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Consider the following description of a typical day in Kristi Lobbâs life in Cincinnati, Ohio. On February 25, 2021, at around 7:30 A.M., Kristi drops her 2-year-old son to Child Care Focus before leaving for her office. She is a senior-level administrator with the Hamilton County Job and Family Services. As Kristi enters her office, she reminds herself to call Tony Reed who works at the Aging of Council, Southwest Ohio. Tony had called her yesterday to verify a clientâs Medicaid eligibility for home care services. At 11 A.M., her husband John calls to inform her that he just mailed the request for proposals, which he has been working on for the last several days, to the Health Foundation of Greater Cincinnati. John works with the county mental health agency. As Kristi is about to take her lunch break, her phone rings again. This time it is her friend Laura. Laura wants to know whether Kristi knows of any agency that could provide some legal advice to her neighbor, a recent immigrant, on a domestic violence situation. Kristi promptly gives her the contact information of the Legal Aid Society of Greater Cincinnati. During lunch, Kristi and one of her colleagues engage in a debate as to why churches should or should not be allowed to engage in political campaign activities. Around 4:30 P.M. Kristi calls back her husband to remind him that she would have to drop some supplies to the Salvation Armyâs drop-off center and that John would pick up their son and take him to YMCA at 5:30 P.M. for his swimming lessons. At around 6:30 P.M. a tired Kristi on her way back home turns on the car radio (NPR) and is saddened to learn that the United States has surpassed 500 million confirmed cases of COVID-19.
All the eight organizations in italics are nonprofit organizations (NPOs). Some are well-known, like the YMCA and NPR, and the others (e.g., Child Care Focus) are less known or unknown to others. However, as the Urban Institute (2020) reported, even after excluding organizations with gross receipts below $50,000, small organizations with less than $500,000 comprised a significant majority (66.9%) of charities in 2016. These and millions other nonprofits form the rich but complex fabric of the nonprofit sector. The varieties no doubt add richness to the sector; however, they also bring confusion as to what nonprofits are, as well as how they relate to the government, the private sector, and the lives of citizens in the communities they serve.
It is therefore important to understand the heterogeneous fabric of this sector, its growth, and growing significance. In this context, it is also important to point out that the nonprofit sector is currently facing several issues, including weak accountability, ethical lapses, financial stress, digital divide, and inadequate demonstration of effectiveness.
The chapter has the following learning objectives:
- Describe NPOs and their similarities and differences with for-profit and government sectors.
- Become familiar with the major classifications of NPOs.
- Illustrate the different subsectors and the sectorâs significance.
- Learn about a variety of large and small nonprofitsâ missions and activities.
- Understand the issue of the sectorâs âidentity crisis.â
1.1 Nonprofits: The Essential Characteristics
NPOs include religious organizations, public schools, public charities, human service agencies, public clinics and hospitals, political organizations, legal aid societies, volunteer services organizations, labor unions, professional associations, research institutes, museums, and many other types of entities.
What exactly is a nonprofit organization or the nonprofit sector? As one can imagine, defining a nonprofit organization, let alone trying to develop a definition of the sector is anything but easy. The wide variety of entities that compose the nonprofit sector has, thus, prompted a variety of definitions of the sector.
Following are some widely used definitions of NPOs:
In addition to the variety of definitions, there also exists a plethora of terms that refer to nonprofits collectively such as civil society, independent sector, voluntary sector, charitable organization, tax-exempt organizations, nongovernmental organizations (NGO), and the private nonprofit sector. Some scholars try to dismiss their use by pointing to the limitations of these concepts to fully comprehend the nature of nonprofits. However, the reality is that each of these terms illuminates one or more of the inherent characteristics of NPOs, and together they help us understand more fully the essential characteristics of this nebulous sector. The following section will address each of these concepts to explain how each illuminates one or more of the essential characteristics of nonprofits.
- The term civil society was coined by classical philosophers (e.g., Hegel, Hobbes) to refer to the broad private realm outside the state. Paul Wapner defines it as the arena above the individual in which âpeople engage in spontaneous, customary and nonlegalistic forms of associationâ with the intention of pursuing common goals (Wapner, 1996, 5). Such a description or definition implies that civil society includes all private forms of association and entities, including family, church, and even for-profit organizations, thereby making the concept ambiguous and slippery. In this context, it is important to note that NPOs are only a part of civil society and do not represent the full spectrum of civil society. As Frumkin explains, âIn practice, it [civil society] has come to denote a set of voluntary mediating institutions that invite individuals to come together to pursue shared interests, values, and commitmentsâ (2002, 13).
- Independent sector denotes a sector that is relatively independent from the governmental and the market forces. Again, in relation to NPOs, it only brings to surface the fact that these organizations are not owned by the government, and their survival is not dependent on the profit criterion of the marketplace. The fact, however, is that NPOs are totally independent of neither the government nor the market forces. They are rather regulated by the government, and market forces have impact on their operations as can be found when nonprofits compete with other similar nonprofits and for-profits for resources clients, and in many other aspects.
- The term voluntary sector signifies ...
