The Nonprofit Sector
A Research Handbook, Third Edition
Edited by Walter W. Powell and Patricia Bromley




Walter W. Powell

SCHOLARS AND PRACTITIONERS ROUTINELY REFER to the wide array of activities pursued by voluntary and social purpose organizations in the United States as “the nonprofit sector.” In different contexts and at different points in history, this domain has gone by a host of names: charitable organizations, civil society, the third sector, the independent sector, the social sector, and, more recently, social purpose organizations. My intention in this introductory chapter is to problematize the terms and concepts used to capture such activities and to preview how the chapters in this volume assess the current landscape and chart future directions. Each section of the book also contains an introduction presenting the unifying theme of those chapters and describing how the analyses within that section collectively elucidate current knowledge and research gaps within a specific area of nonprofit scholarship.

Our goal with this book is to advance research on a number of protean questions: What is a nonprofit organization? What is the relationship between formal nonprofit organizations and the wider sphere of civil society? Why do nonprofits exist in market economies? What roles do voluntary organizations play in democratic and autocratic societies? How do we explain variation in the contributions of nonprofits in fields such as health care, education, and the arts? When do voluntary organizations erode rather than encourage civic capacity? Why does the nonprofit realm have different social and economic footprints in different countries? The authors of this volume take up these and other important questions.

The first question concerns the conceptual framing of nonprofits. What does it mean to describe an entity in terms of the actions it does not take? Were we chemists, this would be a terrible way to go about research. In contrast, physicists often theorize about things with respect to the absence of particular features. The study of nonprofits has more in common with physics than chemistry in this regard, examining underlying principles and dynamics rather than discrete and predictable interactions. What are the common limiting elements associated with nonprofit organizations? Perhaps the most central idea is that of the nondistribution constraint (Hansmann 1987). Nonprofit organizations operate without distributing profits to their stakeholders. Simply put, if there are funds left over at the end of the year, nonprofit executives cannot pocket them. Nonprofit leaders do not focus their energy on enriching shareholders, as do managers of firms, nor do they feel the need to spend every penny of their budgets as if they were state agencies.1 Accordingly, some scholars have argued that nonprofits are, in principle, more trustworthy than firms or government bureaus (Nelson and Krashinsky 1973; Hansmann 1987). The nondistribution constraint is centrally tied to the tax exemption given to nonprofits, which comes with an obligation to respond to society’s needs at a particular time.2 Of course, this temporal feature means that nonprofit organizations turn to the legal tools of organizing available resources in particular countries at specific moments in history. As several chapters of this volume discuss, this legal protection varies markedly across place and time.

What are other “negative” elements that characterize nonprofit organizations? Nonprofits are voluntary; that is, they do not coerce participation. In many countries, young people are required to perform either military or social service. Both are for public benefit, but they are demanded, and length of service is not negotiable. In contrast, people may move readily between nonprofits; participation is fluid and consensual. Nonprofits also exist without clear lines of ownership and accountability, precisely because they serve multiple masters (Frumkin 2002): nonprofits must be responsive not only to their constituents and clients but also to staff, members, volunteers, and donors.

Although these negative features describe what nonprofits lack or are not allowed to do, civil society organizations can also be framed through positive concepts. Whether referred to as civil society (Cohen and Arato 1992) or the public sphere (Habermas 1989), the space for voluntary activity is characterized by debate, contention, and engagement. These expressions reflect the interests of diverse members of society, whether a political regime is democratic or autocratic. In places where the tools of formal representation are available, nonprofits exist because ideas and resources are mobilized and formalized by activists, volunteers, donors, and social entrepreneurs. These diverse elements are the forces that supply energy and ideas. In this sense, nonprofits exist as the medium for the expression of values and commitment.3 Put differently, nonprofits serve as “the organizational infrastructure for civil society” (Anheier 2014). They result from the legal incorporation of activities that represent the varied interests and identities that members of civil society hold. As Nancy Rosenblum and Robert Post (2002:4) nicely put it, “civil society affords individuals the experience of pluralism.”

Political scientist Lester Salamon (2012:6–15) stresses this organizational nature. He emphasizes that nonprofits are formal entities distinct from their officers, capable of holding property, making contracts, and persisting over time. The right of people to come together to build community is distinct from the right of organizations to access the legal tools that enable them to grow larger and exist longer. Although this crucial distinction has become taken for granted in the United States, the ability to ensure organizational persistence is lacking in many countries.

Salamon also points out that nonprofits are self-governing and must provide a public benefit. This expressive view suggests that moral energy for a cause can exist independent of large-scale societal demand for its objectives. Civil society organizations can keep the home fires burning, so to speak, until the political winds blow in the right direction (Taylor 1989). Consider the abolitionist movement, the movement against child labor, advocacy for consumer safety, the fair trade movement, and, today, environmental conservation. Each of these activities was first championed and protected inside a small set of nonprofit organizations and social movements that worked to keep the issues alive until support came from a broad swath of society.

Such commitment or moral energy has enabled the nonprofit sector in the United States to garner political support from both conservatives and progressives. Both ends of the political spectrum use nonprofit organizations to achieve their aspirations and advance their divergent understandings of the public good, although their forms of organization can vary by political beliefs. Theda Skocpol (2011) argues that among contemporary U.S. civic organizations, those on the left create public interest groups that are staff-centered, whereas those on the right, such as the Tea Party and the National Rifle Association, create chapter-based membership federations. In some periods in U.S. history, nonprofits have acted as laboratories for experimentation, and successes were subsequently passed on to the government (Hall 1987). At other times, such as the era in which we now find ourselves, nonprofits may provide the space to raise opposition to the government. Civic engagement is also moving into more temporary and experimental vehicles that quickly spring up and disappear. Such minimalist organizations may have distinctly circumscribed goals; when these are met, the organization dissolves (Tufekci 2017; also see Walker and Oszkay, Chapter 21, “The Changing Face of Nonprofit Advocacy”).

A sharp, clean image of a nonprofit sector, however, is problematic in several respects. First, the term has a geometric connotation that implies clear and firm boundaries. The sector imagery draws attention to formal entities rather than charitable activities or altruistic efforts. Acts of compassion and charity are as old as humankind, whereas the tax code is a modern legal entanglement. Although the U.S. tax code acts like a border patrol, policing which organizations qualify for tax exemption (Simon 1987; Barman 2013), basing the concept of a sector primarily on a single nation’s tax code inhibits comparative analyses. In other countries, comparable organizations can be defined differently, as either nongovernmental organizations (NGOs), voluntary associations, a social economy, or part of a larger civil society. Recently, observers have noted that in North America, Europe, and the Asia Pacific region, nonprofit organizations have attained increasing importance as providers of health, social, educational, and cultural services (Anheier 2009). In Chapter 4, “The Organizational Transformation of Civil Society,” Patricia Bromley chronicles the increasingly formal organization of associational life around the globe. Similarly, there has been international growth in the number of foundations and trusts, most notably in Asia but to a lesser extent in other regions as well (Johnson 2018).4 Evan Schofer and Wesley Longhofer also explore the global growth of NGOs in Chapter 27, “The Global Rise of Nongovernmental Organizations.”

Second, the concept of a sector leads scholars to try to classify and catalog types of organizations, often failing to capture what these entities actually do or promote. In the United States, nonprofit organizations are assigned subsector codes intended to categorize what they do, but such codes may mask an underlying commonality. For example, a variety of organizations in different subsectors, such as housing or the arts, may work with the elderly or children, but the codes assigned to these organizations do not reflect the recipients of their services. Beyond these internal classification challenges lies a bigger question: What purpose does an organization serve? The general public or constituents of different types of organizations are much more concerned with the quality and care of the service provided than with organizations’ tax status. From this vantage point, depicting altruistic or charitable activity requires a broad canvas rather than a divided triptych of commercial, governmental, and nonprofit work.

How, then, did we come to think of the wide array of voluntary activities and donative organizations as belonging to a single common category? The boundaries between the market, the state, the family, and civil society are fluid and varied, depending on both the historical moment and the societal context. Consider, for example, health care in the United States. Jill R. Horwitz offers a fresh view in Chapter 17, “Charitable Nonprofits and the Business of Health Care.” At the beginning of the nineteenth century, medical care in the United States was primarily private, delivered by solo practitioners, with some modest contribution from almshouses, where charitable care was given to the poor (Starr 1982). Over time, health care evolved to a much larger organizational scale and became primarily nonprofit and publicly provided. An unexpected consequence of the Medicare Act of 1964, which extended health care to many more citizens in the United States, was to turn health care into an activity that could be priced. This change drew new for-profit entrants into the field (Scott et al. 2000). Today, health care in the United States is a vast industry, populated by large chains that are primarily nonprofit and private. However, in other advanced industrial nations health care is provided to a greater extent by governments, with a small for-profit presence and a relatively limited nonprofit component.

Similarly, if we consider higher education, the current mix of public and private nonprofit universities in the United States (with a small for-profit component) looks very different from the arrangements in other nations, where higher education is largely public. Nevertheless, some of the most prestigious universities and research centers are nonprofits (e.g., McGill in Canada; Cambridge, Oxford, and the London School of Economics in Britain; Bocconi in Italy; Keio in Japan; and the Max Planck Institutes in Germany). In the United States, the costs of attending college are converging across private nonprofit and public state schools and becoming vastly more expensive. Chapter 18, “Education and the Nonprofit Sector,” by Richard Arum and Jacob L. Kepins reviews the many factors that have reshaped the boundaries of educational institutions.

An Independent Sector?

To a certain extent, the porous boundaries in the United States between the market, the state, and nonprofits are policed by the tax code. However, the tax code is not an abstract entity that exists separately from the organizational realm, as Daniel J. Hemel emphasizes in Chapter 5, “Tangled Up in Tax.” Tax policy is also deeply political, as Aaron Horvath and I detail in Chapter 3, “Seeing Like a Philanthropist,” discussing the power struggles associated with various eras of elite philanthropy. The current IRS tax code that regulates 501(c)(3) organizations was the outcome of a two-decade political battle fought in the U.S. Congress. Indeed, the genesis of the concept of an “independent sector” was a response to contentious debates over the unchecked power of philanthropy. In May 1961, Texas congressman Wright Patman took to the floor of the House of Representatives to deliver a series of speeches inveighing against foundations and other tax-exempt organizations that had become “a vehicle for institutionalized, deliberate evasion of fiscal and moral responsibility” (Hall 1992:72). Distressed at the disproportionately rapid growth of foundations, Patman worried about the economic consequences of granting tax exemptions to these privately controlled entities. Over the next decade, through the efforts of the House Select Committee on Small Business, Patman focused on the favorable treatment that philanthropy gave to the very wealthy. Patman’s efforts helped foster a growing belief that foundations were tax dodges and that those that existed in perpetuity were costs to the government (Brilliant 2000). Patman’s eight-year campaign led to hearings by the House Ways and Means Committee in 1969, with the expectation that Congress would curb the activities of foundations (see detailed discussion of this debate in Hall 1992:66–80). The resulting 1969 Tax Reform Act, however, proved to be less stringent than the heated rhetoric might have suggested.

The foundation world and other tax-exempt entities did not sit idly by as these congressional debates ensued. John D. Rockefeller III and other elite foundation officials and academics sought to alter public opinion about the contributions of foundations to American life. Rockefeller understood that damping down further outbreaks of regulatory zeal would require foundations and tax-exempt entities to come up with a coherent and compelling rationale for the existence of nonprofits and the privileges they enjoyed. The Tax Reform Act set limits on charitable contributions to foundations and increased requirements of accountability and transparency. Penalties for violations were set on foundations, their managers, and their contributors. However, the proposed harsher limitation on the life of a foundation to just twenty-five to forty years was not passed.

In May 1973, John D. Rockefeller created a working group called the Advisory Group on Private Philanthropy. By the end of the summer, he had formed a prestigious and diverse commission, “exquisitely balanced by geography, party, gender, race, occupation, and religious denomination” (Hall 1992:77) and brought together under the leadership of John Filer, a corporate lawyer and the chief executive officer of Aetna Life & Casualty. The commission would come to be a joint effort of Congress, the Treasury Department, and the private sector, aided by a distinguished panel of experts. In 1977 the Department of the Treasury published the results of the Filer Commission’s work in six large volumes as The Report of the Commission on Private Philanthropy and Public Needs. The work gave substance to a new idea: that charitable tax-exempt organizations composed a coherent sector of American political, economic, and social life.

This unified conception of nonprofits and foundations as together forming an independent sector laid the groundwork for establishing that these disparate organizations shared common interests. Before the work of the Filer Commission, there is little evidence in either tax records or scholarly research that the broad analytic category of “the nonprofit sector” existed at all (Hall 1987, 1992). The first two editions of this book had chapters that reflected herculean efforts to map the size and scope of the U.S. nonprofit sector (Rudney 1987; Boris and Steuerle 2006; also see Weisbrod and Long 1977). Today, however, this pioneering work has been supplanted by The Nonprofit Almanac, regularly compiled and published by the Urban Institute. Moreover, data on foundation giving is now available from Candid, the new entity formed through the merger of the Foundation Center and GuideStar, and various nonprofit rating services that assess nonprofits’ efficacy.

The Filer Commission’s vision of the sector brought donors and recipients together as actors with a common purpose. This unification of fund-raising bodies, foundations, and such diverse organizations as soup kitchens and symphony orchestras was a remarkable political and social achievement, cast in economic terms. Rather than seeing grant givers, advocacy organizations, and service providers as distinctive entities, this new view “carried an organizational conception modeled on business enterprise” (Karl 1987:985). The Filer Commission made the case that the independent sector should be viewed for its economic contributions rather than only its moral or social benefits.

But what does independent mean? Does it imply free of government? Surely not, as the effort to create this new sector was in direct response to the activities of Congress and the Treasury Department. Does it refer to independence from corporate influence? Again, the defense of the new sector was led by elite business and civic leaders who, although concerned with efforts to correct abuses by some foundations, nevertheless wanted to maintain a space for the power and influence of elite private philanthropy. Clearly, the claim of independence is misleading, politically constructed to suggest a separation from business and government interests that never existed in practice.

How Do the State and Civil Society Interact?

Perhaps a different way to think about independence is to consider open-access organizations (Lamoreaux and Wallis 2017). Open access implies that groups in society have the ability to associate with one another and create special-purpose organizations. The freedom to establish organizations that are designed to pursue purposes independent of government is relatively recent. Moreover, there is an important complementarity between government-granted freedoms allowing citizens to (1) assemble as a public right and (2) establish private organizations. The assumption that these two freedoms inherently arise together is, in many respects, naïve, both historically and in the contemporary global context. Two striking illustrations highlight this point. The French Revolution led to the influential Loi Le Chapelier (1791), which expressly stated that no intermediary associations were allowed to exist between the individual and the state as an expression of the public will (Anheier 2014:41). Citizens could assemble but not create associations. Prussians lacked the freedom to associate without government permission for most of the nineteenth century. Full freedom of association and the capacity to form organizations did not come about in either country until the twentieth century. In Germany, such freedom was not permitted until the Weimar Republic after World War I (Brooks and Guinnane 2017).

Britain and the United States were the first countries to undergo the dramatic transformation to open access, permitting citizens the power to form organizations without constraints or control by the government (see Lamoreaux and Wallis 2017). By the middle of the nineteenth century, both countries had shifted toward open access, although the process occurred very differently in the two settings. In Britain, a century and a half after the Glorious Revolution of 1688, the change occurred suddenly and with apparently little conflict. Joint stock companies were formed, and a shift toward greater tolerance for all kinds of organizations occurred. To be sure, both men and women had formed a growing number of clubs and voluntary associations since at least the mid-seventeenth century, but organizations that posed questions about the established political or religious order had led a shadowy existence on the margins, protecting themselves from repression by touting their charitable activities. Over the course of the nineteenth century, clubs and voluntary associations proliferated in Britain. These organizations served charitable, educational, recreational, political, and even whimsical goals.

By contrast, the transformation to open access in the United States was more halting, uneven, and organizationally and regionally variegated (Hilt 2017). Peter Hall (2006) has emphasized the profound ramifications of the religious differences between the New England, mid-Atlantic, and Southern states. The plantation South imposed the most restrictions on what types of organizations could be created and what kinds of people could participate. In the North, sharp differences between the states could be seen in rules of incorporation and charter as well as levels of political, religious, and ethnic tolerance. The Tocquevillian image of nineteenth-century America as a “nation of joiners” is far too rosy; Ruth Bloch and Naomi Lamoreaux (2017) convincingly argue that although white (male, and to a lesser extent female) U.S. citizens could form all manner of associations, they depended on state government approval for the tools to make their organizations long-lasting. Benjamin Soskis chronicles these developments in Chapter 2, “A History of Associational Life and the Nonprofit Sector in the United States.”

More recently, scholars of American political development have argued that civic life in the United States has been reorganized from member-based associations to civic organizers and donors (Putnam 2000; Skocpol 2003, 2011). This transformation has two components. (1) It represents a movement from fellowship associations, with citizens joined in fraternal, religious, or veterans’ groups, to more specialized organizations that advocate for causes on behalf of constituents. The staffs of these organizations do not directly interact with these constituents except when asking them for donations or specific actions such as signing petitions or contacting political representatives. (2) These new, professionally managed organizations operate as public-interest groups with considerable political clout (Berry 1999). Arguably, however, they do not create civic capacity, as they do not teach constituents the skills of interacting with one another to resolve differences and enhance sociability. Thus the paradox of contemporary civic life: more voices, but less participation; more causes, but less consensus. Additionally, in comparison to earlier eras, more time is now spent raising money, particularly chasing the wealthy for funds to support advocacy for less advantaged individuals (Skocpol 2011).

Another important question for contemporary scholars of nonprofits is how the private formation of organizations operates differently in legal settings that permit the creation of associations, in contrast to legal regimes that force associational activity outside the law and into the shadows. As we think about comparative differences in the shape and scale of the nonprofit sector across countries, it is critical to understand the ways in which some societies developed to achieve open access while others evolved in directions that keep such access restricted. This dynamic between societal development and associational freedoms is important because, as sociologist Arthur Stinchcombe (1965) argued many years ago, the spread of organizations becomes a self-reinforcing process, creating the groundwork for more organizations to be formed. Anheier and Salamon (2006) have made this argument most clearly, suggesting that the nonprofit sector has different historical “moorings” and reveals different social and economic “shapes” across countries. In a related vein, in Chapter 29, “Social Movements in a Global Context,” sociologists Breno Bringel and Elizabeth McKenna argue that transnational activism takes on distinctly different shapes in specific historical eras.

Private organizations may rein in governments by providing focal points for resistance against abuses of power (Rosenblum and Post 2001: chap. 1). For much of the twentieth century, civil society was seen as a formidable force in sustaining democracy. In this view, private, nonprofit organizations serve as training wheels for democracy, teaching individuals how to function as citizens through both participation in organizations and commitment to associational life (Clemens 2006). As such organizations spread and become common, they enhance wider civic capacity. The organizations become separate from their founders; they can live on even as membership changes. This feature offers a different understanding of the “independence” of the sector. Civil society allows people to see themselves as agentic citizens, independent of their participation as employees, consumers, or voters at a ballot box. Furthermore, in our current illiberal era, with democracy challenged around the globe by elected autocrats in many countries, independence may take on a new meaning. Civil society may be “the last defense” against leaders who run roughshod over the rule of law and a free press (Acemoglu 2017).

Such tensions and counteracting dynamics have long characterized the historical relationship between civil society and the state. Indeed, many scholars consider the sequence and timing of associational and state development to be important in explaining the size and composition of the nonprofit sector (Esping-Anderson 1990). On the one hand, if a modern state developed before associational activity became widespread among its citizens, then the government is likely to carry out most social service activities. On the other hand, in nations where associational life either predated large-scale government or developed in tandem with it—such as the United States, Britain, Canada, and Australia—these same social service activities are conducted by voluntary organizations. Not surprisingly, in the latter circumstance the extent of associational life and nonprofit organization tends to be larger.

This developmental trajectory argument, or social origins theory, also helps us understand the differing composition of nonprofit sectors (Anheier and Salamon 2006). For example, social democratic countries such as Norway, Sweden, and Finland have a considerable array of nonprofit organizations, but they are concentrated among membership organizations, such as football and hockey clubs, rather than social service organizations. In contrast, many more social services are either performed directly by nonprofits or contracted to nonprofits by governments in the liberal market democracies of Anglo-American origin. The central argument in the social origins theory is that there is (1) an inverse relationship between the extent of government social welfare spending and the size of the nonprofit sector and (2) a difference across societies in the predominant types of nonprofits that is shaped by historical development and class relations. Helmut K. Anheier, Markus Lang, and Stefan Toepler revisit and amend this line of argument in Chapter 30, “Comparative Nonprofit Sector Research.”

Despite this overarching framework, broad generalizations about international differences in civil society are nevertheless difficult to make. It is not only the size of the nonprofit arena across nations that is challenging to explain but also its composition. The economist Burton Weisbrod (1975, 1988) attempted to develop such an argument, with important contributions added by the economist Estelle James (1987). Their general explanation of the presence of nonprofit organizations is based on two ideas: the heterogeneity of the population and the concept of a median voter. With heterogeneity, Weisbrod (1989) referred to the degree of consensus among citizens for collective services, such as medical services and famine relief, and trust services, such as day care and nursing homes. If members of a society have disparate interests, in, say, medical research or environmental conservation, governments will have difficulty catering to these diverse tastes. In a heterogeneous society, with differences also marked by religion, race, or ethnicity, one would expect to see more nonprofit organizations than in a homogeneous society. This argument rests on the belief that politicians cater to a “median voter” who represents the largest segment of the demand for public goods. Government spending is aimed at the median voter and leaves other members of society unsatisfied. Nonprofit organizations, in this view, step in to satisfy those who have an interest in public goods not provided by government.

Other factors may loom large alongside heterogeneous demands, however. By and large, more-developed countries have a larger nonprofit sector than less-developed countries. Some observers argue that democratic societies have larger nonprofit sectors than autocratic societies, but associational life in such settings can occur in the shadows and appear in unanticipated ways. Contemporary China, with its massive new middle class of more than 350 million people, has considerable (albeit not necessarily formalized) support for environmental goals and progress. Despite the extensive reach of a powerful state, there is an unruly, contentious online space where millions of Chinese citizens raise questions about their society (Lei 2018). Grassroots organizations spring up in the shadow of the state (Spires 2011). Furthermore, as more middle-class Chinese residents become homeowners, housing associations are becoming more active in expressing the views of neighbors and citizens (Lin 2020). Part of the challenge of studying civil society across nations is that organizing models are deeply conditioned by political struggles, media access, and legal tools.

Ideological movements also influence the contours of the nonprofit sector. In the 1990s, many advanced industrial nations saw a general move toward shrinking government (Hood 1995; Pollitt and Bouckaert 2011). This trend—whether referred to as retrenchment, decentralization, new public management, or neoliberalism—resulted in a sharp reorganization of the public sector. Much more emphasis was placed on accountability and contracting with both private for-profit organizations and private nonprofit entities. As the scale and activities of government shifted, an array of public–private partnerships appeared in many fields, as discussed in Chapter 9, “Toward a Governance Framework for Government–Nonprofit Relations,” by Nicole P. Marwell and Maoz Brown.

General secular trends also shape the size of the nonprofit sector. As two-income families become more common, demand grows for professional child care. Increases in life expectancy raise the demand for elder care. Rising levels of educational attainment produce more heterogeneous tastes, creating a wider variety of artistic, athletic, and cultural interests. The kinds of associations created by the well-to-do are quite different, however, from mass participatory organizations; they are more likely to involve doing for others rather than with them (Skocpol 2003). Meanwhile, increased rates of immigration and forced migration put pressure on governments, and nonprofits have stepped in to provide relief in many countries, as described by Irene Bloemraad, Shannon Gleeson, and Els de Graauw in Chapter 12, “Immigrant Organizations.” Greater awareness of the effects of climate change increases the role of environmental nonprofits (see Chapter 15, “Nonprofits and the Environment,” by Magali Delmas, Thomas P. Lyon, and Sean Jackson), and when greater severity of events caused by climate change combines with increased frequency, pressures develop that governments cannot meet. These secular trends can to a large extent be understood as increasing the heterogeneity of demands discussed earlier, leading to greater nonprofit activity as predicted by Weisbrod (1988).

If explaining the size and scope of the nonprofit sector across countries is difficult, it is perhaps still harder to gain a purchase on how volunteering varies. There are competing definitions of what constitutes a volunteer in different nations, making it challenging to assess the amount of such activity. Even in the United States (as Nina Eliasoph shows in Chapter 25, “What Do Volunteers Do?”), volunteering carries a wide variety of meanings. Sorting out the relationship between formal employment and volunteering is not easy. Research by Salamon and his colleagues in the Johns Hopkins University comparative nonprofit sector project found a general trend: the larger the paid employment in the nonprofit field, the higher the volunteer workforce (Salamon et al. 2012). Paid work does not, therefore, displace volunteers. Countries with the largest nonprofit sectors, such as the United States, Australia, New Zealand, Belgium, and Israel, also have the highest rates of volunteering. Volunteering roles differ notably, however. In Europe, volunteers are often involved in sports activities, whereas in the United States religious congregations attract the most volunteers (see Brad Fulton’s analysis in Chapter 26, “Religious Organizations”).


I greatly appreciate comments from Elisabeth Andrews, Aaron Horvath, and Ted Lechterman on earlier drafts.

1. To be sure, profit or surplus is not precluded, but it may not be given to officers, employees, or anyone who exercises control over it.

2. The U.S. tax code specifies that charitable purposes include the relief of poverty; the advancement of knowledge or education; the advancement of religion; the promotion of health, government or municipal purposes; and other purposes that are beneficial to the community.

3. Of course, many for-profits have all manner of affinity groups, but they are usually peripheral to the core activities of firms. Socially responsible initiatives may be championed inside businesses (Davis and White 2015), but such efforts may be aimed more at employee retention and marketing than real substance (Turco 2012).

4. But it is useful to remember Max Weber’s (1947) comment, “The quantitative spread of organizational life does not always go hand in hand with its qualitative significance.”