Our friends at Philanthropy Roundtable do good and important work. We are grateful to work alongside them in our efforts to advance charitable causes in the support of limited government, personal responsibility, and free enterprise. It’s the leading network for conservative givers and an all around powerhouse of an organization.
If you’re unfamiliar with the Roundtable, a great entry point into their work is our recent webinar-turned-podcast discussion with Philanthropy Roundtable President and CEO Christie Herrera. Alongside other distinguished guests, Christie gives a sense of the threats facing philanthropy as we enter into a new administration.
The post below comes from Patterson Tanner, government affairs associate at Philanthropy Roundtable. If you’ve heard some of the skepticism aimed at philanthropic organizations from prominent politicians, Patterson’s wisdom will help you distinguish legitimate concerns about the nonprofit sector from policy solutions that paint with too broad a brush and risk harming this critical engine of civil society.
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Dispelling Myths: The Truth Behind the Growth of the Nonprofit Sector
By Patterson Tanner
Earlier this year, the Roundtable released a comprehensive research paper outlining the growth of the nonprofit sector in recent decades. Recently, nonprofit growth has caught the attention of lawmakers and sector leaders concerned with improper foreign influence in election activity.
The nonprofit sector, made up of 1.8 million organizations, is vital to America’s national identity. From abolition to women’s suffrage and civil rights, nonprofit organizations have been at the forefront of social progress since our nation’s founding. Further, nonprofits provide our most vulnerable communities with a robust social safety net. From basic necessities like food and shelter to disaster relief and addiction programs, charitable organizations help meet the immediate needs of their communities. And yet, nonprofits now find themselves under scrutiny.
While it’s crucial for lawmakers to address legitimate concerns, particularly regarding organizations linked to hostile foreign governments or terrorist groups, legislators must be careful not to impose overly broad solutions. Such measures could unintentionally harm the vast majority of nonprofits that are doing important work in their communities.
Our analysis provided an in-depth review of growth patterns in the sector, granularly exploring the various types of nonprofit organizations. We also analyzed employment growth in the sector by breaking out nonprofits into subsectors.
Since 2000, the number of U.S. nonprofit organizations has increased by 36%. From 2002 to 2022, nearly 60% of the growth in 501(c)(3) organizations can be attributed to the expansion of human services and public and social benefit groups. These subsectors include organizations such as food banks, soup kitchens, foster care and homeless shelters, as well as veterans’ groups, United Way and the American Red Cross.
Likewise, employment in the 501(c)(3) sector also grew by more than 30% during this period, with over half that growth stemming from nonprofit health care jobs, which rose from 5.3 million to 6.8 million. While the nonprofit sector as a whole has seen 3.8 million new jobs created over 20 years, this pales in comparison to the more than 23 million jobs created in the private sector over the same period.
Contrary to concerns about increased political advocacy, the number of 501(c)(4) organizations has declined by 46% from 2022 to 2023, while the vast majority of 501(c)(4) organizations don’t even engage in any political activity or policy advocacy. What’s more, data indicate a broad sectoral decline in nonprofit advocacy. Many nonprofits are unaware of their legal ability to educate and lobby, which has led to a 31% decline in participation in important policy debates, thereby impacting their role in civic engagement.
It is important to address the legitimate concerns of policymakers regarding organizations that violate existing laws and regulations, particularly those tied to foreign government funding by adversaries or groups linked to terrorist organizations. At the same time, policymakers should avoid applying a broad-brush approach to the charitable sector that could inadvertently harm the vast majority of organizations doing remarkable work in their communities. While a small fraction of these organizations actively engage in policy debates, this is a crucial role of civic society that must be protected as policymakers continue to engage in oversight.
