Studying Nonprofit Organizations
 This chapter presents an overview of the range of nonprofit
institutions, organizations, and activities.
 The chapter briefly surveys the intellectual and political
history of the study of nonprofit organizations, and states
some of the key intellectual, practical, and policy-related
issues involved.
 The study of nonprofit or voluntary organizations is a fairly
recent development in the history of the social sciences.
 What has become one of the most dynamic
interdisciplinary fields of the social sciences today began to
gather momentum about 3 decades ago.
 The nonprofit sector is the sum of private, voluntary, and
nonprofit organizations and associations.
 It describes a set of organizations and activities next to the
institutional complexes of government, state, or public
sector on the one hand, and the for-profit or business sector
on the other.
 Sometimes referred to as the “Third Sector”, with
government and its agencies of public administration being
the first, and the world of business or commerce being the
second, it is a sector that has gained more prominence in
recent years, in the field of welfare provision, education,
community development, international relations, the
environment, or arts and culture.
 It is sometimes hard to distinguish nonprofit sector from
the other two, since organizations migrate from one sector
to another; for instance, hospitals change from nonprofit
centers within them, or business run by nonprofit
organizations; and others yet are quasi-governmental
institutions located somewhere between the private and the
public realm.
 For instance BBC in the UK.
 What kind of service do nonprofits provide in what fields?
 They operate museums, such as Metropolitan Museum of
Art in New York and Tyler Museum of art in Texas.
 They own orchestras, such as the world renowned
companies Cleveland Symphony Orchestra and
Philadelphia Orchestra Association.
 Schools, from prestigious academies and prep schools,
elementary, middle and high schools around the world,
such as those of Turkish schools in around 160 countries.
 Universities; from elite institutions such as Harvard, Yale,
or Stanford, which become multi-billion dollar nonprofit
corporations, to smaller, local and regional colleges.
 Adult education organizations; including schools from
continuing studies, literacy programs, skills and vocational
training, like this one, Academy of Hope in Washington
DC, US.
 Research institutions; including the RAND Corporation, the
Brookings Institution, Tax foundation and the Earth Policy
Institute in Washington DC.
 Policy think-tanks; such as Cato Institute, the Center for Budget
Priorities, or the Hudson Institute.
 Health organizations; from major teaching hospitals such as
Johns Hopkins Medical Corporation in Baltimore, US or Mayo
Clinic in Minneapolis to smaller local establishments.
 Mental health organizations, ranging from organizations serving
specific ethnic communities, such as the Asian Community
Mental Health Board in California.
 Human services; including day care for children, homes for the
elderly, Meals on Wheels, social work organizations, like Kimse
 Credit and savings; including Access to Loans for Learning
Student Loan Corporation and the Consumer Credit Foundation
in California, providing consumers with credit opportunities
that are better than regular banks.
 Environment and natural resources; including the Sierra Club,
wetlands, urban parks, and organizations such as Campton
Historic Agricultural Lands.
 Local development and housing from Habitat for Humanity
International and AmeriCorps to local and regional
organizations such as Affordable Housing Associates in
Berkeley, California.
 Human rights organizations; including Amnesty International
and Human Rights Watch to Anti-Slavery International,
International Campaign for Tibet and many more are out there
 Rural farmers’ associations; such as Minnesota Food
Association and the Association of International
Agricultural Research Centers in Virginia, US.
 Religious organizations; from large institutional networks
such as the Catholic Church, to local congregations of
Lutheran, Baptist, Protestant, Hindu, Buddhist, Jewish and
Muslim.
 Foundations; from large foundations such as the Ford
Foundation, the Rockefeller Foundation and thousands of
more serving different purposes.
 Special interest associations and advocacy groups; such as
the National Rifle Association Foundation, Mothers against
Drunk Driving.
 There are great diversity of nonprofit organizations around
the world; for instance Canada has over 66,000
organizations with charitable status, providing a range of
services from education, youth programs, health, culture,
and the arts, and serves all sectors of the population.
 Nonprofit organizations include labor unions, professional
associations,
managerial
associations,
business
organizations, consumer organizations, ethno-cultural
organizations, religious organizations, social clubs, and
neighborhood groups, in addition to nonprofit service
providers and foundations.
 Private human service providers and charities began to
form in Germany, France, Italy, Australia, and Japan.
 Two such networks, the Catholic and the Protestant Free
Welfare Associations, are among the largest employers in
Germany, with over 1,900,000 jobs; and UNIOPSS alone, a
French social service and health care federation of nonprofit
providers, employs over 350,000 people.
 ONCE, the Spanish organization for the blind runs the largest
lottery system in the country.
 In Israel, nonprofit organizations serve large portions of the
country’s immigrant population as well as the elderly.
 Of course, the nonprofit sector is not limited to the developed
countries of America, Asia-Pacific, and Europe.
 In Africa, Latin America, the Middle East, India, and Central
and South East Asia, too, we find a rich tapestry of
Getting Familiar with Nonprofit Related Terms
 Charity; individual benevolence and caring, is a value and
practice found in all major world cultures and religions.
 It is one of the “five pillars” of Islam, and central to Christian
and Jewish religious teaching and practice as well.
 Philanthropy; the practice of individuals reflecting a “love of
humanity” and the voluntary dedication of personal wealth and
skills for the benefit specific to public causes.
 While philanthropy, like the term charity, has deep historical
roots in religion, its modern meaning emerged in early 20th
century America and refers to private efforts to solve common
social problems such as poverty or ignorance.
 Volunteering; the donation of time for a wide range of
community and public benefit purposes, such as helping the
needy, distributing food, serving on boards, visiting the sick, or
cleaning up local parks.
 Over 50 percent of the US population volunteers on a regular
basis, a figure somewhat higher than that for the UK, Australia,
or Germany.
 Giving; the donation of money and in-kind goods for charitable
and other purposes of public benefit to organizations such as the
Red Cross or religious congregations, or to specific causes such
as HIV / AIDS, cancer research, or humanitarian relief.
 Over two-thirds of US households donate money, a number not
too different that of many other countries.
 Civil Society; many different definitions of civil society
exist, and there is little agreement on its precise meaning,
though much overlap exists between core conceptual
components.
 Modern civil society is the sum of institutions,
organizations, and individuals located between the family,
the state, and the market, in which people associate
voluntarily to advance common interests.
 The nonprofit sector provides
infrastructure of civil society.
the
organizational
 Social Capital; is an individual characteristic and refers to
the sum of actual and potential resources that can be
mobilized through membership in organizations and
 Social capital captures the norms of reciprocity and trust
that are embodied in networks of civic associations, many
of them in the nonprofit field, and other forms of
socializing.
 Social capital is a measure of the individual’s connection to
society and the bonds of mutual trust it creates, the
nonprofit sector refers to private for public benefit, and
civil society is the self-organizing capacity of society
outside the realms of family, market, and state.
An Emerging Sector, an Emerging Field of Study
 The nonprofit sector has become a major economic and
social force.
 Parallel to the increase in economic importance is the
greater recognition nonprofit organizations enjoy at local,
national, and international levels.
 Prompted in part by growing doubts about the capacity of
the state to cope with its own welfare, developmental, and
environmental problems, political analysts across the
political spectrum have come to see nonprofits as strategic
components of a middle way between policies that put
primacy on the market and those that advocate greater
reliance on the state.
 At the international level, institutions such as the World
Bank, the United Nations, and the European Union, and
many developing countries are searching for a balance
between state-led and market-led approaches to
development, and are allocating more responsibility to
nongovernmental organizations.
A Growing Phenomenon
 At the local level, nonprofit organizations have become
part of community-building and empowerment strategies.
 Numerous examples from around the world show how
policy-makers and rural and urban planners use nonprofit
and community organizations for local development and
regeneration.
 At the national level, nonprofit organizations are
increasingly involved in welfare, health care, education
reform, and public-private partnerships.
 In the course of past two decades, most developed market
economies in Europe, North America, and Asia-Pacific
have seen a general increase in the economic importance of
nonprofit organizations as providers of health, social,
educational, and cultural services of many kinds.
 On average, the nonprofit sector accounts for about 6
percent of total employment in OECD countries, or nearly
10 percent with volunteer work factored in.
 At the international level, we observe the rise of
international non-governmental organizations (INGOs) and
an expanded role in the international system of governance.
 The number of INGOs increased from about 13,000 in
1981 to over 47,000 by 2001.
 What is more, formal organizational links between NGOs
and international organizations such as the United Nations
Development Program, the World Health Organization, or
the World Bank have increased 46 percent between 1990
and 2000.
 At the global level, recent decades have witnessed the
emergence of a global civil society and transnational
nonprofits of significant size, with complex organizational
structures that increasingly span many countries and
continents.
 Such organizations include Amnesty International with
more than one million members, subscribers, and regular
doners in over 140 countries and territories.
 The Friends of the Earth Federation combines about 5,000 local
groups and one million members.
 The Coalition against Child Soldiers has established partners
and national coalitions engaged in advocacy, campaigns, and
public education in nearly 40 countries.
 Care International is an international NGO with over 10,000
professional staff.
 Its US headquarters alone has income of around $450 million.
 All these developments suggest that nonprofit organizations are
part of the transformation of societies from industrial to postindustrial, and from a world of nation-states to one of
transnational, even global, economies and societies, where the
local level nonetheless achieves greater relevance and
 Nonprofit organizations are now seen as a part of the wider
civil society and welfare systems of modern societies.
 Next to the institutional complexes of the state or public
sector on the one hand, and the market or the world of
business on the other, nonprofit organizations form a third
set of institutions that are private, voluntary, and for public
benefit.
 Even though they have been recognized as a distinct group
or sector only in recent decades, nonprofit organizations
have long been an integral part of the social, economic,
and political developments in many countries – be it in the
developed market economies of North America, Europe, or
Japan, or in the transition economies of Central and
Eastern Europe, or in the developing countries of Africa,
How Nonprofits Come to be Considered Important?
 The increase in its economic importance in social services,
health care, education, and culture, and the emergence of
nonprofit organizations that increasingly operated beyond
local levels, even across national borders, combined with a
withdrawal of the state in providing welfare and related
services.
 The rise of a “New Policy Agenda”, which emphasized the
role of NGOs as part of an emerging system of global
governance.
 Major reductions in the cost of communication, in particular
in telecommunications and internet access, which increased
information sharing while reducing coordination costs
 Generally favorable economic conditions in major world
economies since the late 1940s, and a considerable
expansion of populations living in relative prosperity.
 A value change over the last 35 years in most industrialized
countries that emphasized individual opportunities and
responsibilities over state involvement and control.
 A major expansion of democracy across most parts of the
world, with freedom of expression and freedom of form
associations granted in most countries.
 Over the time, there came a notion that nonprofits or NGOs
are more efficient and effective providers of social and
other services than governments.
 As a result, cooperative relations between governments and
nonprofits in welfare provision have become a prominent
feature in countries such as the US, France, Germany and
the UK.
 The field of nonprofit studies has emerged as a
fundamentally interdisciplinary field.
 Even though the initial theoretical thrust in the 1980s came
predominantly from economics and other social sciences,
intellectual bridges were quickly built.