03/08/2011 06:58 pm ET Updated May 25, 2011

Mr. Mayor: Don't Ignore the Crisis in Nonprofits

Prior to becoming Chief of Staff for President Obama, Rahm Emanuel famously said: "You never want a serious crisis to go to waste." With acute financial problems affecting both the City of Chicago and its large nonprofit sector, Mayor-Elect Emanuel has an opportunity to reshape not just the City's budget, but also the way nonprofits conduct business. Let's hope that he doesn't let this crisis go to waste.

Chicago area nonprofits have been struggling for several years with steep cuts in government and private funding. This has curtailed crucial services and prolonged the effects of a tough recession for those most in need of assistance. "Do more with less" has become a cliché of the financial meltdown. While Mayor-Elect Emanuel tackles the Chicago's budget deficit of more than $500 million, there is much he can do to help struggling nonprofits shore up the safety net they provide.

Regardless of where the City's budgetary axe may fall, the incoming administration should work hard to encourage nonprofits to innovate and change the way they do business. Just as the new administration will be streamlining processes and services and looking for new sources of revenue, it can serve as a model for nonprofits to follow suit.

A new wave of entrepreneurial activity seems to have taken hold in the technology sector in Chicago. Mayor-elect Emanuel can set the tone at the top for public services, promoting issues like performance management and metrics. Likewise, successful nonprofits will be the ones who can be creative in generating new operating models that adapt to the new budgetary world. Those nonprofits that manage through should be held up by the new administration as examples for both the nonprofit and public sectors.

The new mayor's greatest role will be as communicator. He can serve as an intermediary between City Hall, nonprofits and other members of the community. Mayor-elect Emanuel should create a forum for nonprofit executives to share ideas, collaborate on best practices and identify common resources. He should push further to develop public-private partnerships, opening up conversations that expand upon their shared interests. Newark Mayor Cory Booker 's innovative partnerships with social service nonprofits in areas ranging from job training to parenting skills can offer lessons for Chicago.

While finding new sources of revenue, new operating models and new relationships are of primary importance, the reality is that the nonprofit world may soon see serious consolidation. The new administration should create incentives for nonprofits to share and contain costs, whether in the form of loose partnerships or direct mergers. It can work to break down administrative and cultural barriers that may prevent sensible combinations from happening.

Many nonprofits are in a period of difficult transition, just as many city agencies are, or will be. It is in the interests of all residents and businesses in Chicago that City Hall delivers efficient services and maintains a prudent budget - and that the nonprofit sector remains a healthy and productive partner. The new mayor has a special opportunity to tackle the challenges facing both.