. It is hard to go from having a dream, to enacting a dream, to saying goodbye to that dream. But it is likely that for most nonprofits that day will come.

The question that we must face is how to end the journey well. There are few resources to guide us. While this isn't necessarily challenging work in terms of the processes or effort, it is challenging work emotionally.

In late 2024, the Alberta government released the Alberta Non-profit Listing Dashboard, a tremendous tool for those doing research, advocacy, or planning work for the nonprofit sector and provides insight into the growth and changes that happen in the sector over time.

One story that the provincial data tell us is that nearly 1500 new nonprofits were incorporated in Alberta just last year. Compared to previous years where on average 1200 to 1300 nonprofits incorporated, it appears there is a nonprofit boom underway. But the dashboard also shows what happens to nonprofits over the course of time and allows us to track the status of those newly incorporated nonprofits over the years.

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If we look back on the dashboard over five and ten years, we gain insight into the journey of newly formed organizations. First, many nonprofits don't survive the first few years. After ten years, half of the newly incorporated groups are no longer in existence. And after twenty years, closer to two-thirds no longer exist. This might seem alarming. However, it’s not necessarily a bad sign. In fact, it could be seen as a very healthy sign of a dynamic and evolving sector and it is likely that that the dissolution rate of nonprofits is no better or worse than the winddown rate of small businesses.

Where this does get to be an issue, however, is in how those nonprofits come to be no longer in existence. Dissolving (yellow in the chart) is when an organization goes through the legal process to wind down. While dissolving a nonprofit is not overly complex, most entities do not go through the appropriate, intentional, and fulsome process to do so.

Rather, it seems that most organizations simply stop operating, fail to file their returns, and, after a few years are struck (green in the chart) from the registry by the government. Once this occurs, they no longer exist.

However, a significant issue is that during the two to three-year period between failing to file and being officially struck, these groups are still entities that are responsible for all of the activities undertaken in their name. In some ways they are akin to a vessel that continues to sail even though the crew has abandoned ship. This dynamic is a significant risk area for board directors, many of whom may not know they are still responsible for all the activities of the nonprofit.

Over the next few weeks, IntegralOrg will release a series of articles called When It’s Time to Say Goodbye. This series will look at several perspectives on the journey of winding down a nonprofit organization. We will look at the legal processes for doing this in a compliant way including how to dissolve a nonprofit, how to wind up a charity, and how to disperse assets. We will delve into the strategic aspects of how to know that is time to let go of the dream and to begin the winding down. And finally, and perhaps most importantly, we will focus on the cultural aspects of this journey: how to celebrate the work that has been done and destigmatize the winding down process.

Winding down a nonprofit should not be viewed as a failure. Most if not all nonprofits will have to face this question in one way or another at some point. Saying goodbye in the right way should entail ensuring the legal compliance aspects of the process are well attended to, but also it should be about celebrating the work that has gone into building the organization and honoring the commitment of those who have served.

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