In “Growth of the Nonprofit Sector: More Charities, Better Solutions,” a research paper from Philanthropy Roundtable, authors Jack Salmon and Patterson Sheehan explore the 36% growth in the number of U.S. nonprofit organizations since 2000 and the 30% employment growth between 2002-2022 on the 501(c)(3) sector. The findings reveal most of the growth in nonprofits during this time is in human services and public benefit organizations, suggesting most of the uptick in the volume of organizations in recent decades is in response to increased demand for social services.
As lawmakers consider new laws and policies that assess where and how growth is happening, the Roundtable’s research can show exactly how the sector has changed and dispel some common misconceptions and concerns.
As The Chronicle of Philanthropy reported,
“… As organizations prepare for the next Congress, a new president and a likely reassessment of the tax code as Trump-era provisions expire next year, they’re paying close attention to — and trying to shape — what might come next for nonprofits.
“Applying a broad-brush approach could put at risk all organizations, the vast majority of which are doing amazing work uplifting communities and supporting those most in need,” said Jack Salmon, director of policy research at the Philanthropy Roundtable.”
The Chronicle of Philanthropy goes on to report what our paper shows: “Despite a small group of politically active nonprofits, experts point out advocacy among most charitable organizations has actually declined significantly in the past two decades. Recent nonprofit growth has stemmed largely from an increase in nonprofits dedicated to providing basic social services — not politics or advocacy — some of which formed in response to the COVID-19 pandemic.”
Despite common misconceptions, only around 2-4% of 501(c)(4) organizations engage in political activity and/or policy advocacy. The most common types of 501(c)(4) organizations are community service, sports associations, volunteer fire departments, homeowners’ associations or veterans’ organizations.
As Salmon and Sheehan write, “While concerns related to abuse of status or election interference are important and may warrant further examination, it is also important to differentiate between these activities and what the data tell us about the growth of the nonprofit sector in recent months and decades.”
Read the full research paper, “Growth of the Nonprofit Sector: More Charities, Better Solutions,” and the article by The Chronicle of Philanthropy.
