3. Scope and Dimensions of the Nonprofit Sector

Abstract

The nonprofit sector comprises a large and, by most measures, growing share of the U.S. economy. The sector is also extremely diverse. It includes religious congregations, universities, hospitals, museums, homeless shelters, civil rights groups, labor unions, political parties, and environmental organizations, among others. Nonprofits play a variety of social, economic, and political roles in society. They provide services as well as educate, advocate, and engage people in civic and social life. Given this diversity, conclusions about one type of nonprofit organization do not translate easily to other types. For example, large hospitals are complex organizations with a disproportionate share of the sector’s assets, while other types of health and human service organizations tend to be small and close to community life. Memorial Sloan-Kettering Cancer Center had more than $1 billion in revenues in 2000, while Rainbows and Moonbeams, a facility for children with fetal alcohol syndrome, had revenues of less than $133,000. Educational organizations are also quite varied, ranging from Harvard University with close to $6 billion in revenues in 2000 to Treasure Island Christian School with less than $265,000. Why try to explore the scope and dimensions of such a diverse nonprofit sector? For the same reasons that we measure the dimensions of the business and government sectors and compile data on national income, business profits, tax collection, and the costs of defense and social welfare. The nonprofit sector influences our lives in so many ways through its impact on the economy, on communities, and on us as citizens and individuals. The scope and dimensions of nonprofits must be interpreted carefully because although the data become the basis for many decisions, they can easily be misconstrued. Public officials, for instance, are interested in whether nonprofit organizations are able to meet various public needs, as well as whether particular organizations use their resources to serve public or private interests. A common misperception—largely dispelled by the data—is that the nonprofit sector is mainly concerned with charity and depends upon donations and volunteers for most of its resources. In fact, many parts of this varied sector are not engaged in serving the poor, depend little or not at all on contributions, and pay wages, sometimes substantial, to individuals. The data reveal a vibrant sector, but not one solely concerned with social welfare and civic engagement. This chapter provides an overview of the nonprofit sector, primarily from an organizational perspective, including information on organizational types, finances, and roles within the U.S. economy. Other chapters in this volume examine in much more detail particular aspects of the nonprofit sector, such as contributions and volunteers, as well as particular subsectors, such as health organizations. Attempts to map and study the nonprofit sector are relatively new. The pioneering research of Burton Weisbrod (1977) for the Commission on Private Philanthropy and Public Needs (also known as the Filer Commission) is among the earliest systematic work. Chapters by Gabriel Rudney and Lester Salamon in the first edition of The Nonprofit Sector: A Research Handbook (Powell 1987), along with the comprehensive coverage of Virginia Hodgkinson and Murray Weitzman’s Nonprofit Almanac: Dimensions of the Independent Sector, 1992–1993 (1992), and Boris and Steuerle’s Nonprofits and Government (1999), further developed, refined, and discussed measures of the nonprofit sector.