In the Spotlight

Tools
News & Features
Make Change, Not Money: A Look at the World of Nonprofit Business
By American RadioWorks
September 3, 1998

Click for audio Listen to the archived broadcast
RealAudio 2.0 14.4
CONTENTS
Introduction (below)
One: A Church in Queens
Two: More Like Big Business
Three: Family Philanthropy
Four: A Mythical Nonprofit Stock Exchange
Five: Nonprofit Small Town
Six: A Get-Tough Nonprofit
Seven: What Makes it a Nonprofit?

Introduction

WHAT DO YOU DO to raise money for a worthy cause? Well, on any given weekend, people in towns and cities across this country gather at their houses of worship for bake sales, raffles, and that most venerable of church-basement events - the rummage sale.

Woman 1: Somebody took the vase I really had meant to pick up.

Woman 2: You gotta move fast.
The proceeds from this rummage sale in Minnesota will go to a variety of local charities. Before the turn of this century, most of what we now call nonprofits were churches and fraternal organizations performing loosely-organized charity work in their own communities. The 19th century social-philosopher Alexis de Tocqueville marveled at American eagerness to band together and help others.
Americans of all ages, all stations of life, and all types of disposition are forever forming associations. There are not only commercial and industrial associations in which all take part, but others of a thousand different types-religious, moral, serious, futile, very general, and very limited, immensely large, and very minute.

In democratic countries knowledge of how to combine is the mother of all other forms of knowledge.

- Alexis de Tocqueville
Thanks to the 1913 federal income tax law, de Tocqueville's association's are now called, nonprofits since they are exempt from paying taxes. And in the past century, the nonprofit sector has exploded in size. At more than $600 billion dollars, it accounts for some 8 percent of the economy and employs about one in every ten workers. Many nonprofits are multi-billion dollar enterprises. They have huge payrolls and the latest in high-tech office equipment. Northwestern University economist Burton Weisbrod says many nonprofits are hard to distinguish from major, for-profit corporations.
Weisbrod: When you talk about the Red Cross or you talk about private universities, you know, you're talking about multi-billion dollar organizations. These are not small, grass roots organizations that are run by local people. These are big businesses.
Now the majority of nonprofits are actually small to medium-sized businesses. Many still have bit of the flavor of de Tocqueville's voluntary groups. But they have also become sophisticated organizations tackling complex problems.

Are Americans disengaged from society? Is de Tocqueville's "genius for association" a thing of the past? In recent years, growing numbers of liberal and conservative thinkers alike have argued that the nation's civic ties are dangerously eroding.

But the flourishing nonprofit sector suggests the opposite.

The nonprofit economy has never been bigger, employed more people, or been so flush with cash. You might say the nonprofit sector is one of America's most promising growth industries.

No, the dilemma seems to lie elsewhere. Nonprofits are being asked to step in to address some of America's most pressing social ills as government steps back. That's tough to do. Nonprofits are supposed to be as efficient as business, yet also nurturing caregivers. Nonprofit management should combine the qualities of a Fortune 500 C.E.O. and the late Mother Teresa, all with an eagerness to work for a slim paycheck.

The historically clear distinctions between nonprofits, government, and business will continue to blur. The nonprofit sector is a very big business indeed. But it is still a distinctly American expression of community.


NEXT ->

  Make Change, Not Money is a production of Minnesota Public Radio which is solely responsible for its content. Funding for this program was provided by Bentz Whaley Flessner, a consulting firm specializing in fund raising and institutional advancement, counseling leading not-for-profit organizations worldwide.