tag:blogger.com,1999:blog-3614581.post6945144384914365099..comments2024-03-28T03:11:22.839-07:00Comments on PHILANTHROPY 2173: What are nonprofits for?Lucy Bernholzhttp://www.blogger.com/profile/09253941214286179394noreply@blogger.comBlogger3125tag:blogger.com,1999:blog-3614581.post-51985404632149907432014-07-22T22:52:01.676-07:002014-07-22T22:52:01.676-07:00Lucy
Great question! I agree with your suggestion ...Lucy<br />Great question! I agree with your suggestion that to answer the question “What are nonprofits for?,” we should start by asking what matters about the distintion between a nonprofit, a for-profit, and presumably government. <br />Much smarter people than me have written books on the question, but I think one key aspect of the essence of “nonprofitness” is that they are vehicles for people to voluntarily work together to express their values or beliefs (people should not be enslaved, women and girls should have the vote and access to education, people should not go hungry, people deserve medical care). (Referring here to public charities, not necessarily to private foundations – which could be a solo expression of values or belief – and not the other 20+ types of tax-exempt orgs (I am a recovering attorney with maybe too much experience in nonprofit law). Their “nonprofitness” is more than any one thing they do (yes, the YMCA offers gym memberships, but it also ….), or who benefits (the IRS decision about open-source seems myopic), or how their leaders are paid, and more than how they are bound to use surplus revenues (we expect government to look after the common good, even as we know democratic and bureaucratic decisionmaking are distorted). Nonprofits are born in people coming together to solve problems or meet a need that people feel or believe must be addressed, and must be addressed collaboratively or in concert, and the faith people put into each other through nonprofits is at the root of many expectations we have of them, that they don’t pay their leaders too well, that they put peoples’ needs above their ability to pay, and so on. Perhaps the two dominant theses for the existence of nonprofits are “market failure” theory and “government failure” theory – like the name “nonprofit,” these theories are negative, they define a “non-elephant”). But even even if we imagine perfectly efficient markets and perfectly effective and efficient governments, I think we still would need nonprofits to fill this voluntary function, the coming together of people to express the way they would wish the world to be, or themselves or their community to be. (Jan Masaoka at CalNonprofits is one of the strongest proponent of this point of view, she deserves any credit in this comments, and faults are mine alone.)<br />Thanks,<br />PetePete Manzonoreply@blogger.comtag:blogger.com,1999:blog-3614581.post-84585239747849422762014-07-22T08:18:45.824-07:002014-07-22T08:18:45.824-07:00Great and timely post Lucy, and an excellent comme...Great and timely post Lucy, and an excellent comment by PST. To my mind the major difference is the use of whatever surplus income-generating activities might produce to provide free or subsidized goods and services. In a for-profit, profits would accrue to the owners/shareholders. If a nonprofit cannot demonstrate how it is serving a charitable or public benefit purpose it is fair to question whether the tax benefit constitutes unfair competition with for-profit businesses (the health club example) Beyond that, nonprofit is not hyphenated while for-profit is!Bradford Smithhttp://www.foundationcenter.orgnoreply@blogger.comtag:blogger.com,1999:blog-3614581.post-2383886096359537242014-07-18T09:06:31.657-07:002014-07-18T09:06:31.657-07:00Senator Grassley's quote reflects what I see a...Senator Grassley's quote reflects what I see as a disturbing trend: as local and state governments become increasingly strapped for money, whether that be because of overspending, decreased revenue from the Great Recession, or taxes being cut, they are setting their sites on tax-exempt organizations and questioning their tax-exempt status. This is often done without an understanding of what the term "nonprofit" means, and what it encompasses. There is a sense in the general public that nonprofit means "doesn't make a profit," not "doesn't distribute profits to its owners." There is also a misunderstanding about what is charitable. This comes at the same time that many in the government want to cut government aid to the poor, with the expectation that the charitable sector can more efficiently replace the government. PSThttps://www.blogger.com/profile/13241010480134379854noreply@blogger.com