Yet many nonprofits, forgetting this lesson and driven by some very real desperation, regularly pull out the "Help, this is it!" message anyway.
Well, if ever there were a reason to tone down the desperation, it's expressed in the recent article in The New York Times by Stephanie Strom, called "As Detroit Struggles, Foundations Shift Mission." It quotes a University of Michigan professor, Larry Gant, who articulates what local Detroit charitable foundations are carrying out in practice: "Insolvent organizations need to be dissolved, weak ones need to be merged and acquired, and only the strongest should receive the stimulus they need to become more financially sound."
Gulp. By way of example, the article discusses one organization on the way to insolvency that a foundation guided into a merger with another organization. It was probably one of the lucky ones -- others are no doubt receiving outright "no's" to funding. If it were my organization, I'd want to take a hard look at my position before approaching a foundation, and if some radical change like a merger is the only realistic hope, have my plan in hand before seeking new money. Let them see that you've got your turnaround plan in place -- a light at the end of the tunnel.