When to Call It Quits

(Photo by iStock/DNY59)

“Maybe we should dissolve.”

In July, after over a decade of operation in Nicaragua (and an unwavering commitment to the organization I founded), I found myself uttering this unthinkable phrase at a board meeting.

In an already unstable economic climate, the ground beneath our organization had crumbled beneath us. As the Nicaraguan government tightened its grip on authoritarian rule, it was threatened by civil society organizations who possess the power to hold them accountable, receiving funds they do not control and investing those funds in services that preserve human rights, protect democracy, and empower individuals. We had to be honest about what the government’s efforts to eliminate the sector entirely through a massive shutdown of NGOs had achieved: The third sector of Nicaragua had collapsed.

The Pitfalls of Government Support

Civil society creates a balance between sectors, providing a means for private companies to create social impact, and to improve civilian access to essential needs usually covered by the public sector, like education and health care. Our organization, the Barrio Planta Project (BPP), had been previously directly supported by the Nicaraguan government to address shortfalls in the public school system. Due to limited government funding, students in Nicaragua’s public schools receive only a half-day of school (broken into two “turns,” morning and afternoon), and curricular offerings often lack crucial coursework like computer science and English as a Second Language (ESL). BPP provided children and youth with these essential courses and other valuable enrichment programs. Low-income students, who attended public school for half a day and our programs for the other half, relied on both the public and the third sector for a well-rounded education. To reach the communities we serve, collaboration between sectors was not only ideal but essential.

One year after our founding, BPP secured a direct connection with the government when we landed a meeting with the president, Daniel Ortega. At our meeting, he agreed to provide us with monthly funding, national NGO status, and my residency, as well as facilitating necessary collaborations with the Department of Education and municipal government. Within months we had our NGO registered and Fundación Proyecto Barrio la Planta worked together with our US 501(c)3 organization, Friends of Barrio la Planta. Additionally, the government’s monthly donations proved to be the consistent funding that would be a crucial element in our ongoing sustainability.

Things began to change in 2016, when Ortega won the third consecutive election and his wife, Rosario Murillo, was appointed vice president. When I went to renew my temporary residency for the fifth time—expecting it to be as routine as usual—I was told it wasn’t ready. When I asked around to find out why, people told me, “La Chayo [Murillo] is in control now. Good luck getting anything through.” This proved prescient: When our NGO’s legal documents could no longer be updated without my legal residence—after almost a year of failed attempts—I had to resign and pass the legal representation to our dedicated administrator, who had served the organization since its inception. Without residency, I had no choice but to leave the country in 2017, although I continued to support the organization remotely while implementing an exit strategy and succession plan.

I wasn’t the only one experiencing complications with the Ortega-Murillo regime. In April of 2018, protests erupted in Nicaragua as frustrated civilians voiced disapproval of government policies and actions. Protesters were exiled, imprisoned and many were killed. Since then, the government has taken ongoing actions to silence any perceived opponents including universities, the press, religious institutions, and civil society organizations. More to the point, since 2018, the Nicaraguan government has closed over 1,981 organizations (and counting), especially after Ortega won his fourth consecutive election in 2022. Well-established national and international organizations were closed overnight. To put it into perspective, of the roughly 6,000 NGOs registered in the country in 2017, the government has effectively eliminated almost a third of the sector.

What is the government’s incentive? A Nicaraguan journalist who spoke to me on conditions of anonymity (for fear of reprisal against him or his family) said that it’s a way of silencing the population. “NGOs are platforms that provide people with information,” he said, “with knowledge and with training. The government needs to eliminate this space to avoid an uprising against them. Any organization that is doing something for the people has the ability to restore the president’s popularity or take it away.”

Many authoritarian leaders would like to eliminate the counterbalance of power that civil society presents, of course, but not all of them hold the complete control required to successfully achieve this. But in March, the National Assembly drafted the General Law of Regulation and Control of Nonprofit Organizations, Law 1115, to establish the legal framework applicable to national Non-Profit Organizations (NPOs) and international NPOs with operations in Nicaragua. In August of 2022, the law was reformed to give complete control to the Ministry of Government (MIGOB), which represents the executive branch.

However, the criteria for organizational survival in this context is unclear. Closures started with accountability institutions such as the Nicaraguan Center for Human Rights Association (Asociación Centro Nicaragüense de los Derechos Humanos) and the Let’s Make Democracy Association (Asociación Hagamos Democracia), both closed in November of 2018. However, organizations unrelated to advocacy and accountability now account for most closures, including organizations such as the “Society of Nicaraguan Pediatrics” (Asociación Sociedad Nicaragüense de Pediatría), shut down in January of 2022, and the “Surgical Dentists of Leon Association” (Asociación de Cirujanos Dentistas de León), closed in March of 2022.

While the long-term impact has yet to be assessed, millions of philanthropic dollars designated to vulnerable communities in Nicaragua have been redirected or absorbed by the government, as they have seized millions of dollars of assets owned by the NGOs and taken possession of them.  Hundreds of thousands of beneficiaries have been negatively impacted, losing access to crucial services they once relied on. Thousands of jobs have been lost, and even those organizations that have not been shut down directly have experienced setbacks, navigating enhanced funding restrictions and rapid depletion of resources.

NGOs Depend on Each Other

Civil society leaders connect with each other to exchange resources, enhance impact, and expand reach. Many funders favor collaborative organizations, some even requiring partnerships for funding eligibility. Investors get a higher return when efforts to strengthen civil society are collective, as it results in the growth of entire communities and economies. For this reason, the Nicaraguan government doesn’t need to shut down every NGO in the country to cancel the third sector: While growth is collective, the same can be said for collapse. These connections that are formed contribute to the creation of a delicate ecosystem, in which organizations depend on each other for crucial resources (staff, volunteers, funding, educational resources, and buildings). When one organization is eliminated, all the organizations that relied on them are negatively impacted. When several organizations in the same community are eliminated, both the direct and indirect impact on the surviving ones can be exponential.

When many organizations filed their 2021 annual financial reports, MIGOB simply declared the organizations noncompliant by declining to acknowledge receipt, and then revoked their charters (with no system in place to appeal). Although BPP was not subject to closure due to the direct government support we received, our survival became increasingly challenging: We submitted our annual financial report ahead of the tax deadline in January but when we did not receive acknowledgement of receipt until June, we were unable to receive a corporate donation we were relying on for five months, negatively impacting our cash flow. We were told that businesses, such as our corporate sponsor, who contribute to NGOs that do not have updated documents are subject to closure as well. Because the Nicaraguan government threatened businesses that exercise social responsibility with closure, as opposed to incentivizing contributions as many governments do with tax deductions, businesses decreased charitable contributions drastically.

As international donations and local support both decreased, things were further complicated when an NGO we relied on was shut down: Our main site operated in a building owned and operated by the Association for Cultural Promotion (Asociación de Promotores de Cultura), but when their charter was revoked in July, the building was seized by the government and our teachers and students were evicted with only a day’s notice. Our hope to remain open dwindled with the realization we had no site, no staff, no programs, and very little funding. While in many cases, bouncing back is possible, the depletion of funds and grim socio-political situation made it unlikely for the US organization who primarily provided funding to the Nicaraguan NGO. We subsequently voted to dissolve the US entity, while the Nicaraguan entity evaluated their options.

In addition to the 1,981 organizations that were forced to close against their will, other organizations have chosen to withdraw. Medicos de Mundo, a Spanish organization with operations in 20 countries, chose to exit in 2019 after 22 years of operation in the country:

“As a result of our principles and our values, it is impossible for us to continue working alongside a government that is systematically violating the human rights of the Nicaraguan population. Without this assured guaranteed framework, we cannot be consistent with our vision.”

The American Nicaraguan Foundation (ANF) dissolved after 30 years of operation, citing a decrease in international donations (founded by the prominent Pellas family of Nicaragua, ANF developed programs that covered essential needs for vulnerable communities spanning everything from clean water and housing to education, health care, and humanitarian aid). And the Corazon Contento Comprehensive Development Center, who provided services to children and young people with disabilities, announced their decision to close in May of 2022 after their primary donor, Fundación Trabaja, withdrew from the country. “We appreciate all the support you have given us during this time,” they said in a statement. “We hope to find a solution soon so that we can continue serving [our beneficiaries].”

When Is It time?

How do you know when it’s time to call it quits?

Since founding this NGO in 2009, I poured my heart into it. I utilized my personal networks and thousands of people volunteered to participate, while philanthropists, organizations, and individuals collectively contributed $3.5 million over the years. I built the organization from the ground up, working over 80-hour weeks for many years, making personal financial sacrifices and investing over a decade of my life. I say this to emphasize that closing permanently was not an easy decision, nor for our board of directors (many of whom had been involved as long as I had). We spent several years looking for alternatives to closure, scaling back, pivoting, and strategizing, but ultimately landed on a rather abrupt dissolution.

However, in hindsight, the signs were already there leading up to this difficult decision. Our strategies were motivated by the goal to remain open in a similar capacity, but we did not consider the option of completely altering our organization’s structure by the exit of our US entity and transitioning more deliberately to local leadership.

Here, I’ve outlined five of the most prominent signs you may be headed for closure, for other civil society leaders who may be attempting to navigate an NGO through a large sectoral shift, such as that which we experienced in Nicaragua.

1. Your strategic plan isn’t working

A strategic development plan is an essential institutional tool utilized to help organizations identify strengths, recognize weakness, seize opportunities, and mitigate threats. Successful implementation can take years, but having an underlying strategy, focus and direction makes a huge difference when it comes to an entity’s survival. When conditions prevent the strategic plan from working, an organization must close.

In the past, our strategic plans allowed us to sustain, stabilize and grow, and in the years leading up to closure, we enhanced our strategic development plan’s execution efforts, drafting accompanying timelines to hold ourselves accountable to the benchmarks we established.

In 2018, we created our first development plan to help us strategize and support an international scaling initiative. The plan gave our board meetings direction and focus, and at the end of the year, when we evaluated our outcomes, we had made progress on the majority of our objectives. In 2019, we drafted a three-year plan with a focus on our response to the sociopolitical situation in Nicaragua that emerged after the April 19th movement in 2018, updating the plan on an annual basis. But at the end of 2021, when we evaluated these efforts, most lacked tangible results, which was especially reflected in the numbers. In 2022, all of our committees began meeting more frequently, with our strategic planning & development committee, which focused on fundraising efforts, meeting weekly to pursue earned income strategies and prospecting methods, but everything led us to a dead end.

A strategic development plan has the power to salvage an organization that may be headed for closure, but if you’ve kept the plan updated annually, are consistently evaluating your outcomes, have full board commitment and have ramped up execution efforts significantly, but are still not seeing tangible results, it may be time to consider shutting down.

2. Funds are consistently depleting

Financial planning is extremely useful when organizations are attempting to navigate unforeseen budget shortfalls. Budget cuts help avoid overspending, so an organization can make it through difficult periods and pave the way to future growth. However, most organizations have a minimum budget required to support a stable infrastructure that also leaves room to invest in potential growth in the future. If you are just scraping by, staff is completely overextended and there are barely enough funds to invest in development, it may be a good idea to rethink what kind of structure you can support with what you have, while ensuring you are leaving room in the budget to prioritize an investment in growth that doesn’t place unreasonable demands on your existing staff.

Our budget cuts began at the onset of the COVD-19 pandemic in 2020, but instead of bouncing back, one budget cut led to another, and our income seemed to consistently decrease. New strategies were not yielding positive outcomes and old consistent reliable methods started turning out lower outcomes as well. This happened over the course of several years but escalated dramatically in the last year of operation until our infrastructure was bare bones.

3. Your vision is becoming diluted

An organization’s vision supports its mission, defines its long-term impact on society and provides a basis to influence and structure its strategy. Because that vision lays the foundation for an organization, when conditions require alterations in the vision itself, don’t overlook the deeper significance. It may be time to consider drastically restructuring the entire organization.

After the 2018 civil unrest in Nicaragua, we rewrote our vision statement as the socioeconomic structure of the society our organization was built on shifted drastically. And while the shift in wording was slight, the need to redefine your overall vision can indicate graver circumstances down the road.

4. Board updates are generally filled with bad news

Boards play a wide variety of roles in the governance and support of their organizations from full-on operational oversight to general grant-giving, some meeting monthly, while others may meet annually. Despite the degree of participation, the board decides to take on, the executive director is responsible for ensuring any challenge that can impact the functions of the entity is brought to the attention of the BOD. Organizations are frequently able to resolve conflicts without needing to bring them to the BOD, but when every conflict is severe enough to require board attention, it is probably a bad sign. Our organization held bimonthly meetings, and for the first half of 2022, my ED update for every meeting started with the words, “Bad news.”

5. Leading becomes a burden

Leading a nonprofit organization is a lot of work, but it is also a privilege that generally brings a sense of joy and accomplishment to the organization’s leaders. When this sense is overshadowed by feelings of dread, and the only motivational factor for board involvement and leadership is a sense of reluctant obligation, the organization is probably not in great shape. Hope for the future began to deteriorate as our organization continued to mitigate an ongoing series of threats and perpetual crisis-mode made leading the organization increasingly less appealing.

Human Nature Prevails

After the withdrawal of our US entity, the Nicaragua NGO was left with limited resources in a collapsing sector. The board comprised of Nicaraguan nationals who had been involved with the organization since its inception and are members of the communities it serves evaluated the situation and their commitment. They decided to find a new location, retain their current students and volunteers, and forge ahead. The rebranded organization released a statement in September that stated, “We keep working for the good of the community ... the faith in the project, the voluntary support of the staff, the help of parents and national donors have given us the necessary tools to be able to continue working … and [we] will continue to provide [our] services to the community for as long as God decides.”

The missions and visions that drive these organizations are born from actions motivated by human nature, and only later are defined, conceptualized, and structured. In Nicaragua, thousands of CSOs exist that have never been formally incorporated and cannot be shut down, and amongst these current closures, many more are beginning to form. The attack on Nicaragua’s civil society organizations only reaffirms the power civil society holds to lift people and communities up. While these shutdowns will eventually subside, rebuilding civil society organizations after such a drastic assault will take decades. However, for as long as humans live together, civil society will continue to live, to thrive, to evolve, and to grow, and no government can take that away.

Read more stories by Dyani Leal.