The State of Nonprofit America

1
THE STATE OF NONPROFIT AMERICA Lester M.
Salamon, editor An Aspen Institute
Project Published by the Brookings Institution
Press, 2002
2
CHALLENGES
The State of Nonprofit America

• The fiscal challenge

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
3
CHALLENGES ITHE FISCAL CHALLENGE
The State of Nonprofit America

• Federal retrenchment

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
4
The State of Nonprofit America
Total
Pensions
Education
1950 1994 1980 100
Health
Welfare
Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
5
CHALLENGES ITHE FISCAL CHALLENGE
The State of Nonprofit America

• Federal retrenchment

• Changing forms of government support
• Tepid giving growth

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
6
GROWTH IN NONPROFIT REVENUE FROM PHILANTHROPY, BY
SUBSECTOR, 1977-97
The State of Nonprofit America
Share of Total Revenue
1977
1997
14
6
15
16
33
20
31
36
41
44
86
84
27
20
62
12
18
Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
7
CHALLENGES
The State of Nonprofit America

• The fiscal challenge

• The competition challenge

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
8
The State of Nonprofit America
NONPROFIT and FOR-PROFIT ROLES IN SELECTED
FIELDS, 1982-1997
Nonprofit Change in 1982a 1997b Relati
ve N/P Share

• Employment
• Child day care 52 38 -27
• Job training 93 89 -4
• Individual and Family services 94 91 -3
• Home health 60 28 -53
• Kidney dialysis centers 22 15 -32

Facilities/Enrollment Dialysis
centers 58a 32 -45 Rehabilitation
hospitals 70a 36 -50 Home health
agencies 64a 33 -48 Health Maintenance
orgs. 65a 26 -60 Psychiatric
Hospitals 19a 16 -16 Hospices 89c 76 -1
5
Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
9
The State of Nonprofit America
HOSPITAL TRENDS, BY OWNERSHIP, 1980-1996
Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
10
The State of Nonprofit America
Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
11
The State of Nonprofit America
FOR-PROFIT SHARE OF SOCIAL SERVICE
AGENCY GROWTH, 1977-1996
For Profit Share of
Day Care
Individual Familiy Svcs
Job Training
Residential Care
Total
Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
12
CHALLENGES
The State of Nonprofit America

• The fiscal challenge

• The competition challenge

• The effectiveness challenge

• The technology challenge

• The legitimacy challenge

• The human resource challenge

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
13
OPPORTUNITIES
The State of Nonprofit America

• Favorable social
• and demographic shifts

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
14
OPPORTUNITIES SOCIAL AND DEMOGRAPHIC SHIFTS
The State of Nonprofit America

• Aging of the Population
• Changing Role of Women
• Shifts in Family Structure
• Expanded Immigration
• Outsourcing of Family Functions
• Rise of the Cultural Creatives

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
15
OPPORTUNITIES
The State of Nonprofit America

• Favorable social and
• demographic shifts

• New Philanthropy

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
16
OPPORTUNITIESTHE NEW PHILANTHROPY
The State of Nonprofit America

• Intergenerational transfer of wealth
• The New Wealth
• New Corporate interest

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
17
OPPORTUNITIES
The State of Nonprofit America

• Favorable social and
• demographic shifts
• New Philanthropy

• Visibility and policy salience

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
18
OPPORTUNITIESVISIBILITY
The State of Nonprofit America

• Reagan rhetoric
• Civil Society/Central Europe
• Global associational revolution
• Social capital
• September 11, 2001

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
19
OPPORTUNITIES
The State of Nonprofit America

• Favorable social and demographic shifts
• New Philanthropy
• Visibility and policy salience

• Resumption of government
• spending growth

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
20
The State of Nonprofit America
OPPORTUNITIES GROWTH IN REAL GOVERNMENT SOCIAL
WELFARE SPENDING, 1985-1995
Source Social Security Bulletin Economic Report
of the President, (February 1998).
21
CAUSES OF RECENT SOCIAL WELFARE SPENDING GROWTH
The State of Nonprofit America

• Expansion of entitlement programs
• SSI
• Medicaid
• Medicare

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
22
The State of Nonprofit America
FEDERAL ENTITLEMENT PROGRAM GROWTH 1980-1999
Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
23
CAUSES OF RECENT SOCIAL WELFARE SPENDING GROWTH
The State of Nonprofit America

• Expansion of entitlement programs
• SSI
• Medicaid
• Medicare

• New Initiatives
• State Activism
• The Welfare Reform Windfall
• New Tools

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
24
The State of Nonprofit America

• Profit-making organizations are more flexible
  with respect to the deployment and redeployment
  of resourcesBut the centrality of mission for
  nonprofit organizations places limitations on
  their flexibility of action.
• Rosabeth Moss Kanter and
• David V. Summers, 1987

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
25
NONPROFIT RESPONSE
The State of Nonprofit America

1. Overall growth

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
26
The State of Nonprofit America
CHANGES IN NONPROFIT REVENUES, BY SUBSECTOR,
1977-1997, IN CONSTANT DOLLARS
Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
27
The State of Nonprofit America
GROWTH IN NUMBER OF REGISTERED CHARITABLE ORGS IN
THE U.S., 1977-97
Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
28
NONPROFIT RESPONSE
The State of Nonprofit America

1. Overall growth

1. Successful marketing to paying customers

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
29
The State of Nonprofit America
SOURCES OF NONPROFIT REVENUE GROWTH, 1977-1997
Excluding Religion
GOVERNMENT 42
PHILANTHROPY 7
FEES, COMMERCIAL 51
Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
30
GROWTH OF NONPROFIT FEEINCOME, BY SUBSECTOR,
1977-97
The State of Nonprofit America
Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
31
NONPROFIT RESPONSE
The State of Nonprofit America

1. Overall growth
2. Successful marketing to paying customers

1. Successful pursuit of public funds

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
32
GROWTH OF NONPROFIT REVENUE FROM GOVERNMENT, BY
SUBSECTOR, 1977-97
The State of Nonprofit America
Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
33
NONPROFIT RESPONSE
The State of Nonprofit America

1. Overall growth
2. Successful marketing to paying customers
3. Successful pursuit of public funds

1. Revolution in charitable fundraising

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
34
THE REVOLUTION INCHARITABLE FUNDRAISING
The State of Nonprofit America

• Emergence of the fundraising profession

• AFP 20,000 members

• New technologies

• Telephone solicitation, e-philan.
• Donor-advised funds

• New actors

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
35
NONPROFIT RESPONSE
The State of Nonprofit America

1. Overall growth
2. Successful marketing to paying customers
3. Successful pursuit of public funds
4. Revolution in charitable fundraising

1. Venture activity

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
36
VENTURE ACTIVITY
The State of Nonprofit America

• Museum stores
• Traveling exhibitions
• University licensing arrangements
• Hospital purchasing consortia
• Social ventures

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
37
NONPROFIT RESPONSE
The State of Nonprofit America

1. Overall growth
2. Successful marketing to paying customers
3. Successful pursuit of public funds
4. Revolution in charitable fundraising
5. Venture activity

1. Adoption of market culture
2. New business partnerships
3. Sector infrastructure
4. Surviving competition

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
38
The State of Nonprofit America
NONPROFIT and FOR-PROFIT ROLES IN SELECTED
FIELDS, 1982-1997

•  
  Nonprofit Change in
• 1982 a 1997 b
  Relative N/P Share
• Employment
• Child day care 52
  38 -27
• Job training 93 89
  -4
• Individual and Family services
  94 91 -3
• Home health 60 28
  -53
• Kidney dialysis centers 22
  15 -32
•  
• Facilities/Enrollment
• Dialysis centers 58a 32
  -45
• Rehabilitation hospitals 70a
  36 -50
• Home health agencies 64a
  33 -48
• Health Maintenance orgs. 65a
  26 -60
• Psychiatric Hospitals 19a
  16 -16
• Hospices 89c 76
  -15
• Mental Health Clinics 64b
  57 -11
• Higher Education Enrollments 96d
  89 -7

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
39
NONPROFIT RESPONSE
The State of Nonprofit America

1. Overall growth
2. Successful marketing to paying customers
3. Successful pursuit of public funds
4. Revolution in charitable fundraising
5. Venture activity
6. Adoption of market culture
7. New business partnerships
8. Sector infrastructure
9. Surviving competition

1. Growing political effectiveness

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
40
THE RISKS
The State of Nonprofit America

• Growing Identity Crisis
• Increased Demands on Nonprofit Managers
• Threat to Nonprofit Missions
• Disadvantaging Small Agencies
• Potential Loss of Public Trust

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
41
RESETTING THE BALANCE
The State of Nonprofit America

• The Distinctiveness Imperative
• The Survival Imperative

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
42
THE DISTINCTIVENESS IMPERATIVE
The State of Nonprofit America

• Rethinking community benefit
• Improving public understanding
• From organizational to
• activity exemptions

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
43
THE SURVIVAL IMPERATIVE
The State of Nonprofit America

• Capitalizing the sector
• Buy-in by third-party payers
• Shift to a tax credit system

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)
44
CONCLUSION
The State of Nonprofit America

• It has been said that the quality of a nation
  can be seen in the way it treats its least
  advantaged citizens. But it can also be seen in
  the way it treats its most valued institutions.
• Lester M. Salamon
• State of Nonprofit America, 2002

Source Lester M. Salamon, ed., The State of
Nonprofit America (Published by the Brookings
Institution Press in collaboration with Aspen
Institute, Washington, DC, 2002)