Introduction To The Nonprofit Sector

Introduction to the
Nonprofit Sector
www.dbooks.org
INTRODUCTION TO THE
NONPROFIT SECTOR
DYANA P. MASON
www.dbooks.org
Introduction to the Nonprofit Sector by Dyana P. Mason is licensed under a
Creative Commons Attribution-NonCommercial 4.0 International License,
except where otherwise noted.
CONTENTS
Acknowledgements ix
Preface 1
1. Introduction 5
1.1 What are nonprofit organizations? 6
1.2 What types of organizations are 9

there?
1.3 Further defining nonprofits 18
1.4 Summary and Activities 20

2. Theories 22
2.1 Chapter Introduction 23
2.2 The “Four Failures” 24
2.2 Interdependence Theory 35
2.3 Social Origins Theory 36
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3. Mission, Ethics and Accountability in the 39
Nonprofit Sector
3.2 The nonprofit mission 41
3.3 Nonprofit Accountability 44
3.4 Nonprofit Ethics 47

4. Government-Nonprofit Relationships 53
4.2 Shape(s) of Nonprofit-Government 55

Relationships
4.3 Nonprofit organizations as partners 55

to government
4.4 Benefits and Challenges of 63

Nonprofit-Government Partnerships
4.5 Nonprofits as Advocates and 67

Adversaries to Government
5. Volunteers and Voluntary Action 70
71
5.2 Defining volunteering 73
5.3 Why Do People Volunteer 76
5.4 Valuing Volunteering 78
5.5 Considerations for Managers 81
5.6 Summary 85
6. Philanthropy and Charitable Giving 86
6.1 Chapter introduction 87
6.2 Defining philanthropy and charitable 88

giving
6.3 Why people give 92
6.4 How else do organizations raise 97

money?
7. Social Movements and Advocacy 103
7.2 Defining Advocacy 106
7.3 How Nonprofits Advocate 106
7.4 Advocacy Activities 112
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8. Social Enterprises and Entrepreneurship 119
8.2 What are Social Enterprises? 121
8.3 What is Social Entrepreneurship? 123
8.4 Activities of Social Enterprises 125
8.5 Social Enterprises vs. Corporate 128

Social Responsibility
8.6 Benefit Corporations and “B-Corps” 129

9. International Organizations 134
9.2 INGOs Versus NGOs 137
9.3 Theories of International NGOs 139
9.4 What INGOs and NGOs Do 140
9.5 The Management of INGOs 142
9.6 Ethical Considerations of INGOs 147

ACKNOWLEDGEMENTS
This project was funded by Open Oregon Educational

Resources through a grant which was received in 2021. Open
Oregon Education Resource’s mission statement is to
“promote textbook affordability for community college and
university students, and facilitates widespread adoption of
open, low-cost, high-quality materials.”
I would also like to thank Ashly Lilly and Allia Service for their
editing prowess. Kaushal Sapkota also provided insights to the
chapter on international nongovernmental organizations, and
Saurabh Lall for the chapter on social enterprises, for which I
am grateful.
Cover image is: “Nonprofit” by Sharon Sinclair (EKG

Technician Salary) is licensed under CC BY 2.0.
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PREFACE
Image: “‘Volunteer Point’” by Stefan 1981 is licensed under CC BY-NC-ND 2.0.
The study of nonprofit organizations and the nonprofit sector

is often a paradox. There is opportunity and hope, with
organizations serving millions of people every year. There are
also challenges, with organizations failing to live up to public
expectations or failing to deliver what they’ve promised.
Let’s look at some recent examples:
• The Covid-19 pandemic, and the 2022 inflation that

followed, saw nonprofits filling ever greater needs in
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2 | PREFACE
communities, from housing to food insecurity. As stated

by Josh Hopkin, the Executive Director of Family
Promise of Albany County, Wyoming, a nonprofit
organization working to end homelessness, “(Inflation
has) made it so people’s rent goes up by $300, and now
they can’t afford the place they’re in…. They’re going to
get evicted, and now they’re in a really rough spot where
they might not be in that rough position a year ago.” Yet,
the Wyoming Tribune Eagle published a story about
how the nonprofits in that community were answering
the call for increased demand for their services, despite
flat or decreased fundraising.
• Additionally, the war in Ukraine has led to many
international nonprofits stepping up to provide
emergency aid to refugees. World Central Kitchen and
its founder, celebrity chef José Andrés, is on the ground
to help.
One or more interactive elements has been

excluded from this version of the text. You
can view them online here:
https://opentext.uoregon.edu/
intrononprofit/?p=4#oembed-1
PREFACE | 3
• On the other hand, in 2021, The New York Times

published an investigation into the CORE Services
Group, a New York-based nonprofit organization that
was designed to help set up shelters for unhoused
individuals and paid for largely by tax payer dollars. In
the investigation, the group and its founder were accused
of funneling tens of millions of dollars into private
companies owned by the founder. Shortly after the
investigation was published, the city of New York
cancelled its contracts with the organization.
As these examples demonstrate, nonprofit organizations are

on the front lines in communities, providing an important
foundation for the social safety net in the United States and
around the world. They often accomplish amazing feats with
few resources. Yet, through bad management and governance,
the reputation of nonprofit organizations, and sometimes the
sector as a whole, struggles to overcome a credibility gap.
Because of this, it’s important for nonprofit managers – and
the public at large – to understand the crucial roles these
organizations play in society. This includes paying close
attention to the expectations that communities have for
nonprofit organizations to be professionally managed,
transparent and accountable.
This book was designed to be used in an undergraduate-level

introductory course on the nonprofit sector. It provides an
overview of the vocabulary used in defining the work of
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4 | PREFACE
nonprofit organizations and topics of interest to nonprofit

managers, as well as describing the primary roles nonprofits
play in American (and to a lesser extent international)
communities. The book also considers the growing numbers
and influence of social enterprises and other “social
innovation” organizations. Throughout, it brings in leading
themes of accountability, ethics and obligations facing many
nonprofit organizations as they go about their work –
challenges that should be well understood by anyone
interested in becoming a leader in the nonprofit sector.
1.
INTRODUCTION
Learning Objectives
After reading this chapter, you should be able to:
• Define the difference between a nonprofit

organization and other types of organizations.
• Understand the different terminology
associated with the nonprofit sector.
• Start to understand the scope of the nonprofit
sector in the United States.
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6 | INTRODUCTION
Image: “Nonprofit” by Sharon Sinclair (EKG Technician Salary) is licensed

under CC BY 2.0.
1.1 What are nonprofit

organizations?
Whether you know it or not, nonprofit organizations are
ubiquitous in American society. They are part of almost
everyone’s lives every day. Nonprofit organizations can be
small, such as local social or activity groups like soccer clubs
or homeowner’s associations covering a single neighborhood.
They can also be larger, such as state advocacy organizations
working in the capitol to change policy or international
humanitarian organizations with thousands of members and
budgets in the billions. They provide human services and offer
INTRODUCTION | 7
opportunities to enjoy art and culture. They raise money for

community needs and also distribute billions of dollars to
other nonprofit organizations.
But the question remains – what are they? How are they
defined? And how might they be different from other
organizations, including for-profit businesses or public sector
agencies?
The nonprofit sector includes private, voluntary, “not-for-

profit” organizations, along with other voluntary associations.1
They can be either formally registered with the IRS as a tax-
exempt corporation or informal gatherings of individuals. In
fact, in 2019 there were approximately 1.5 million formally
registered nonprofit organizations in the United States, with
an estimated additional 1 million unregistered groups.
One thing that almost all nonprofits share, however, is that

they are tax-exempt, meaning they are not required to pay
many forms of tax, particularly taxes on contributions and
1. Helmut K. Anheier, Nonprofit Organizations: Theory, Management, Policy, 2nd

ed. (New York: Routledge, 2014), http://books.google.com/
books?hl=en&lr=&id=FCpc6YdSAT0C&oi=fnd&pg=PP1&dq="edition
published in the Taylor and Francis e-Library," "purchase your own copy of this or
any of Taylor & Francis or" "2005 Helmut K." "known or hereafter invented,
including photocopying and"
&ots=XwI7vdB88A&sig=SK_snvwMXOI0aEPXu2Kj0Q3O73U.
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8 | INTRODUCTION
grants.2 In addition, they have what is called a non-

distribution constraint; they are not allowed to distribute
profits to the managers or “owners” of the organization.3 This
is an important distinction from for-profit businesses,
especially because nonprofits don’t have “owners” in the
traditional sense we may think of. While the managers and
volunteer board of directors in a nonprofit organization are
responsible for protecting the organization’s reputation and
resources, they don’t “own” the organization. Instead,
nonprofit organizations are incorporated by states and the
federal government and are, in effect, owned by the taxpayers.
In exchange for a tax-exemption benefit, nonprofit

organizations are expected to work towards the public good in
some way. That term can be broadly applied and may include
providing much needed services to offering opportunities for
people with shared goals and values to come together. In this
way, nonprofit organizations are mission driven, not profit-
driven.
Nonprofit organizations typically have the following features:
2. Kelly LeRoux and Mary K Feeney, Nonprofit Organizations an Civil Society in the
United States (New York: Routeledge, 2015).
3. Henry B. Hansmann, “Economic Theories of Nonprofit Organizations,” in The
Non-Profit Sector: A Research Handbook, ed. Walter W. Powell (New Haven, CT:
Yale University Press, 1987).
INTRODUCTION | 9
• Not profit-seeking.
• Non-distribution constraint.
• Organized outside of government and business.
• Self-governing and independent.
• Formally constituted (legal filings, bylaws, etc.).
• Voluntary.
As mentioned earlier, many groups of individuals may look

and act like a nonprofit organization but are not formally
constituted as tax-exempt corporations under the law. Also,
although it is true that you generally can’t be compelled to
join or participate in a nonprofit organization, there are some
situations in which you may be called on to join a nonprofit
in order to participate in a certain profession (such as a labor
union or the American Bar Association for attorneys) or to live
in a specific neighborhood (homeowner’s associations).
1.2 What types of

organizations are there?
There are many different types of nonprofit organizations in
the United States and around the world. The National
Taxonomy of Exempt Entities (NTEE) is one way that the IRS
and other researchers classify nonprofit organizations. When
an organization files the application to become a tax-exempt
corporation, the IRS uses the organization’s stated mission
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10 | INTRODUCTION
statement to identify their NTEE classification. Major NTEE

categories include:
• Arts, Culture, and Humanities.

• Education.
• Environment and Animals.
• Health.
• Human Services.
• International, Foreign Affairs.
• Public, Societal Benefit.
• Religion Related.
• Mutual/Membership Benefit.
• Unknown, Unclassified.
Under this primary classification, there are a series of sub-

classifications to help identify a nonprofit further, such as
codes for advocacy organizations, higher education,
professional societies and associations and those that provide
monetary support to others, just to name a few. The IRS also
separates organizations under different sections of code.
There are many different names used to describe the nonprofit

sector. While these names are often used interchangeably in
INTRODUCTION | 11
scholarship and practice, there are subtle differences in their

meanings.4
• Charitable organizations are groups whose work is

primarily seen as “helping the needy.” While some
nonprofit organizations “help the needy,” there are also
many organizations that engage in other types of
activities, including social and religious organizations
and political and advocacy organizations.
• Independent Sector emphasizes that the role of the
nonprofit sector is outside of both government and the
business sector, as it is autonomous from the other two
sectors in making decisions and engaging in activities.
Yet, there are many nonprofits that engage in
commercial activities or are closely partnered with
government through contracts and grants.
• Nongovernmental organizations (NGO) is the term
used primarily outside of the United States for the
nonprofit sector. There are local NGOS as well as
international NGOs that work across borders (INGOs).
• Voluntary organizations are those that depend on gifts
of money or time to run their programs and activities.
Many smaller and community organizations can be
considered voluntary organizations; however, this tends
4. LeRoux and Feeney, Nonprofit Organizations an Civil Society in the United States;
Anheier, Nonprofit Organizations.
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12 | INTRODUCTION
to omit larger organizations with paid staff and those

that are funded largely through government.
• Social Sector describes the group of organizations that
work on behalf of social aims and goals, but this term
does not require an organization to be nonprofit.
Peter Frumkin5 describes two different types of nonprofit

organizations: instrumental and expressive. Instrumental
organizations work as an “instrument” to engage in an
activity or to get something done, such as providing medical
services, running a food bank or providing childcare. In this
way, they have tangible outputs that can be measured.
Expressive organizations, on the other hand, help bring
people with shared values and beliefs together. These could
be religious organizations or social or political groups. Instead
of seeing a dichotomy of instrumental OR expressive, it’s
probably better to view these categories as two ends of a long-
spectrum.
5. Peter Frumkin, On Being Nonprofit: A Conceptual And Policy Primer (Cambridge,

MA: Harvard University Press, 2005).
INTRODUCTION | 13
The American Red Cross (ARC) was founded in

1881 by Civil War nurse Clara Barton to “prevent
and alleviate human suffering in the face of
emergencies by mobilizing the power of
volunteers and the generosity of donors.” Since
its founding, ARC has responded to an untold
number of disasters, including responding to
house fires; setting up shelters and providing
food to areas hit by hurricanes, earthquakes or
fire; training people in first aid and CPR and
helping to collect and manage blood for those
who need it. Although they have about 35,000
paid staff members across the country and
around the world, the activities of the Red Cross
are supported by over 300,000 volunteers.
Volunteers can turn their “compassion into
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14 | INTRODUCTION
action” by supporting people in their own

communities and often volunteer for the Red
Cross for decades, finding great meaning and
satisfaction in their service.
• Do you think the American Red Cross is an

instrumental or expressive organization?
Or both? Why or why not?
• Think of other nonprofit organizations in
your community. Would you consider
them expressive or instrumental?
One way to think about nonprofit organizations is that they

have features that are similar to, and distinct from, the for-
profit business sector and government sector.6 The below table
demonstrates where nonprofit organizations are more similar
to businesses and where they are more similar to government.
6. Frumkin.
More Like Business More Like Government
Privately Controlled X
Non-distribution Constraint X
Incorporated X
Tax-Exempt X
Lines of Accountability X
Can’t Compel you to Pay (i.e. taxes) X
Money Raised Elsewhere for Services/Activities X
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Ethical Obligations to Public X
16 | INTRODUCTION
Activity
You want to start a nonprofit – called Millennium

Readers – to help improve literacy in your
community. The first thing you have to do is
decide what role the organization will take and
what activities it will pursue. As you can imagine,
there are multiple ways that the organization
can proceed with “improving literacy.” Here are a
few options. Can you think of more?
Direct Service Role:

Direct services are when organizations work
directly with the public, providing the services
they need, such as housing or food, medical care
or education. In the case of Millennium Readers,
INTRODUCTION | 17
what might be the different types of direct

services the organization could offer?
• Provide an after-school tutoring program

in reading?
• Collect donated books for the city’s
library?
Education Role:
Organizations engaged in an education role
may help to share and spread information about
a particular issue or cause to the public.
• Educate the public via the media about

the challenge of literacy in your
community?
• Research policy options to understand
effective interventions and programs?
• Develop a program to train teachers on
identifying potential learning disabilities?
Advocacy Role:
Advocacy is “speaking on behalf of a cause” and
nonprofits may advocate for specific populations
(such as children) or issues (such as the
environment), among other causes (see Chapter
7 on advocacy).
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18 | INTRODUCTION
• Lobby the local school board for more

early education funds?
• Create a petition in support of your cause?
• Sue (litigation) the state’s Board of
Education for not providing adequate
reading supports to children with learning
disabilities?
Image: “Children reading in the street at the reading outreach

activity from the Trujillo Municipal Library” by
BeyondAccessInitiative is licensed under CC BY-SA 2.0
1.3 Further defining

nonprofits
While there is a wide range of types of issues nonprofit
organizations work on (such as education, environment or
health care as discussed above), there are just as many different
roles nonprofit organizations can take based on their mission
and goals.
INTRODUCTION | 19
Helmut Anheier7 describes one way to think about these roles:

categorizing organizations based on who they serve. The first
group, member-serving organizations, are those
organizations whose mission and purpose is to provide some
sort of benefit or representation for their members. Many
associations fall into this category, including professional
associations and homeowner’s associations. Social, sports and
religious organizations may also fall under this category.
Public-serving organizations, on the other hand, are those

groups who have a public goods or public benefit focus,
focusing on clients, beneficiaries or public at large. Health,
education and environmental organizations may fall into this
group. So too can organizations serving the unhoused or
helping people overcome food insecurity.
It is also possible to describe organizations as market or non-

market organizations. Market-based organizations are
those that generate revenue by providing goods or services
through commercial activities – sometimes called fee for
service. Examples of these organizations are institutions of
higher education – which charge tuition – and hospitals.
There are a lot of other human-service related organizations
that charge, at least marginally, for their services. Market
7. Anheier, Nonprofit Organizations.
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20 | INTRODUCTION
organizations may also include social enterprises (covered in

Chapter 8), which use the market to create social value.
Non-market organizations, on the other hand, are those

that generally receive revenue either from private sources
(individual donations, grants from private foundations) or
from public sources (government contracts, government
grants).
1.4 Summary and Activities

• Nonprofit organizations play a significant role in the
American economy and social fabric.
• They are extremely diverse in both form and function –
ranging across mission/issue areas and types of activities
they do.
INTRODUCTION | 21
Activity
1. In small groups, look up the following two

organizations working to support affordable
housing opportunities in Eugene, OR. Can you
tell if they are for-profit, nonprofit or public?
◦ Community Lending Works

◦ Homes for Good
2. Look up the U.S. Chamber of Commerce,

National Public Radio and The Smithsonian
Institution online and review their missions.
Would you consider them member-serving or
public-serving organizations? Why or why
not?
3. Review the websites for Doctors Without
Borders and World Vision. Do you consider
them instrumental or expressive
organizations? Why or why not?
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2.
THEORIES
Learning Objectives
• Understand why the nonprofit sector is seen

to exist.
• Define and understand the main theories
applicable to the nonprofit sector.
• Consider why nonprofit organizations and
their roles vary around the world.
THEORIES | 23
Image: “USAID/Georgia’s Disability Advocacy Project”

by USAID_IMAGES is licensed under CC BY-NC 2.0.
2.1 Chapter Introduction

As discussed in the previous chapter, the nonprofit sector in
the United States is incredibly large, with over 1.5 million
registered organizations and another estimated 1 million
informal groups. How did this come to be? Why does the
nonprofit sector look the way that it does? And, perhaps more
significantly, why does the nonprofit sector exist in the first
place?
Over the last fifty years, nonprofit scholars have been

developing theories that describe, define and shape the
nonprofit sector, as well as explain its roles, responsibilities and
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24 | THEORIES
behaviors. This chapter will present the main theories of the

nonprofit sector and relate them to actual organizations.
2.2 The “Four Failures”

Compared to for-profit businesses or government agencies,
nonprofit organizations have their own strengths and
weaknesses. Nonprofits are distinct organizational forms that
are seen to exist for many reasons, with the leading theories
sometimes described as the “Four Failures”:
• Market Failure.
• Government Failure.
• Contract Failure.
• Voluntary Failure.
Market Failure
Market Failure is a broad term often used in economics,
political science, public administration and nonprofit studies.
It defines a situation in which the market (business sector)
fails to produce demanded goods and services. This failure
leads to an inefficient distribution of goods and services by the
THEORIES | 25
“free market.” Richard Steinberg 1 argues that businesses may:

fail to produce goods or provide services demanded by the
public; over-restrict access to certain goods (such as by pricing
too high); or fail to meet consumer expectations around the
quantity or quality of the good/service.
In the case of the nonprofit sector, market failure is

particularly relevant when goods or services for critical needs
– such as health care, education, food or job training – aren’t
available to those that can’t afford “market prices.”
While it may seem that market failure happens simply because

businesses can’t “make a profit,” there are other reasons the
market may fail. Different types2 of market failure include:
• Information asymmetries, which occur when the

parties to any transaction have different levels of
information about the quality of the product/service.
This can lead to exploitation, such as when someone
selling a car knows there is a significant issue with the
engine and fails to provide this information while
encouraging you to buy it. Government often intervenes
1. Richard Steinberg, “Economic Theories of Nonprofit Organizations,” in The

Non-Profit Sector: A Research Handbook, ed. Walter W. Powell and Richard
Steinberg, Second Edition (New Haven, CT: Yale University Press, 2006), 117–39.
2. Lueken, “Defining Market Failure (with Examples),” EdChoice, May 24, 2018,
https://www.edchoice.org/engage/defining-market-failure-with-examples/.
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26 | THEORIES
to prevent information asymmetries through regulations

that protect consumers, such as requiring certain
disclosures by the seller or by establishing “lemon laws.”
• Externalities, also called “spillover effects,” which occur
when benefits (positive) or costs (negative) impact
someone who is not directly involved in a transaction.
For example, a firm exposes the community to pollution
while making its product. Government may also
intervene in these cases through regulation (such as
regulating or fining polluters), but nonprofit
organizations may also get involved by holding
organizations accountable to the law, either through
political pressure or through litigation.
Activity
An Oregon based nonprofit, Beyond Toxics

works to limit the impact of pesticides and other
toxins in communities across the state. They
THEORIES | 27
recognize the role of pollution on communities,

and their climate justice initiative recognizes that
“Frontline communities historically and presently
bear the brunt of health, economic and ecological
impacts that are the consequences of climate
change.” They engage in advocacy and education
efforts to reduce pollution and protect
communities from harm.
Review the Beyond Toxics website.
• What type of externalities do they try to

prevent or reduce?
• How does the organization link the
externalities of pollution to the ideas of
climate justice?
• What IS climate justice?
• Free-Rider problem, where individuals will not

participate in the provision of (pay for) a good or service
unless they are compelled to do so. This is especially the
case when they can receive the good without having to
pay for it (for example, driving down a road, enjoying a
park or listening to public radio).3 Government
intervenes in this case by compelling people to pay for
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28 | THEORIES
the good or service through taxation. These types of

goods are called non-excludable public goods and
make up many of the goods and services government
and nonprofit organizations provide. However, students
know about the free-rider problem personally when they
are working on a team project and one group member
chooses not to contribute but expects to receive the same
grade!
• Monopolies, where the market is concentrated on one
provider, often allowing the provider to charge whatever
they would like for a product. Monopolies can be
particularly problematic if they are providing goods or
services that are needed by the public, such as medical
care or electricity. Government often regulates
monopolies by placing a cap on what they can charge, or
may even break them up into smaller organizations.
Traditionally, market failures are one of the main reasons

government intervenes with taxes and regulations. If people
won’t voluntarily provide funds for a public good (free-rider
problem), government will tax the public in order to provide
them, such as collecting taxes to fill potholes in the road or
3. Lester M. Salamon, “Of Market Failure, Voluntary Failure, and Third-Party

Government: Toward a Theory of Government-Nonprofit Relations in the
Modern Welfare State,” Nonprofit and Voluntary Sector Quarterly 16, no. 1–2
(January 1, 1987): 29–49, https://doi.org/10.1177/089976408701600104.
THEORIES | 29
build a new bridge. If buying a car is risky because you don’t

know about the maintenance history (information
asymmetries), states might pass a “lemon law” to protect your
rights in the event the car breaks down shortly after purchase,
allowing you a full refund. Government may fine polluters
for dumping into a local river (externalities). Government may
also set price caps for public goods provided by a monopoly,
such as a public utility.
Government Failure
Yet, sometimes government failure also impacts the
availability of public goods and services. Government failure
may exist because government is unwilling or unable to
provide that public good or service. One theory to explain
government failure asserts government is only interested in
producing goods that are desired by the majority of the public
(also called the median voter theorem).4 This leaves some
goods and services under-provided by both market and
government.5 In the nonprofit context, this might include
4. Alec Wreford and Ian Clark, “Median Voter Theorem – Atlas of Public
Management,” 2018, https://www.atlas101.ca/pm/concepts/median-voter-
theorem/.
5. Salamon, “Of Market Failure, Voluntary Failure, and Third-Party Government.”
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30 | THEORIES
goods and services as diverse as arts organizations or mental

health services. More broadly, it could include advocacy
organizations working to protect public goods like forests,
parks, clean air and public waterways.
Image: “Median Voter Theorem,” Chegg.com,
In both market and government failure, the public cannot

access goods and services. This is where nonprofits step in,
“filling the gaps” left behind by the inability of government
and the market to provide for the public.6
6. Peter Frumkin, On Being Nonprofit: A Conceptual And Policy Primer (Cambridge,

MA: Harvard University Press, 2005).
THEORIES | 31
Activity
Explore the websites for the below

organizations. Do you think they are responding
to market failure? Government failure? Why or
why not?
• White Bird Clinic

• Greenhill Animal Sanctuary
• Civil Liberties Defense Center
• Centro Latino Americano
Image: Getty Images/StockPhoto
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32 | THEORIES
Contract Failure
Contract Failure, on the other hand, is a distinct form of
market failure that relates to information asymmetries. The
public recognizes that a nonprofit organization is mission
driven, not profit driven, and therefore may expect a better
service than one provided by a for-profit business or
government agency.7 In this case, the public is more willing to
select a nonprofit provider over other types of organizations
because nonprofits are considered more trustworthy by the
public.
Voluntary Failure
The last of the “four failures” is called Voluntary Failure.
That is, no matter how much money is donated, or time given
by volunteers, the nonprofit sector is insufficient to solve
problems on its own. This failure requires that the public
sector (government) shore up the nonprofit sector through
financial support. Lester Salamon8 considers four reasons for
voluntary failure:
Philanthropic Insufficiency: Simply put, the nonprofit
7. Salamon, “Of Market Failure, Voluntary Failure, and Third-Party Government.”

8. Salamon.
THEORIES | 33
sector is not, on its own, able to generate or organize the

resources necessary to “get to scale” and be large enough to
solve society’s problems. This is partially due to the free-rider
problem, but also relates to how private donations are simply
not adequate to provide for all desired public goods and
services.
Philanthropic Particularism: This is the criticism that

nonprofit organizations select only sub-groups to serve rather
than the wider public. For example, groups may only serve
individuals of a particular religion or ethnic group, or may
serve only the people in a particular neighborhood, or their
specific interests or profession. This can lead to favoritism or,
in worst case scenarios, bias and discrimination.
Philanthropic Paternalism: Traditionally, those who run

nonprofit organizations and other community groups tend to
be those who already have access to a community’s resources.
This can leave a power imbalance between those who are
serving and those who are being served, which may lead to
organizations believing they “know what’s best” for
beneficiaries and giving beneficiaries no control over resources
spent on their behalf. This may also mean that those in charge
choose programs, activities and services that they personally
perceive as valuable (from a position of relative privilege),
while potentially ignoring the real needs of those they mean to
serve.
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34 | THEORIES
Philanthropic Amateurism: Many organizations are led by

individuals who do not have management expertise or
experience. This is partly due to paternalism, where good
intentions and outdated assumptions lead to ill-managed
programs. It’s also due to the lack of training and development
in the nonprofit sector as a profession where specific skills and
expertise are needed.
Critical Conversation
Read the following article by Davarian Baldwin
in Nonprofit Quarterly: “Universities and Cities:
Why We Must End the Nonprofit Path to
Wealth Hoarding” and consider the following
questions:
THEORIES | 35
1. Would you consider Baldwin’s description

of the role of universities as voluntary
failure? Why or why not?
2. If you did, which of Salamon’s four
dimensions of voluntary failure seem to
relate most closely to what Baldwin is
discussing?
3. Do you agree with the potential policy
solutions recommended by Baldwin?
Which one resonates with you the most?
Image: “Critical Practice logo” by neil cummings is

licensed under CC BY-SA 2.0
2.2 Interdependence Theory

Due to the Four Failures, nonprofit organizations and
government are mutually dependent on each other for
providing services that the public needs and demands.
Nonprofit organizations (due to voluntary failure) are
dependent upon government for the financial resources
necessary to do their work, and the government (due to
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36 | THEORIES
government failure) is dependent on the nonprofit sector to

“fill the gaps” left by its own limitations and constraints.
Sometimes the government may not directly produce a service,
but rather they provide for one through the allocation of funds
through grants and contracts to the nonprofit sector. This can
be called interdependency theory.
2.3 Social Origins Theory
Image: “Sepak Takraw from Schagen’s World Map (1689)” by oschene is

licensed under a CC BY-NC-SA 2.0 license.
One final theory that I’d like to include in this chapter (there
THEORIES | 37
are many others) is Social Origins Theory9. This theory

provides a good framework to understand the variation in
nonprofit sectors in different countries. For example, most
higher-income countries have a substantial social safety net
for citizens in need. In these countries, the nonprofit sector
doesn’t have as many human services organizations as we do in
the United States. In countries that lack basic services, such as
schools and medical care, the nonprofit sector may be focused
on those activities. In countries that limit free speech or
advocacy, there may be few, if any, organizations engaged in
advocacy or activism.
Discussion Questions
• Define the four failures.

• Why does the nonprofit sector get involved in
9. Lester M. Salamon and Helmut K. Anheier, “Social Origins of Civil Society:

Explaining the Nonprofit Sector Cross-Nationally,” Voluntas: International
Journal of Voluntary and Nonprofit Organizations 9, no. 3 (1998): 213–48,
https://doi.org/10.1023/A:1022058200985.
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38 | THEORIES
responding to market failure or government

failure? What is their role?
• Why do the types of nonprofit organizations
and their roles in society differ around the
globe? How do these differences reflect on
the nonprofit sector in various parts of the
world?
3.
MISSION, ETHICS AND

ACCOUNTABILITY IN
THE NONPROFIT
SECTOR
Learning Objectives
• Define a nonprofit’s mission and vision

statements.
• Explore some of the ethical issues and
obligations facing nonprofit organizations and
the nonprofit sector.
• Link nonprofit accountability to ethical
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40 | MISSION, ETHICS AND ACCOUNTABILITY IN THE NONPROFIT
SECTOR
behavior.

Nonprofit organizations are both similar to and different from
for-profit businesses and government agencies, and they also
have unique attributes. Due to their tax-exempt status and
requirement to behave in the public interest, one of the unique
attributes of the nonprofit sector is that it is often held to a
very high standard of behavior.1 They have important ethical
and legal responsibilities that they must pay attention to, lest
they end up on the front page of the newspaper or harm
people. Nonprofit organizations have serious obligations to
the public that should always be front-of-mind, from
maintaining the public trust to protecting and acting in the
best interests of their constituents, clients and beneficiaries. In
this chapter, we will discuss the role of a nonprofit’s mission
statement and vision in guiding their behavior, the
1. Alnoor Ebrahim, “The Many Faces of Nonprofit Accountability,” in The Jossey-

Bass Handbook of Nonprofit Leadership and Management, ed. David O. Renz
(John Wiley & Sons, 2010).
MISSION, ETHICS AND ACCOUNTABILITY IN THE NONPROFIT
SECTOR | 41
expectations for accountability nonprofits have to meet and

the ethical dilemmas they must avoid.

3.2 The nonprofit mission

All nonprofit organizations have a mission statement: a
“succinct description of the basic purpose of the
organization.”2 A mission statement helps to define and guide
the organization’s activities. Usually only a couple of sentences
long, a good mission statement should include:
• The nature of the work.

• The reason the organization exists.
2. Gary M. Grobman, An Introduction to the Nonprofit Sector, 4th edition

(Harrisburg, Pennsylvania: White Hat Communications, 2015).
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SECTOR
• The clients/constituencies they serve.

• The organization’s principles and values.
Additionally, a good mission statement should be broad

enough to allow the organization to grow, adapt and add new
programs and activities. However, it shouldn’t be too broad, as
the community needs a good idea of what the organization’s
purpose is.
Activity
In groups, look up four different types of

nonprofit organizations and find their mission
statements on their websites.
SECTOR | 43
• A community garden organization

• An international humanitarian
organization
• A civil rights organization
• A local ballet company or symphony
1. Discuss their differences and similarities.

Do they discuss their: Purpose? Reason for
existing? Who they serve? Their principles
and values?
2. Review their websites. If you were to re-
write their mission statements, what
would you include? As a group, write a
first draft of a new mission statement for
one organization.
Image: “Ballet” by Rodrigo Denubila licensed under a CC BY

SA 2.0 license
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SECTOR
3.3 Nonprofit Accountability

To be accountable is “to answer to one’s behavior.”3 Calls for
accountability in nonprofit organizations have been increasing
over the past several decades, particularly when there is a
scandal involving a nonprofit organization or the people who
work for one (see the examples in the introduction).
Nonprofits fail to be accountable when they:
• Fail to follow their mission statement.

• Misappropriate funds (spending money on something
different than what was said).
• Steal money.
• Mislead the public about what they are doing.
• Discriminate against their staff, their clients, volunteers
or members of the public.
• Are wasteful.
• Fail to share financial information when asked.
• Can you think of others?

SECTOR | 45
Nonprofits are also unique from other types of organizations

because they are accountable to a wide variety of stakeholders.
Stakeholders are those individuals or groups who are interested
in what your organization is doing and whether or not it is
meeting its mission.
Nonprofit stakeholders are different from those of businesses,

which are most concerned about their owners or
shareholders. They are also different from those of
government, which is most accountable to citizens and voters.
Nonprofit organizations have stakeholders both internally
(volunteers, staff, board) and externally (the public, media,
regulators). Additionally, they are accountable “upwards” to
key stakeholders, as well as “downwards” to others. 4 The
following table illustrates who these stakeholders might be:
4. Ebrahim, “The Many Faces of Nonprofit Accountability.”
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SECTOR
Nonprofits are accountable for activities that they are expected

to engage in (based on their mission), as well as the
organization’s performance, finances and legal compliance.
Helmut Anheier5 argues that accountability includes
transparency of the organization’s activities along with the
behavior of their board members and employees. He argues
that it’s crucial for nonprofit managers to have a “culture of
transparency” to help ensure accountability. Transparency can
include:
5. Anheier, Nonprofit Organizations.

SECTOR | 47
• Honesty in fundraising.
• Clear communication with donors and supporters.
• Fiscal accountability (who is responsible for what when
it comes to managing the organization’s money and its
accounting practices).
• Posting financial information on the organization’s
website.
Some organizations, such as CharityNavigator or GuideStar,

have set up websites where individuals can review available
public information about organizations, including their most
recent financial filings and other documents submitted to
provide transparency.
3.4 Nonprofit Ethics

Running an ethical organization should be a top priority for
nonprofit managers. Ethics are “well-based standards of right
and wrong that prescribe what humans ought to do, usually
in terms of duties, principles, specific virtues, or benefits to
society.”6 Although this definition applies to individuals,
6. Craig E. Johnson, Meeting the Ethical Challenges of Leadership: Casting Light Or

Shadow (SAGE Publications, 2007), 10.
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SECTOR
organizations can also act ethically or unethically. If

organizations act unethically, they can do harm, fail to meet
their missions or face scandals that can lead to significant
public embarrassment, lawsuits or even being forced to close
down.
Activity
Individuals and organizations generally know

what clear lines are drawn in their organizations
(for example, don’t steal), but staff, volunteers
and board members can “get in trouble” when
there is no clear distinction between right and
wrong. Consider the following short scenarios.
Are they potential ethical issues? Why or why
not? What would you do in these situations?
1. You are an organization that works on

child health. Your local fast food chain
would like to make a large contribution in
support of your “Activate Child Health”
SECTOR | 49
day at the local elementary school.

2. Your sports organization is offered a
contribution that will double your annual
budget, but you are told you can’t accept
clientele who are transgender or gender
non-conforming unless they are willing to
participate as their “assigned gender at
birth.”
3. Your staff have worked very hard over the
last year, particularly in recovering from
the Covid-19 pandemic. You want to
acknowledge their great and hard work by
providing a significant bonus and
throwing a party at a local country club.
4. A board member suggests their company,
an accounting firm, should be hired by
your organization to complete and file the
annual financial reports.
5. Your organization is having trouble paying
rent this month because donations are
down. There are some leftover funds from
a grant you received from a big local
foundation. Your board chair suggests you
use that leftover money to pay the rent.
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SECTOR
Image: “Ethics” by masondan is licensed under CC BY-NC-SA

2.0
Unethical behavior by nonprofit organizations can include the

following:
• Violation of your mission (what you say you are going to

do).
• Discrimination.
• Fraud or embezzlement.
• Inappropriate fundraising practices.
• Failing to file your annual financial statements and forms
on time.
• Accumulating too much profit and not spending it on
the mission.
• Issues with salaries and benefits inside the organization.
• A lack of diversity among staff or board members.
• Self-dealing or self-interested behavior by board
members or staff (called a conflict of interest).
SECTOR | 51
Read the assigned case study, “Standards for

Child Sponsorship Agencies: Part A” (2002) by
Esther Scott and Dave Brown. Before you come
to class, consider the following questions:
• Based on the information provided in the

case, who are child sponsorship agencies
accountable to? Who are they most
worried about offending?
• How do you feel about their fundraising
program? Do you think they are being
transparent with donors about where
their money is going? Why or why not?
• Make a list of the potential ethical
problems you see in this case. Why did
you add them to your list?
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SECTOR
Image: “Critical Practice logo” by neil cummings is licensed

under CC BY-SA 2.0
4.
GOVERNMENT-NONPRO
FIT RELATIONSHIPS
Learning Objectives
• Understand the ways nonprofit organizations

interact with government.
• Understand the theory of government-
nonprofit relationships.
• Gain practice considering the challenges and
opportunities involved when a nonprofit
works closely with government.
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54 | GOVERNMENT-NONPROFIT RELATIONSHIPS
Image: “Providing hygiene kits to families as they return home” by DFID – UK

Department for International Development is licensed under CC BY 2.0.

Many nonprofit organizations work closely with government
at the federal, state and local level in the United States.
International nonprofits may work closely with their own
federal governments, the governments where they work or
international agencies like the United Nations or International
Monetary Fund. Alternatively, organizations may work in
conflict with government(s) through their advocacy efforts.
This chapter covers the different ways nonprofit organizations
interact with government and government agencies, from
close partners to adversaries.
GOVERNMENT-NONPROFIT RELATIONSHIPS | 55
4.2 Shape(s) of
Nonprofit-Government
Relationships
Relationships between nonprofit organizations and
governments take many forms in both theory and practice.
These relationships may include:
• Contracts.
• Grants.
• Third-Party Payments.
• Tax-deductions and Tax Exemptions.
• Joint Ventures (Public-Private Partnerships).
• Privatization.
• Advocacy.
• Policy change.
4.3 Nonprofit organizations as

partners to government
As discussed in Chapter 2, the nonprofit sector has a crucial
role in providing much needed services and programs that
government is either not able or willing to organize itself.
However, government often provides funding – through
grants and contracts – that supports the delivery of public
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goods and human services by nonprofit organizations to the

public. This requires a close partnership between government
and nonprofit organizations.1 In Chapter 2, we called that
interdependence theory; government depends on the
nonprofit sector to deliver services, while the nonprofit sector
depends on government for funding.
The following examples demonstrate the many ways

government and the nonprofit sector work together.
Tax Deductions and Tax Breaks

Almost all organizations in the nonprofit sector interact with
government through tax exemption. The U.S. federal
government forgoes literally billions of dollars in tax revenue
every year by allowing most nonprofits to be exempt from
paying taxes on their revenues. Most state and local
governments also extend tax exemption to nonprofits in their
jurisdictions. In exchange, nonprofits agree to a few rules,
including: 1) acting in the public interest, 2) being transparent
about finances and 3) having a board of directors that will
provide oversight of the organization. These requirements
1. R. Smith and Kirsten A. Grønbjerg, “Scope and Theor of Government-Nonprofit

Relations,” in The Non-Profit Sector: A Research Handbook, ed. W. W. Powell and
Richard Steinberg, Second (New Haven, CT: Yale University Press, 2006),
221–42.
ensure shared leadership of nonprofit organizations and allow

public scrutiny of their finances.2
Privatization
Sometimes government steps back from providing a service
altogether, turning the services and programs over to the
private sector (both businesses and nonprofits). Privatization
is “the act of reducing the role of government or increasing the
role of the private institutions of society in satisfying people’s
needs; it means relying more on the private sector and less
on government.”3 Governments often engage in privatization
measures in order to “shrink” the size of government, find
new efficiencies and save taxpayer dollars. There are different
types of privatization efforts, from grants and contracts to full
divestment.4
• Contracts. The United States federal government, states

and local governments enter contracts with external
vendors, including nonprofit, for-profit and other
2. Candid Learning, “Trainings in Nonprofit Fundraising, Proposal Writing,

Grants,” Candid Learning, accessed May 2, 2022, https://learning.candid.org/
resources/knowledge-base/pros-and-cons;
3. E S Savas, Privatization and Public-Private Partnerships (Chatham, NJ: Chatham
House, 2000), 2.
4. Savas, Privatization and Public-Private Partnerships.
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government agencies, to carry out its work. Contracts

are the “mutually binding legal relationship obligating
the seller [contractor] to furnish the supplies or services
(including construction) and the buyer [federal
government] to pay for them.”5
The nonprofit sector receives billions of dollars annually
through federal, state and local contracts to deliver
particular services, projects and programs that the
government is, by law, required to provide. Among
nonprofits, healthcare nonprofits have the highest
proportion of contracts, followed by organizations
focused on the environment and animals and other
social services.6
5. “Part 2 - Definitions of Words and Terms | Acquisition.GOV,” Acquisition.Gov,

accessed April 7, 2022, https://www.acquisition.gov/far/part-2.
6. Sarah L Pettijohn and Elizabeth T Boris, “Contracts and Grants between
Nonprofits and Government,” 2013, 8.
Discussion
In some cases, government opts to allow private

organizations to take over a service typically
administered by government. This is called
contracting out. For example, in 2022, Hillsborough
County in Florida contracted out their entire child
protective services to a nonprofit, The Children’s
Network of Southwest Florida. Interestingly, the
organization didn’t submit their own bid for the
contract. Instead, the state recruited them to provide
the service.
Read the article linked above and answer the

following questions:
1. What is the goal of government wanting to

contract out child protective services to a
nonprofit rather than doing it themselves?
2. Why might the nonprofit be interested in
providing the service? What challenges might
they face?
www.dbooks.org
• Grants. On the other hand, grants are “authorized

expenditure[s] to a non-federal entity for a defined
public or private purpose in which services are not
rendered to the federal government.”7 Grants are usually
given for a specific purpose to benefit project or program
development in organizations. They do not have to be
paid back. While most federal grants are provided to
state and local governments, some nonprofit agencies are
able to apply for them. In addition, nonprofits often
compete for grant funding from their states, counties
and municipalities as well. The below graphic8 shows
how the federal government, state and local agencies and
nonprofit organizations interact in terms of grants and
contracts.
7. USASpending.gov, “Glossary,” accessed May 2, 2022, https://usaspending.gov/.

8. National Council of Nonprofits, “Toward Common Sense Contracting: What
Taxpayers Deserve” (Washington, DC: National Council on Nonprofits, 2014),
https://www.councilofnonprofits.org/sites/default/files/documents/toward-
common-sense-contracting-what-taxpayers-deserve.pdf.
Public-Private Partnerships
(PPP)
PPP occur when government agencies and nonprofit or for-
profit organizations collaborate to jointly define and develop a
product, project or service. PPP are one way that organizations
help to leverage the finances, management, ideas and
leadership available across the three sectors.9
9. STUART C. MENDEL and JEFFREY L. BRUDNEY, “PUTTING THE NP IN

PPP: The Role of Nonprofit Organizations in Public-Private Partnerships,” Public
Performance & Management Review 35, no. 4 (2012): 617–42.
www.dbooks.org
The San Diego Regional Policy & Innovation

Center is a new partnership between the County
of San Diego, CA, the San Diego Foundation and
the Brookings Institution, a leading nonprofit
think tank. It was founded in 2021 and, as its
own nonprofit organization, is designed to:
“develop, test and implement world-class
research and policy-driven solutions to
address our region’s most pressing
challenges. We use applied research to help
local leaders identify catalytic policies, programs,
and interventions and attract greater capital to
the region.” Read the following article:
https://www.sandiegouniontribune.com/news/
politics/story/2021-09-27/new-partnership-
brookings-foundation
• What is the Policy and Innovation Center

seeking to do?
• Why do they feel like their approach as a
Public-Private Partnership is the right one
to solve social issues?
4.4 Benefits and Challenges

of Nonprofit-Government
Partnerships
An outstanding question is: why do government and
nonprofit organizations seek partnerships, whether through
collaboration or contracts and grants?
A government agency may want to partner with nonprofit

organizations to help cut costs to taxpayers. This contracting
out has been a trend in government over the past several
decades. Whether it’s a desire to “shrink the size” of
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government or identify competencies and expertise not held

by the agency, contracting out aims to ensure that the program
is being provided without government having to undertake
it.10
Government agencies may also be interested in working

through nonprofit agencies to leverage the nonprofit’s
positive community reputation, particularly among
constituencies that may be otherwise hard to reach – such as
immigrants or the unhoused population. In some ways, this
can be seen as government understanding Contract Failure
from Chapter 2 and using this to its advantage in delivering a
public service.
Nonprofits, on the other hand, may look forward to the

additional financial resources of partnerships, allowing them
to grow their organizations, build their capacity to do more
work and provide financial stability. They may also enjoy more
influence among policymakers or over policy processes and
gain further legitimacy with other donors.
10. Anna A. Amirkhanyan, “Monitoring across Sectors: Examining the Effect of

Nonprofit and For-Profit Contractor Ownership on Performance Monitoring in
State and Local Contracts,” Public Administration Review 70, no. 5 (2010):
742–55, https://doi.org/10.1111/j.1540-6210.2010.02202.x; Michael Lipsky and
Steven Rathgeb Smith, “Nonprofit Organizations, Government, and the Welfare
State,” Political Science Quarterly 104, no. 4 (1989): 625–48, https://doi.org/
10.2307/2151102.
However, these relationships can be challenging. For one,

contracting out services to third parties can make identifying
lines of accountability difficult when something goes wrong;
each side can easily blame the other. Additionally, nonprofits
may find the added burden of additional red tape – usually
through oversight or filing reports and updates – difficult to
manage effectively. Nonprofits may also find themselves
working on issues outside their stated mission (sometimes
called mission drift).
Mission drift, or mission creep, has often been

seen as a bad thing[pdf] to be avoided at all
costs by the nonprofit sector. Although it’s true
that organizations may become stretched too
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thin, and even end up engaging in activities not

aligned with their mission statement, some
scholars have recently started to encourage
nonprofit leaders to think more critically about
the issues of “mission drift” in their
organizations. Read this article by Vu Le, a
leading blogger and thinker about the nonprofit
sector in the United States. Consider the
• Why do some people think that mission

drift shouldn’t be avoided at all costs by
organizations?
• What are the downsides of strictly
adhering to a mission? Or developing a
very narrow mission?
• How should managers think about
mission drift instead?
Image Source: “Critical Practice logo” by neil cummings is

licensed under CC BY-SA 2.0
4.5 Nonprofits as Advocates

and Adversaries to
Government
Although many nonprofits work closely with government
agencies to implement programs and public services, many
nonprofits also engage in advocacy efforts. Advocacy is
“speaking or acting on the behalf of others.”11 Chapter 7
discusses nonprofit advocacy in much more detail.
Advocacy, and even lobbying, isn’t just undertaken by

“political” organizations. Nonprofit organizations engage in
advocacy for many reasons, including to: advocate for public
funding to support certain organizations and issues; raise
awareness within the communities they work with; help refine
or change existing public policy to better serve their
constituents; lobby for policy change at the local, state, federal
or international levels; and help people understand policy
issues and connect them to their representatives.
A lot of advocacy efforts can be adversarial, with organizations

challenging government agencies and legislatures to be more
responsive to social issues and problems. However, advocacy
United States (New York: Routeledge, 2015).
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can also be participation in political processes, including

serving on local commissions and committees or working with
government agencies to define a new grant proposal process.
In these ways, nonprofit organizations can be involved in
policy processes and changes at all different levels of
government.
One or more interactive elements has

been excluded from this version of the
text. You can view them online here:
Advocacy in Action
Watch the first few minutes of Keenya

Robertson testifying before the U.S. House of
Representatives Committee on Appropriations in
2019 (start at about the 22 minute mark). Mrs.
Robertson is the Board Chair of the National Fair
Housing Alliance and President and CEO of
Housing Opportunities Project for Excellence, Inc.

Consider the following questions:
• What is Mrs. Robertson’s priority?

• What is she asking Congress for?
• Did she share information about the
problems faced by the people her
organization serves? How did she do that?
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5.
VOLUNTEERS AND
VOLUNTARY ACTION
Learning Objectives
• Define volunteering and volunteerism.

• Understand why people volunteer.
• Recognize how organizations use volunteers.
VOLUNTEERS AND VOLUNTARY ACTION | 71
Image: “Green Day’s Tre Cool and ONE Volunteers at Warped” by Brande
Jackson is licensed under CC BY-NC-ND 2.0.

So far in this book, we have covered the theories and the “why”
of many issues that nonprofit managers have to consider when
running their organizations. We have also discussed how
scholars think about nonprofit organizations, their activities
and their role in society. This chapter begins to look at how
nonprofit organizations organize their resources and work for
change, starting with volunteers and voluntary action.
Approximately one third of Americans – almost 80 million
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72 | VOLUNTEERS AND VOLUNTARY ACTION
people – volunteer every year.1 Additionally, scholars have

estimated nearly 1 million people volunteered internationally
every year before the Covid-19 pandemic curtailed
international travel.2 In 2016, the U.S. Bureau of Labor
Statistics reported that women are more likely to volunteer
than men and the most active age group were those 35-44 years
old.
The impact of these volunteers on organizations can’t be

under-estimated. Many, if not most, nonprofit organizations
rely upon volunteers to support their activities. Smaller
organizations may have no paid staff and are completely
organized and managed by volunteers. Additionally, almost all
nonprofit organizations have a volunteer board of directors
providing oversight of the organization. This chapter will first
discuss how volunteers are defined, who volunteers and why
people volunteer. It will end with a discussion about what
managers might want to consider in running a successful
volunteer program for their organization.
1. US Census Bureau, “National Volunteer Week: April 17-23, 2022,” Census.gov,

accessed May 4, 2022, https://www.census.gov/newsroom/stories/volunteer-
week.html.
2. Benjamin J Lough, “A Decade of International Volunteering from the United
States, 2004 to 2014,” Research Brief (St. Louis, MO: Center for Social
Development, 2015).
5.2 Defining volunteering

Believe it or not, there are many different ways to define
volunteering. Broadly, volunteering is unsalaried service3 and
is “any activity in which time is given freely to benefit another
person, group or cause.”4 However, while it is undertaken as
part of an individual’s leisure time, it is also often considered
“work”5 – making its classification difficult. Most definitions
of volunteering include the following four key elements: 6
• free will.
• no financial reward.
• helping strangers/beneficiaries.
• conducted through an organization.
However, this doesn’t take into account different motivations
3. Ram A. Cnaan, Femida Handy, and Margaret Wadsworth, “Defining Who Is a

Volunteer: Conceptual and Empirical Considerations,” Nonprofit and Voluntary
Sector Quarterly 25, no. 3 (1996): 364–83.
4. John Wilson, “Volunteering,” Annual Review of Sociology 26 (2000): 215.
5. Lester Salamon, Megan A. Haddock, and S. Wojciech Sokolowski, “Closing the
Gap? New Perspecitives on Volunteering North and South,” in Perpsectives on
Volunteering: Voices from the South, ed. Jacqueline Butcher and Christopher J
Einolf (Switzerland: Springer International Publishing, 2017), 29–52.
6. John Wilson, “Volunteerism Research A Review Essay,” Nonprofit and Voluntary
Sector Quarterly 41, no. 2 (April 1, 2012): 176–212, https://doi.org/10.1177/
0899764011434558.
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people have to help and the types of volunteering available.

Although volunteering is usually done without a financial
reward, individuals can and often do receive a benefit of some
sort. For example, they may receive recognition for their
service, free t-shirts, free food or free membership with an
organization in exchange for their service. In addition, a
definition requiring work for a formal organization ignores
the fact that much voluntary action is conducted outside of
formal organizations.
Informal volunteering is “unpaid, non-compulsory work:

that is, time individuals give without pay to activities
performed either through an organization or directly for
others outside their own household.” Two examples of
informal volunteering are driving an elderly neighbor to a
doctor’s appointment or watching your neighbors’ children
for free if they need a babysitter. Higher rates of informal
volunteering – through supporting each others’ communities
– are seen among women, people of color and those with
lower-incomes. This can lead to negative stereotypes about
marginalized communities, creating a belief that they aren’t
somehow involved in serving their communities.7 Most
measurements of volunteering in the United States don’t take
7. Jon Dean, “Informal Volunteering, Inequality, and Illegitimacy,” Nonprofit and

Voluntary Sector Quarterly, July 27, 2021, 08997640211034580, https://doi.org/
10.1177/08997640211034580.
informal volunteering into account, which can leave many

helping behaviors and voluntary actions hidden from view and
thus undervalued.
Discussion: Covid-19 and Volunteering
When the Covid-19 pandemic shuttered

businesses, churches and nonprofit organizations
across the country in early 2020, some
individuals stepped up to help their neighbors in
need. Read this article about one individual’s
effort in the San Francisco Bay Area and discuss
the following questions:
• Would you consider Mr. Pham’s efforts in
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his community formal or informal

volunteering? Why or why not?
• What were other strategies taken by
others equally concerned about food
insecurity during the pandemic?
• How have you and your family or friends
engaged in informal volunteering? Formal
volunteering?
Image: “Feeding Mind and Body” by Phil Roeder is licensed

under CC BY-ND 2.0
5.3 Why Do People Volunteer

While defining volunteering can be challenging,
understanding why people volunteer is also difficult, as people
volunteer for a diverse set of reasons. They may be motivated
by instrumental reasons, like adding to a resume, being social
with others, the social environment they live in or a sense of
reciprocity they share with their community members,
friends and family.
For example, some scholars take a functional approach,

suggesting that volunteer motivations serve different
functions, or needs, of individuals.8 These functions may
include an interest in expressing their values, learning about
the world, personal growth, career development, an interest
in social interaction or trying to lessen feelings of guilt or
obligation.
Volunteers may be motivated by religious or spiritual

obligations or values, a desire to provide community support
or life-changing events that may change values and priorities.9
People may also volunteer for different reasons at different
times of their lives.10
Both in the United States and internationally, different

cultural, ethnic and racial groups may have different reasons
for volunteering. Latino/a/x communities, for example, may
8. E. Gil Clary and Mark Snyder, “The Motivations to Volunteer: Theoretical and
Practical Considerations,” Current Directions in Psychological Science 8, no. 5
(October 1, 1999): 156–59.
9. James L Perry et al., “What Drives Morally Committed Citizens? A Study of the
Antecedents of Public Service Motivation,” Public Administration Review 68, no.
3 (May 1, 2008): 445–58, https://doi.org/10.1111/j.1540-6210.2008.00881.x.
10. Takashi Yamashita et al., “Underlying Motivations of Volunteering Across Life
Stages: A Study of Volunteers in Nonprofit Organizations in Nevada,” Journal of
Applied Gerontology 38, no. 2 (February 1, 2019): 207–31, https://doi.org/
10.1177/0733464817701202.
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volunteer for more family-oriented reasons11, while religion

is shown to be an important factor for African-American
communities.12 Informal volunteering is slightly more
predominant than formal volunteering in Black and Hispanic/
Latino communities13 but the opposite is true for people with
disabilities.14
5.4 Valuing Volunteering

Nonprofit scholars and practitioners are also very interested in
measuring the economic impact of volunteers. But, how do
you measure the value of a volunteer when they are not paid
for their services? There are a few different ways practitioners
11. Beverly B. Hobbs, “Diversifying the Volunteer Base: Latinos and Volunteerism,”
Journal of Extension 39, no. 4 (2001): 46–53.
12. Ian A. Gutierrez and Jacqueline S. Mattis, “Factors Predicting Volunteer
Engagement Among Urban-Residing African American Women,” Journal of Black
Studies 45, no. 7 (October 1, 2014): 599–619, https://doi.org/10.1177/
0021934714543189.
13. Young-joo Lee and Jeffrey L. Brudney, “Participation in Formal and Informal
Volunteering: Implications for Volunteer Recruitment,” Nonprofit Management
and Leadership 23, no. 2 (2012): 159–80, https://doi.org/10.1002/nml.21060.
14. Carrie L. Shandra, “Disability and Social Participation: The Case of Formal and
Informal Volunteering,” Social Science Research 68 (November 1, 2017): 195–213,
https://doi.org/10.1016/j.ssresearch.2017.02.006.
may consider the value of volunteer work within their

organization.15
One way managers can measure the value of volunteering is

to consider the opportunity cost of a volunteer’s time. In
other words, what would a volunteer have earned if they were
working instead of volunteering their time? While it may be
easy to calculate what a volunteer may have earned for the same
amount of time in any current employment they have, it is
much more difficult to measure the value of the leisure time
that individuals are foregoing in order to volunteer.
Managers can also measure the replacement cost of their

volunteers. That is, how much would the organization have
to pay if they hired someone to do the work a volunteer can
do? Although this is more straightforward, there are many
volunteer positions – such as donating blood, preparing and
delivering meals to the elderly, helping with your church’s yard
sale or coaching your kids’ sports team – for which there is no
clear market comparison. In addition, how would you replace
someone with a paid employee in positions that are almost
exclusively held by volunteers – such as board service?
Last, managers can assess organizational value – or the way
15. Laura Leete, “The Valuation of Volunteer Labor,” in Handbook of Research on

Nonprofit Economics and Management, Bruce A. Seaman and Dennis R. Young
(Eds.) (Northampton, MA: Edward Elgar Publishing, 2010), 238–48.
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the organization values their volunteers’ efforts. This is

intangible value that may be impossible to place a monetary
figure on. Volunteers are ambassadors for the organization,
can provide networking opportunities in order to identify
collaborative partnerships and may be a key feature of the
organization’s values and culture.
Volunteers and the American Red Cross
In Chapter 1 you were introduced to the role of

the American Red Cross (ARC) when you were
thinking about instrumental vs. expressive
organizations. Did you know that 90% of ARC’s
workforce are volunteers? Over 300,000
volunteers engage in a variety of activities, from
responding to house fires to installing fire alarms
to responding to disasters by staffing shelters

and providing mental health care, spiritual care
and case management. Volunteers also lead local
chapters, conduct local fundraising and help to
spread awareness about ARC’s activities in their
communities. How would you measure the value
of these volunteers to the organization?
Image: Twitter https://twitter.com/redcross/status/

1251873188515962882
5.5 Considerations for

Managers
The challenges facing volunteer managers are complex. How
do you match volunteer motivations with the tasks your
organization needs? As discussed above, volunteers come to
nonprofit organizations for a diverse set of reasons; a successful
manager will try to match a volunteer’s interests with positions
they need filled in their organization. For example, if you have
a volunteer who is looking for something to do in their spare
time that offers a social outlet, assigning them to tasks done
independently will likely lead to that volunteer not returning
to help the organization.
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Managers also need to consider what tasks within their

organization would best be filled by a volunteer rather than
built into the job description of a paid employee. This should
be done strategically as part of a larger conversation about
staffing needs in organizations.
Lastly, volunteers need to be supported in their roles, or they

will lose their motivation and fail to return. Hager and
Brudney assert, “unless organizations pay attention to issues
of volunteer management, they will not do a good job of
recruiting, satisfying, and retaining volunteers.”16
To manage volunteers, many leaders use practices and

structures recommended by scholars and practitioners that
closely resemble other human resource management (HRM)
practices used by businesses to hire, train and manage
employees.17 When organized well, volunteering can help meet
the social, psychological and professional needs of individuals
and help organizations improve their impact. Some questions
16. Mark A. Hager and Jeffrey L. Brudney, “Problems Recruiting Volunteers: Nature
versus Nurture,” Nonprofit Management and Leadership 22, no. 2 (December 1,
2011): 2, https://doi.org/10.1002/nml.20046.
17. Kerstin Alfes, Bethania Antunes, and Amanda D. Shantz, “The Management of
Volunteers – What Can Human Resources Do? A Review and Research Agenda,”
International Journal of Human Resource Management 28, no. 1 (January 2017):
62–97, https://doi.org/10.1080/09585192.2016.1242508.
that managers must consider in launching a volunteer

management program are:
• Who will be responsible for managing volunteers?

• What do you need volunteers for? How long do you
need them for?
• Where will you find volunteers?
• What training will they require in order to fill their
role(s)?
• How will you keep them motivated?
Activity: Develop a Volunteer Management

Plan
You are the volunteer manager for the local

NAACP chapter that runs a mobile food pantry
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like this one in partnership with the local food

bank, among other programs. Since your
organization would like to expand the program
to take place in more locations and for more
hours every week, your supervisor has asked
you to put together a new volunteer plan for the
program. Take a few minutes to think about how
you would answer the following questions:
• What tasks might you use volunteers for?

Who are your ideal volunteers? What are
their likely motivations?
• How will you recruit them? (Where will
you find them?)
• What type of training will they need to be
successful?
• What type of support can your
organization provide to keep them
motivated and engaged?
• How will you measure their contributions
to your mission?
Bonus: Sketch out what a volunteer job

description might look like for this role.
Adapted from: Jones, J. A. (2020). “Volunteer management:

introducing students to the art and the science.”

Management Teaching Review, 5(2), 163-171.
Image: “Cart for the Food Bank” by Waldo Jaquith is licensed
under CC BY-SA 2.0
5.6 Summary
In this chapter we discussed the reasons why people might
volunteer for organizations, the difference between formal and
informal volunteering and some considerations managers may
want to integrate into a successful volunteer program. One
key lesson is that volunteers are not free to organizations.
Working with volunteers in nonprofit organizations requires
that managers use volunteers strategically and in ways that will
leave both the organization and the volunteer enriched by their
service. This takes intentionality and planning to do well.
Many organizations may even hire professional staff whose sole
job is volunteer recruitment, training and support.
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6.
PHILANTHROPY AND
CHARITABLE GIVING
Learning Objectives
• Understand why people give to nonprofit

organizations.
• List the ways nonprofits access financial
resources.
• Consider contemporary critiques of
philanthropy.
PHILANTHROPY AND CHARITABLE GIVING | 87
Image: “Donation Box” by Yukiko Matsuoka is licensed under CC BY 2.0.
6.1 Chapter introduction

Despite the Covid-19 pandemic, or perhaps because of it,
charitable giving in the United States reached an all-time high
in 2020: $471 billion, a 15% increase over the previous year.1
Perhaps this shouldn’t be a surprise, but nonprofit

organizations usually need financial resources in order to meet
their mission as organizations. Larger organizations need to
1. Haleluya Hadero, “Charitable Giving in the U.S. Reaches All-Time High in

2020,” AP NEWS, June 15, 2021, https://apnews.com/article/philanthropy-
health-coronavirus-pandemic-business-94cac51d5caf18f48a7827de04e017c0.
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88 | PHILANTHROPY AND CHARITABLE GIVING
pay staff salaries, pay to implement their programs and pay

rent and utilities. Even small, community-based organizations
without staff often require a modest budget to be able to
implement their plans – from purchasing necessary supplies
and equipment, to marketing their work (printing flyers and
brochures, media campaigns), to reimbursing volunteers for
travel expenses. It seems sometimes that nonprofit
organizations are always on the hunt for more resources to
support their work.
In this chapter, we will discuss the various revenue streams

that organizations use to raise the funds they need. We will
also cover some of the leading theories that explain why people
give money to nonprofit organizations. We will finish with a
short discussion of some of the critiques of philanthropy in the
United States and around the world.
6.2 Defining philanthropy and

charitable giving
Although I think we all know what philanthropy means, there
is quite a bit of diversity for the terms used by scholars and
practitioners. Merriam-Webster defines philanthropy as
“goodwill to fellow members of the human race.” While it
usually relates to financial donations, sometimes “gifts” of
time (volunteering) is also included (see Chapter 5 for more
on volunteering).2 It is often perceived as altruistic, benefitting

others.
When people think of philanthropy, they often first think of

wealthy individuals who give a significant amount of their
wealth away through one form or another – from a single gift
to a favorite organization to setting up a family foundation in
their name. Those foundations then make their own grants to
organizations, sometimes for decades or longer. Take a look
at MacKenzie Scott as she seeks to give away a significant
proportion of her wealth.
2. Robert L. Payton and Michael P. Moody, Understanding Philanthropy: Its

Meaning and Mission (Indiana University Press, 2008).
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Foundations
Foundations are a specific type of nonprofit

organization, often with a primary goal to help
collect and distribute money to other nonprofit
organizations. The Council of Foundations
defines a foundation as “an entity that
supports charitable activities by making grants
to unrelated organizations or institutions or to
individuals for scientific, educational, cultural,
religious, or other charitable purposes.” These
organizations must pay out at least 5% of their
assets each year in grants.
Private foundations are founded by an

individual, family or corporation.
Public Charities may also provide grants to

other individuals and organizations, but they are
generally supported by the public at large, rather
than a single person or business. Community
foundations are included in this category, as
they raise their money and often distribute those
funds in specific communities.
Explore more about foundations at the Council

on Foundations.
Image: “Sidewalk Stencil: Your existence gives me hope”

by Franco Folini is licensed under CC BY-SA 2.0
Charitable giving, on the other hand, often means any gift of

money, time, goods or services to those in need. It also usually
refers to individual gifts, rather than institutional gifts from
foundations or corporations.
Both scholars and practitioners often use these two terms –

philanthropy and charitable giving – interchangeably.
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Charitable giving across cultures and faiths
Like volunteering, different groups of people

tend to give money away to charity differently.
Different parts of the country tend to give at
different rates, and “blue states” tend to give less
than “red states.” The main driver for this seems
to be religious practice. Those who attend
religious services more frequently tend to give
more often – and even give more – than those
who don’t.
Among different racial and ethnic group, Black

donors tend to donate a higher proportion of
their wealth than white donors. This trend also
holds for the Latino/a/x and Asian communities.
6.3 Why people give

One of the big challenges facing scholars who study charitable
giving and philanthropy is understanding why people donate
money to causes and organizations that they do not directly
benefit from. Classical economics would argue that charitable
giving is irrational. That is, in an effort to maximize their own
best interest, or maximizing their utility, individuals

shouldn’t be expected to give away their wealth with no
expectation of any benefit in return. There are several different
theories to explain why otherwise self-interested individuals
will give money away.
Public goods provision. Economists argue that individuals

desire a certain level of public goods in their communities
(such as education, the arts, human services), and they will
contribute their own money to support the provision of these
services up to the point where government steps in to support
the provision of the good. In this way, government provision
could be seen as crowding-out private philanthropy.3 In other
words, every dollar of government provision for a public good
will lead to donors giving one dollar less in charitable giving.
Yet, research has found that people do tend to contribute past
the point of government funding, leading to only a partial
crowding-out.4
Impure Altruism and Warm-glow. Economist James
3. Burton A. Weisbord, “Private Goods, Collective Goods: The Role of the

Nonprofit Sector Charitable Organizations,” Research in Law and Economics
Supplement 1 (1980): 139–70.
4. James Andreoni, “An Experimental Test of the Public-Goods Crowding-Out
Hypothesis,” The American Economic Review 83, no. 5 (1993): 1317–27.
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Andreoni argued that individuals are rarely purely altruistic.5

That is, they don’t engage in charitable giving with no real
expectation of a benefit. Rather, people are engaged in what
he calls impure altruism. He suggests that individuals often
give to charity because doing so makes them feel good – what
he calls a warm glow. This outcome is a powerful benefit
received by the donor that can incentivize them to give away a
part of their wealth.
Reputational Concerns. Outside of making a donor feel

good, charitable giving can also improve one’s reputation in
the community. Since people want to be seen as “good,”
charitable giving is one way someone can demonstrate that
they are a good person that can be respected.6
Signaling. Related to reputational benefits, wealthy people

might give financial gifts to organizations in order to signal, or
demonstrate, their wealth to their communities.7
Peer Pressure. Individuals are influenced by peer pressure;

they want to behave in similar ways to others. One tool that
5. J. Andreoni, “Impure Altruism and Donations to Public Goods: A Theory of

Warm-Glow Giving,” The Economic Journal 100, no. 401 (1990): 464–77.
6. David Reinstein and Gerhard Riener, “Reputation and Influence in Charitable
Giving: An Experiment,” Theory and Decision 72, no. 2 (February 1, 2012):
221–43, https://doi.org/10.1007/s11238-011-9245-8.
7. A. Glazer and K. A Konrad, “A Signaling Explanation for Charity,” The American
Economic Review 86, no. 4 (1996): 1019–28.
has been shown to influence charitable giving is called social

information – when giving behavior of others is shown to
potential donors, they tend to give in similar ways.8
Discussion: Theories of Charitable Giving
In 2013, Jen Shang and Rachel Croson published

the results from an experiment with a public
radio station conducting a fundraising drive.
During these drives, on-air personalities
encourage listeners to call-in and make a
8. J. Shang and R. Croson, “A Field Experiment in Charitable Contribution: The

Impact of Social Information on the Voluntary Provision of Public Goods,” The
Economic Journal 119, no. 540 (2009): 1422–39.
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financial contribution to support the station and

the programming they enjoy.
As part of the experiment, potential donors who

called in were randomly assigned to different
treatment groups. Some donors were informed
that a “previous donor” had contributed $75 (or
$180 or $300), then asked “How much would
you like to pledge today?” The control group in
the experiment was not given any information
about a previous donor’s gift.
Not surprisingly, donors who received

information about previous donors often gave
more than those donors who did not receive this
information.
Discussion questions:
• For donors who are calling in to the

station, what might be one motivation for
giving? Which theory or theories might
explain why people give to support public
radio?
• Which theories were Shang and Croson
using in their experiment with the
potential donors to potentially increase
their gift?
• If you were a fundraising manager, what
messages might work best if you think
people are motivated by the different
theories?
Croson, Rachel, and Jen Shang. “Limits of the Effect of Social
Information on the Voluntary Provision of Public Goods:

Evidence from Field Experiments.” Economic Inquiry 51, no. 1
(January 2013): 473–77.

Image: “Mel Aguilar at Indiana Public Radio” by susi.bsu is
licensed under CC BY 2.0
6.4 How else do

organizations raise money?
Believe it or not, individual, foundation and corporate donors
give less than 20% of the money that flows into the nonprofit
sector every year. Donations from individuals only account for
9% of the nonprofit sector’s revenue.
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Image: Nonprofit Impact Matters [pdf] (2019) by the National Council of

Nonprofits
What surprises you about the image above? To me, the fact
that private foundations only account for 2.9% of the revenue
of the nonprofit sector is surprising. Corporate donations, too,
account for less than one percent!
Instead, the vast majority of the money that nonprofit

organizations receive every year – upwards of 80% of it – comes
from either government contracts/grants or fees for
service.9 Government contracts and fees for service are often
called earned income, where there is a payment of some sort
9. Mark Hrywna, “80% Of Nonprofits’ Revenue Is From Government, Fee For

Service,” The NonProfit Times, September 19, 2019,
https://www.thenonprofittimes.com/news/80-of-nonprofits-revenue-is-from-
government-fee-for-service/.
in exchange for a service provided by the organization. Under

the fees for service category above, the largest proportion are
the fees private insurance pays for medical care and tuition
for nonprofit colleges and universities. However, it can also
include tickets to a musical concert, or a museum, or the sales
at thrift stores run by nonprofit organizations.
One form of earned income, and one that is growing, is social

enterprises. We will discuss social enterprises in much more
detail in Chapter 8, but for the purpose of fundraising, a social
enterprise can be any organization that uses the market to
create social value. In this case, any nonprofit that seeks to
generate additional money through sales of a good or service
could be included in our definition of social enterprises.
Can Philanthropy Solve Social Problems?
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As we have seen above, donations from

individuals are only 9% of the revenue that flows
into the nonprofit sector. Many scholars and
nonprofit leaders have pointed out that even a
significant amount of philanthropy is often not
adequate to solve the problems communities
face – we discussed this in Chapter 2 when we
talked about voluntary failure.
Taking things a step farther, some scholars and

community leaders challenge the notion that
philanthropy is always a force for good and have
become critical of the role of philanthropy in our
society. Consider these facts:
• Most charitable giving does not go to

organizations that serve the poor or most
needy.
• Large-donor philanthropy from individuals
or private foundations rarely fund
advocacy efforts to push for significant
social or policy change and dismantle
systems of oppression like racism.
• Wealthy individuals give a smaller
proportion of their income to charity than
middle-class and working-class
households.
• Our tax laws regarding charity benefit the
wealthy more than middle-class and
working-class families. Only the most
wealthy are able to receive the tax
deduction promised by many charitable
organizations for their gifts. Individuals
that do not itemize their expenses on their
annual tax returns – which are the
majority of those in the United States –
receive no benefit from their charitable
gifts.
Discussion Questions:
• Should we just give up on philanthropy as

a way to address social problems?
• With so much attention to the social
issues many communities continue to face,
why have these inequities in charitable
giving and beneficiaries been allowed to
persist?
• What might be some policy changes to
encourage more charitable giving to those
most in need?
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• What are other options to ensure that

those most in need are able to get the
services they would benefit from?
7.
SOCIAL MOVEMENTS
AND ADVOCACY
Learning Objectives
• Read about the theories of social movements

and advocacy.
• Understand the role of nonprofit
organizations in social movements and
advocacy.
• Practice advocacy skills.
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104 | SOCIAL MOVEMENTS AND ADVOCACY


So far in this textbook you have learned about the service role
of nonprofit organizations. You’ve also learned about the ways
that nonprofits partner with government to deliver public
goods. However, nonprofit organizations are also central
players in movements for social and policy change. Sometimes
they engage in policy change in partnership with
government by serving on commissions, task forces and
committees alongside public officials. Other times they are in
conflict with government by engaging in efforts to change the
status quo and improve public policy to solve social issues,
protect the environment and improve human rights
protections. Some of these efforts are part of larger social
movements, which are often made up of many nonprofit
organizations, businesses and community leaders.
As part of their advocacy efforts, nonprofits help to inform the

SOCIAL MOVEMENTS AND ADVOCACY | 105
public about issues before policymakers and help to educate

policymakers about issues facing communities. They also
often represent historically marginalized communities before
policymakers and identify potential policy solutions.
In this chapter, we will define advocacy and social movements,

describe the roles of nonprofit organizations in engaging in
these activities and efforts and learn about different advocacy
tactics organizations and individuals can support to create
change.
Activity
Brainstorm a list of all the ways that individuals
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and organizations can speak up on community or

policy issues. Identify organizations that engage
in one or more of the activities you listed.
Image: “Advocacy and Mobilization Workshop”

by inclusivesecurity is licensed under CC BY 2.0.
7.2 Defining Advocacy

Simply put, advocacy is speaking or acting on the behalf of
others.”1 It is an umbrella term that includes many different
types of advocacy activities – some of which are regulated by
the United States government, depending on the type of
nonprofit an organization is.
7.3 How Nonprofits Advocate

According to Kelly Leroux and Mary Feeney2, nonprofit
United States (New York: Routledge, 2015).
2. LeRoux and Feeney.
organizations engage in several different roles in their

advocacy:
• Representation. Nonprofits represent the interests of

certain groups before policymakers. Sometimes, that can
be taken literally by representing clients in courts
through litigation or lawsuits. However, nonprofits
often do this through direct lobbying – in Congress,
state legislatures, or at the local level – or by presenting
petitions or public testimony to decision makers.
Through representation, nonprofit organizations help to
raise community issues before policymakers and offer
solutions for change.
• Political Mobilization. Nonprofit organizations help
to mobilize the public. They might do this by organizing
petition drives, encouraging people to vote or attend
public hearings and rallies or by recruiting and training
individuals to lobby their own legislators or do media
outreach. Through political mobilization, nonprofit
organizations help connect the public to their elected
officials.
• Education. Nonprofits also have an important role in
education around policy and political issues. They help
inform the public about how their representatives vote
on particular issues, and they help increase awareness
around issues they are working on. Some nonprofits,
such as think tanks like the Brookings Institution and
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other organizations, may conduct their own policy

research, researching problems and identifying potential
policy solutions.
It’s important to recognize that nonprofit organizations may

engage in one or more of these roles simultaneously.
IRS Regulation of Advocacy

In Chapter 1, we discussed the different types of
tax-exempt nonprofit organizations defined by
the Internal Revenue Service (IRS). The type of
nonprofit an organization chooses to become
may have implications for what type of advocacy
tactics that organization can get involved in.
Specifically, the IRS regulates the role of
nonprofits in direct lobbying and
electioneering (campaigns for office) activities.
Lobbying is defined by the IRS as “attempting to
influence legislation. A 501(c)(3) charitable
organization may engage in some lobbying, but
too much lobbying activity risks loss of tax-
exempt status.” Note that the IRS doesn’t define
what “too much lobbying” is. This definition also
doesn’t include meeting with agency secretaries
(such as “lobbying” the Environmental Protection

Agency). So, in short, lobbying is ONLY about
talking to a legislator about legislation (a
specific bill). On the other hand, 501(c)(4) social
welfare and mutual benefit organizations, along
with several other types of organizations, are
allowed to engage in unlimited direct lobbying.
501(c)(3) charitable organizations also are not
allowed to engage in any electioneering
activities except for voter registration, get out
the vote drives and a limited amount of voter
education as long as it doesn’t endorse a
candidate.
501(c)(4) groups can engage in some

electioneering, including endorsing candidates
and giving money to other nonprofits such as
Political Action Committees (PACs). Again, the
IRS doesn’t provide a threshold to determine
what amount is “too much.”
Because of the ambiguity of some of these rules

around advocacy, some groups form more than
one nonprofit in order to engage in different
activities. For example, HRC (in our example
above) has a 501(c)(3), a 501(c)(4) and a Political
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Action Committee of its own (which allows them

to give money directly to candidates for office).
Although each of these organizations are legally
autonomous, they often operate under a single
mission and sometimes are supported by the
same group of staff members.
As a nonprofit manager, it’s important to know

which type of nonprofit your organization is and
what advocacy activities you are able to engage
in.
Activity
The Human Rights Campaign is a national

LGBTQ (lesbian, gay, bisexual, transgender and
queer) advocacy organization.
Their mission is “to end discrimination against

LGBTQ people and realize a world that achieves
fundamental fairness and equality for all. HRC
envisions a world where lesbian, gay, bisexual,
transgender and queer people plus community
members who use different language to describe
identity are ensured equality and embraced as
full members of society at home, at work and in
every community.”
Following a wave of anti-LGBTQ legislation

introduced in state capitals across the country in
2022, HRC was not only working at the federal
level in Washington, D.C., but was also helping to
organize and represent the LGBTQ community
nationwide, from Juneau, Alaska to Tallahassee,
Florida.
Review HRC’s website. Which role(s) do they

play in advocacy? Refer to Leroux and Feeney’s
typology of representation, mobilization and
education.
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7.4 Advocacy Activities

Take a minute to think about all the ways that you or your
friends and family have worked to “speak on behalf of a cause.”
Can you list some of them?
Organizations may use many different types of activities to

advance their policy agenda or to stop legislation or laws they
oppose. Below is just a sampling. Can you think of others?
• Lobbying – Lobbying is just one form of advocacy

activity and one of the only ones that the IRS and some
states try to regulate and monitor. Review the box on
the IRS definition of advocacy for more information.
• Litigation – Many nonprofits file lawsuits against a
local, state or federal government or agency, or
sometimes even a corporation. Sometimes nonprofits
will file suit in order to enforce implementation of a law
or to stop a law from taking effect. They may also seek to
change the law through judicial action.
• Grassroots lobbying – There are a lot of activities that
fall under this category, including lobby days, petition
gatherings, phone banking and letter writing campaigns.
Through these activities, nonprofits help citizens
communicate their opinions, values and beliefs with
lawmakers.
• Raising awareness – Nonprofits are often very active in
educating the public about issues before decision
makers. Activities that raise awareness may support
grassroots lobbying, but they can also be used primarily
to help sway public opinion or educate communities on
particular issues. These types of tactics include town hall
meetings or other types of community gatherings and
events, rallies and marches, media outreach and
engagement, newsletters or social media posts or
dissemination of policy research.
• Electoral activities – Although electoral activities, like
lobbying, are regulated by the IRS, nonprofits often are
leading actors in candidate and ballot measure
campaigns. They help register voters, educate them on
the issues and turn them out to vote. Most nonprofits
are also able to host nonpartisan candidate forums [pdf],
where all candidates for office are invited to share their
positions on the issues facing the community. Some
types of nonprofits are even able to endorse candidates
and provide them campaign contributions or work on
their behalf.
• Direct Action and Civil Disobedience – Sometimes
using the above tactics isn’t successful in winning the
social or policy change that organizations seek. At other
times, issues are too urgent to wait for Congress or a
state legislature to act. And sometimes communities are
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frustrated with the lack of action by decision makers. In

these cases, nonprofit organizations may sponsor certain
types of direct action activities. These activities are
designed to generally raise awareness by disrupting
public spaces, and may include street blockades, holding
a sit in at a local business or government office, strikes,
boycotts and tree sitting. The goals of these activities are
usually to generate public attention and support
through the media and also increase pressure on
lawmakers to act quickly.
While some nonprofit organizations may focus on one

advocacy technique, many organizations engage in several
tactics, sometimes simultaneously. Nonprofit boards of
directors and staff are tasked with identifying which tactics
may be appropriate based on their mission and goals and their
stakeholders’ expectations.
Activity
Your voice matters too! Think about an issue you

are concerned about. Spend a few minutes
researching the basic facts of the issue. Consider
exploring the website of a nonprofit that is
working on the issue you care about.
Then, write a short letter to the editor to your

local newspaper.
Letters to the editor are usually only 100-250

words, under your own name, that summarize
an issue, point out the relevant facts people
should understand and often suggest a possible
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solution or a different point of view. Review

some examples at The Washington Post before
you begin.
Image: “Newspapers” by Lydia licensed under a CC BY 2.0

license.
Can Nonprofits Solve Social Issues Through

Advocacy?
Although many, if not most, nonprofits engage

in some form of advocacy efforts on behalf of
their organization or beneficiaries, community
and members, there have been growing
demands for nonprofits to do more. This is

particularly the case when nonprofits are
hesitant to be adversarial with government for
fear of jeopardizing their tax-exempt status,
losing donor support or being perceived as too
polarizing, “political” or partisan. Instead, these
groups may seek to maintain a more neutral
position when it comes to policy or social
change, particularly when a topic is deemed
controversial, such as racism, sexism,
homophobia, income inequality, climate change,
immigration, LGBTQ rights and others.
Some nonprofit activists and scholars are calling

for the nonprofit and philanthropic sector to be
more willing to stand together in an effort to
dismantle the historical systems that are
responsible for bias, discrimination and
inequality. Others have called for the nonprofit
sector itself to “do better” in creating just and
equitable organizations. Read one or both of the
articles found at the links in this paragraph and
think about the following questions:
• What are the risks to nonprofit

organizations if they appear “too political”
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to some of their supporters? What are the

benefits of appearing to stay neutral in
policy battles?
• Should nonprofits consider donor wishes
when thinking about advocating on behalf
of their beneficiaries? How should
managers balance the wishes of their
different stakeholders?
• Should nonprofits, regardless of their
mission, be involved in social or policy
change? What if they only have limited
resources to do so? Should they move
money away from services to advocacy?
Why or why not?
8.
SOCIAL ENTERPRISES
AND
ENTREPRENEURSHIP
Learning Objectives
• Define how various scholars conceptualize

social enterprises.
• Recognize the relative strengths and
weaknesses of social enterprises in creating
social value.
• Consider the role of social enterprises in a
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120 | SOCIAL ENTERPRISES AND ENTREPRENEURSHIP
global context.
Image: Japanese entrepreneurs at the dialogue with World Bank President

Jim Yong Kim on solutions for scaling-up social enterprises. From left: Aiko
Doden, Moderator – Senior Commentator NHK; Atsuyoshi Saisho,
e-Education Project; Hiroko Samejima, Representative Director, andu amet.
Photo: “World Bank Photo Collection” by Antony Tran / World Bank is
licensed under CC BY-NC-ND 2.0.
SOCIAL ENTERPRISES AND ENTREPRENEURSHIP | 121

Social enterprises are a unique form of organization that have
captured the imagination of scholars, nonprofit practitioners
and entrepreneurs over the last few decades. Yet, they can be
hard to define because they mix elements from the nonprofit
and business sectors. In this chapter, we will attempt to
develop a working definition of social enterprises and discuss
their relative strengths and weaknesses compared to other
forms of social value creation.
8.2 What are Social

Enterprises?
Like so many other terms, social enterprises defy an easy
definition. One reason is because a social enterprise can be
any type of organization and can include a variety of different
types of activities. One definition would be “the use of
nongovernmental, market-based approaches to address social
issues.”1
1. Janelle A. Kerlin, “Social Enterprise in the United States and Europe:

Understanding and Learning from the Differences,” Voluntas: International
Journal of Voluntary and Nonprofit Organizations 17, no. 3 (September 28, 2006):
247, https://doi.org/10.1007/s11266-006-9016-2.
www.dbooks.org
It’s important to note that social enterprises can be for-profit,

nonprofit or even public organizations. Although each of
these forms may have different ways to generate revenue
(grants for nonprofits versus investors for businesses), and
would include different forms of organizational governance
and accountability, what distinguishes them as enterprises is
that they use market mechanisms for social good.
Because of this blending and blurring of for-profit and

nonprofit organizations in structure, organizational form and
vision, social enterprises are often considered to be hybrid
organizations.2
Activity
Take a few moments to review the two social

enterprises below.
Homeboy Industries, based in Los Angeles, has a

mission to provide “hope, training, and support
to formerly gang-involved and previously
incarcerated people, allowing them to redirect
2. Julie Battilana et al., “In Search of the Hybrid Ideal,” Stanford Social Innovation
Review, 2012, https://ssir.org/articles/entry/in_search_of_the_hybrid_ideal.
their lives and become contributing members of

our community.”
BioLite is a “social enterprise that develops,

manufactures, and distributes advanced clean
energy technologies to off-grid households
around the world.”
Discussion Questions:
• One is a for-profit and one is a non-profit.

How can you tell? Does it matter?
• Based on the below table in this chapter,
how would you categorize their activities?
What type of social enterprise is each
organization?
8.3 What is Social

Entrepreneurship?
The study of entrepreneurship in the United States dates back
to the beginning of the study of businesses – the early 20th
century. An entrepreneur is someone who “combines existing
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resources in new and interesting ways.”3 Entrepreneurs are

often founders of their own businesses, and as such, assume
all the risks and rewards that may come with that.
Entrepreneurship is also often linked to the introduction of
new products and services.4
Social entrepreneurs, on the other hand, are similar in many

ways to traditional business entrepreneurs. However, their
goal is to create social value as well as, or instead of, profit.5
Social value is a contribution to the welfare or well-being of
society.6 Their motive may be not only to make money for
themselves or their investors, but also to do good.
Social enterprises can be defined as an activity of the social
3. Joseph A. Schumpeter, The Theory of Economic Development (Cambridge, MA:

Harvard University Press, 1934).
4. Rachel Lee Gross, “What Is an Entrepreneur?,” The Balance (blog), December 30,
2021, https://www.thebalance.com/what-is-an-entrepreneur-5187721.
6. Ana María Peredo and Murdith McLean, “Social Entrepreneurship: A Critical
Review of the Concept,” Journal of World Business 41, no. 1 (February 1, 2006):
56–65, https://doi.org/10.1016/j.jwb.2005.10.007.
entrepreneur, as they design and develop a nonprofit or

business venture that will benefit others.
8.4 Activities of Social

Enterprises
Like nonprofit organizations, social enterprises are often
involved in a variety of activities.
• Commercial activities: Many social enterprises sell

goods and services to help fund their social mission. For
example, for every pair of socks that Bombas sells, they
contribute one pair of socks to unhoused individuals.
Hot Bread Kitchen, on the other hand, helps train
immigrant women to bake and sell bread, a profession
most often held by men in the United States and
Europe, but women elsewhere in the world. Yet, this
definition of buying and selling goods and services can
also be broadly defined and even include more
“traditional” types of nonprofits like Goodwill or the
Salvation Army.
• Corporate philanthropy: For-profit businesses may
engage in activities that help advance social missions.
Probably one of the best examples is Ben and Jerry’s Ice
Cream and their Foundation, which takes a proportion
of their profits and redistributes it to the community in
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the form of grants.

• Microfinance: Related to commercial activities,
microfinance organizations are unique in that they
provide financial services (most often loans) to
individuals living in poverty around the world. These
loans, sometimes just a few dollars, are provided with the
goal to help lift a person out of poverty. Groups like
Grameen Bank and Kiva are examples of microfinance
organizations.
Perhaps another way to think about how to categorize social

enterprises is by how they raise money compared to how
they distribute money to the community.
In the table below, enterprises have been broken into categories

based on “who pays” and “who benefits” from the social
mission of the organization.
Model Examples of Enterprises
Customer is the beneficiary Grameen Bank, Kiva
Customer pays for the beneficiary (aka cross-subsidy) TOMS Shoes, Warby Parker, Ben & Jerry’s
Customer buys from the company employing beneficiary Homeboy Industries, Hot Bread Kitchen
Customer buys from company supplied by beneficiary Fair Trade Coffee
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7
Adapted from Ebrahim et al.
Ultimately, social mission organizations can be

conceptualized as any form of organization (nonprofit,
business or government) that seeks to create social value or
meet social needs or problems.8
8.5 Social Enterprises vs.

Corporate Social
Responsibility
You may have read the above section wondering what the
difference is between social enterprises and companies that
engage in a corporate social responsibility (CSR) program,
such as promoting a living wage, changing products to be
more environmentally friendly or providing grants to the
community. The past several decades have also seen a rise in
CSR efforts to meet societal expectations and demands about
7. Alnoor Ebrahim, Julie Battilana, and Johanna Mair, “The Governance of Social
Enterprises: Mission Drift and Accountability Challenges in Hybrid
Organizations,” Research in Organizational Behavior 34 (2014): 81–100,
https://doi.org/10.1016/j.riob.2014.09.001.
8. Björn Schmitz, “Social Entrepreneurship, Social Innovation, and Social Mission
Organizations: Toward a Conceptualization,” 2015, https://doi.org/10.4135/
9781483398082.N4.
ethical corporate behavior and greater social responsibility.9 So

what is the difference?
While traditional corporations engaging in corporate social

responsibility still have profit maximization and
shareholder value at their core, many social enterprises have
simultaneous goals of profit and increased social value.
Although this line can sometimes be blurred, one of the main
ways that these ventures differentiate themselves as social
enterprises is through new organizational forms like benefit
corporations, which we discuss in the next section.
8.6 Benefit Corporations and

“B-Corps”
Looking at traditional business models, some entrepreneurs
and business leaders have wanted to do more and form a social
enterprise. Some states in the U.S. have started to recognize
for-profit social enterprises as distinct from other for-profit
businesses – and define them as benefit corporations. (It’s
important to note that nonprofit social enterprises are still
9. Suntae Kim and Todd Schifeling, “Good Corp, Bad Corp, and the Rise of B
Corps: How Market Incumbents’ Diverse Responses Reinvigorate Challengers,”
Administrative Science Quarterly, April 15, 2022, 00018392221091734,
https://doi.org/10.1177/00018392221091734.
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generally regulated as nonprofits, but may be required to file

additional financial filings and even pay some taxes depending
on their activities and state and federal law.)
One way that states recognize benefit corporations is by

certification through third party organizations like B-Lab (see
the box below). To become certified, enterprises go through an
organizational audit to ensure that they are meeting the bar for
creating “social value.”
B Lab, an international benefit corporation

certification organization, is a “nonprofit network
transforming the global economy to benefit all
people, communities, and the planet.” They are
one of a few organizations that can provide
benefit corporation certification to businesses.

Watch the video above and explore B-Lab’s

website. Then, think about the following
questions:
1. How are “B-Corps” different from typical

businesses?
2. Are benefit corporations and more
traditional corporate social responsibility
programs different or the same? Why?
3. What might be some differences between
benefit corporations and social
enterprises. Are they the same?
The benefits of registering as a benefit corporation include

less pressure from investors to maintain high profits at the
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expense of paying a living wage, protecting the environment,

sourcing more sustainable products or giving back to the
community. Benefit corporations are also able to promote
themselves as having met the certification standards, giving
consumers the opportunity to choose a business that is also
working to create social good.
Social Enterprises are Not Social Justice?
Social enterprises have caught the world’s

attention over the past several decades by
offering exciting and innovative solutions for
change. However, some have argued that social
enterprises and entrepreneurships aren’t
adequate to lead social change broadly speaking
– the kind of systems change in politics and

power that is needed to reduce or eliminate
social and economic inequality and discrimination
or to respond to climate change, just to name
two.
Read the article Social Enterprise is Not Social

Change by Ganz, Kay and Spicer and discuss the
• The authors argue that solving social

problems requires vigorous public debate
and democratic processes. Are social
enterprises compatible with that, or do
they try to circumvent those institutions?
• Do social enterprises have an obligation to
engage in these debates? Or is their
obligation to stay focused on their
enterprise?
• If not social enterprises, who or what else
should advocate for social change?
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9.
INTERNATIONAL
ORGANIZATIONS
Learning Objectives
• Understand the scope of the international

nonprofit sector.
• Define the roles of international nonprofit/
nongovernmental organizations.
• Discuss the unique ethical concerns facing
international nonprofits.
INTERNATIONAL ORGANIZATIONS | 135

Much of this book has been focused on the nonprofit sector
in the United States – although much of the content can be
applied or adapted to international organizations as well.
However, this chapter will look outside the borders of the
United States and explore the diversity of nonprofit
organizations that are active internationally. Many of these
groups are registered in the United States (or another
“western” country) as nonprofit organizations, but many
others are founded and registered in the countries in which
they work.
In an international context, nonprofits are often called NGOs,

or nongovernmental organizations, signifying their roles as
independent of both the state (government) and market
sectors, much like nonprofits in the United States. They can be
very large, multi-billion dollar organizations that work across
multiple countries or small community-based
organizations (CBOs) that work only in a single community
or region.
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136 | INTERNATIONAL ORGANIZATIONS
A word on vocabulary:
When discussing the work of nonprofit

organizations internationally, it is easy to fall into
using language that can perpetuate stereotypes
in the “developing world.” I prefer to use the
phrase low-income countries to describe
nations that struggle with poverty and
inequality. There are historical reasons why
these countries struggle with economic and
political development – reasons that have often
been outside their control, including colonialism.
If you’d like to read more about this issue, here is

a good source for some background on these
terms from the World Bank, as well as a strong

argument for updating our vocabulary, published
by NPR (National Public Radio).
Image: “Bound Together Bookstore * San Francisco Sessions

2001 *” by Sterneck is licensed under CC BY-NC-SA 2.0.
9.2 INGOs Versus NGOs

Similar to nonprofit organizations in the United States, the
types of nongovernmental organizations globally are diverse,
although internationally many groups work on humanitarian
aid, economic development, environmental protection or
human rights. International NGOs (INGOs)1 are groups
that work across borders – sometimes by working in more
than one country, sometimes because they raise money in one
country (such as the United States) and spend that money
in another country. One example of an INGO is CARE
1. Stephen Commins, “INGOs,” in International Encyclopedia of Civil Society, ed.

Helmut K. Anheier and Stefan Toepler (New York, NY: Springer US, 2010),
858–64, https://doi.org/10.1007/978-0-387-93996-4_556.
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International, an organization founded after World War II.

This group now works in more than a dozen countries around
the world providing humanitarian relief, economic
development and working towards social justice.
Watch the video of CARE International UK in Mozambique

as they assist in the humanitarian response to a hurricane in
2019.

NGOs, on the other hand, are organizations that work, raise

money and are headquartered in a single country. Equitable
Cambodia is an example of an NGO, based in Cambodia,
working for peasants rights and social justice causes.
Although INGOs and NGOs are often used interchangeably

to describe nonprofit organizations around the world, it’s
worthwhile to distinguish them as either those who work
across borders (INGOs) or those that are based and work in a

single country (NGOs).
Because the registration of NGOs is different from country

to country, it is very difficult to get a handle on how many
NGOs and INGOs are active around the world. One recent
estimate suggested there are at least 75,000 International
NGOs, and on a country-by-country level NGOs can run in
the millions. In 2009, it was estimated that India had over
three million NGOs, while China has an estimated 460,000
registered NGOs.2 Tracking employment in the INGO and
NGO sector is also difficult, but it’s clear millions of people are
actively working as either volunteers or staff for INGOs and
NGOs globally.
9.3 Theories of International

NGOs
Like the nonprofit sector more broadly, NGO and
International NGO formation can be defined by the same
theories we discussed in Chapter 2. That is, they are impacted
by market and government failure, contract failure and
2. David Lewis, Nazneen Kanji, and Nuno S. Themudo, Non-Governmental

Organizations and Development, 2nd ed. (London: Routledge, 2020),
https://doi.org/10.4324/9780429434518.
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voluntary failure. However, in many lower-income

countries, the scale of government failure can be more
significant than it is in the United States or other wealthier
nations, as communities struggle to provide basic needs like
clean water, sanitation, schools or hospitals.
Social Origins Theory3 is another helpful theory to use to

compare the nonprofit sectors across countries. This theory
suggests that the shape of the nonprofit or NGO sector in
each country has been defined by the historical, social, political
and legal contexts of that nation. For example, a country that
provides a stronger social safety net for its population may
offer less of those types of NGOs than a country that has no
social safety net whatsoever for its poor population.
9.4 What INGOs and NGOs Do

NGOs play a variety of roles in development, humanitarian
and social justice work. Lewis4 describes three primary roles:
implementer, catalyst and partner. These terms are not
3. Lester M. Salamon and Helmut K. Anheier, “Social Origins of Civil Society:

Explaining the Nonprofit Sector Cross-Nationally,” Voluntas: International
Journal of Voluntary and Nonprofit Organizations 9, no. 3 (1998): 213–48,
https://doi.org/10.1023/A:1022058200985.
4. David Lewis, Non-Governmental Organizations, Management and Development
(Routledge, 2014).
mutually exclusive, and organizations can engage in more than

one role at any given time.
• Implementer organizations gather and distribute goods

and services to those in need. This covers a wide swath of
organizations engaged in humanitarian aid responding
to disasters, groups that are contracted by governments
to provide particular services or those that grant
charitable dollars to other organizations.
• Catalyst organizations seek to bring about social or
political change. Change can be focused on helping to
empower local communities or bringing about change
with government, with businesses or among funders.
• Partner organizations work in collaboration with other
organizations, including government or other NGOs.
This role recognizes that NGOs are rarely acting in a
vacuum.
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Above you watched a short video about the

work of CARE International UK in responding to
a humanitarian crisis. Take a few minutes to
reflect on the video and review their website.
• Would you consider CARE to be an

implementer, catalyst or partner in the
work that they do? Why?
9.5 The Management of

INGOs
One way to think about the management of INGOs is that
“the global is local.” That is, effective NGO managers must
recognize the political, social, cultural, technological and
economic context in which they are working as well as
understand the management skills needed to run an
organization. Below is one way to consider the different
dimensions of INGO management.
Political Factors (P)

Economic Factors (E)
Key Question: What aspect of a
country’s political and legal Key Questions: What aspects of
environment could be the economic environment will
beneficial or detrimental to our enable or constrain our work?
mission, strategy and What micro and macro
operations? economic factors do we need to
consider?
Socio-Cultural Factors (S)

Technological Factors (T)
Key Questions: How will the
Key Questions: How is the
society, its traditions and
country’s technological
culture affect our mission,
environment going to affect our
strategy and operations? How is
mission, strategy and
the host country’s socio-
operations? What innovations
cultural landscape different
are available/unavailable?
from ours?
Adapted from Aguilar, Francis J. (1967) “Scanning the Business Environment”.

Macmillan.
• The political environment – INGO leaders need to be

conscious of the different political structures and
regimes that are active in the country in which the
organization is working. Take, for example, Gaza Sky
Geeks in occupied Palestine. This organization does its
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work to enable STEM education and entrepreneurship

in one of the most politically contested areas of the
world and has to negotiate with both the Palestinian
Authority and the government of Israel. Their work in
the region relies upon managing the political context
successfully.
• Additionally, INGO managers should pay attention to
local politics, as many lower-income countries struggle
with political instability that can lead to changes in the
country’s leadership, civil unrest or even violence.
• Economic Issues – INGOs need to be conscious of the
economy of the country in which they are working. If
they are raising money in the U.S., they may need to
consider the volatility of exchange rates, the average wage
of the country’s population and the cost of operations
there. For example, Argentina has struggled with high
inflation rates for the past several decades, leaving the
U.S. dollar more powerful, but making basic needs
much more expensive for the communities that
organizations may work with. This may also impact the
economic security of the staff you employee in the
country.
• Socio-Cultural Issues – Different people around the
world approach problems differently and have different
communication styles, gender norms, religious beliefs,
social needs and ideologies. Cultural awareness must also
take into account how relationships, networks and trust
are manifested among different groups of people.

Someone who is not from a particular country may not
only experience culture shock, but may also struggle to
implement plans and goals that are not seen as relevant
or appropriate culturally.
• Technological Issues – Many lower-income countries
without a solid infrastructure may struggle to offer their
citizens consistent electricity, telephone service or
internet access. The population may have little to no
access to consumer banking as well. Some INGOs seek
to focus on these infrastructure issues.
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Activity: So You Have an Idea
Looking at the problems facing the world,

particularly in low-income countries, it’s easy to
think you have struck on an idea that can make a
difference. Yet, there are thousands of failed
projects scattered around the world. Why does
this happen? What can you do to avoid similar
pitfalls?
Watch this video and then discuss the


• Do you think that “aid has failed?”

• What are key lessons that aid and
development workers should consider?
• (Feel free to review Engineers Without
Borders website: https://www.ewb-
usa.org/)
9.6 Ethical Considerations of

INGOs
INGOs may seem like saviors or heroes, addressing key needs
of communities around the world; however, some scholars and
practitioners have criticized INGOs for enabling an unequal
status quo. Rather than being advocates for changes to
political and economic systems that prevent community
empowerment and participation, they simply add a salve to
deeply rooted inequities and injustices.5
It’s important to reflect on some of the more controversial

aspects of INGO work around the world. At a minimum,
INGO employees, volunteers and donors should recognize
these tensions and seek to mitigate the challenges these
critiques provide.
• North-South Tensions – Most wealthy countries are

in the northern or western hemispheres, while most
middle and low income countries are in the southern
5. Jennifer Alexander and Kandyce Fernandez, “The Impact of Neoliberalism on

Civil Society and Nonprofit Advocacy,” Nonprofit Policy Forum 12, no. 2 (July 1,
2021): 367–94, https://doi.org/10.1515/npf-2020-0016.
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hemisphere. It’s also the case that most southern

countries have been colonized by northern powers at
some point over the last five centuries. These facts lead
to what some scholars call North-South Tensions.6
Watch this video for a short primer on this topic: (note this
video uses the first world vs. third world language)

Since northern nations generally fund humanitarian

and development efforts in the global south, this can
lead to tensions around power and control, particularly
6. Darcy Ashman, “Strengthening North-South Partnerships for Sustainable

Development,” Nonprofit and Voluntary Sector Quarterly 30, no. 1 (March 1,
2001): 74–98, https://doi.org/10.1177/0899764001301004.
over decision-making about where and how the money

is spent. Some leaders may resent foreign intervention in
their country. As one southern NGO leader stated, “We
have come to regard western NGOs as ‘international’ and
the rest of the world as ‘local’. When so-called ‘northern
NGOs’ engage with ‘southern actors’ it’s rarely a
partnership, it’s more of a sub-contract.”7
• Lack of cultural competency – Until relatively

recently, many INGOs were staffed by Americans,
Europeans or others from higher-income countries. This
not only created power imbalances, but also led to
organizations employing staff that had very little cultural
or practical expertise in the country they were working
in. This has started to shift over the past two decades
with an increasing number of INGOs hiring most of
their international staff from the countries where the
organization is working.8 Some organizations are even
starting to move their global headquarters to southern
cities, such as Oxfam International’s recent move to
Nairobi.9 The benefit of this approach is to help
7. Louise Redvers, “NGOs: Bridging the North-South Divide - World | ReliefWeb,”

reliefweb, June 8, 2015, https://reliefweb.int/report/world/ngos-bridging-north-
south-divide.
8. Donna Bryson, “Diversifying NGO Leadership (SSIR),” 2013, https://ssir.org/
articles/entry/diversifying_ngo_leadership.
www.dbooks.org
organizations offer solutions more attuned to local

needs. However, diversification can lead to new
challenges, including cultural and language barriers
between “northern” and “southern” staff, strategic
decision-making in multiple contexts, staff from
multiple countries working cross-culturally and inequity
regarding pay.
• Paternalism – International NGOs have also been
criticized for being paternalistic, believing they know
what’s right for the communities they are serving
without any feedback or input from the local
population. This is related to the idea of white savior
complex, which is where a white person, motivated by a
sense of superiority, seeks to help or rescue people of
color or members of their community.10 In other words,
it’s when a white (or “northern”) person feels that they
somehow inherently have the skills, knowledge or
expertise to know a better solution to a problem than the
people who have been impacted by the problem. While
this can be a problem in the nonprofit sector in the U.S.,
9. Sebastian Forsch, “Moving to the Global South: An Analysis of the Relocation of

International Ngo Secretariats,” St Antony’s International Review 13, no. 2
(February 28, 2018): 159–86.
10. Murphy, “White Savior Complex Is a Harmful Approach to Providing
Help—Here’s Why,” Health, September 20, 2021, https://www.health.com/
mind-body/health-diversity-inclusion/white-savior-complex.
it is exacerbated in the global south when Americans, or

other staff members or volunteers, travel to there on
behalf of an organization that funds a project. This can
lead to significant power imbalances, discrimination and
bias in decision-making about the project, which can
lead to project failure or even do real harm to the
community.
International Volunteering
Prior to the Covid-19 pandemic, up to a million

Americans travelled abroad every year to
volunteer with International NGOs, faith-based
groups and local communities. This type of
volunteering is sometimes called voluntourism
– as these opportunities often promise authentic
www.dbooks.org
cultural exchange within an immersive

experience. There are even organizations that
will help arrange various voluntourism
opportunities for you, for a fee!
Yet, others caution those who may want to

travel abroad to volunteer or work. To these
scholars, practitioners and community leaders,
voluntourists are really the ones benefiting, not
the communities being served.
Read this article and watch the below videos.

Then, reflect on the provided questions.
Videos:


• Who is really benefiting when you

volunteer abroad? What benefits might
you gain? What about the community you
worked with?
• What do you think of voluntourism as
“social currency?”
• How can organizations that work with
international volunteers leverage the
energy and passion of their visitors to also
best serve their communities?
www.dbooks.org

Introduction To The Nonprofit Sector

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Introduction to the

1.1 What are nonprofit organizations? 6

1.2 What types of organizations are 9

1.3 Further defining nonprofits 18

1.4 Summary and Activities 20

2.1 Chapter Introduction 23

2.2 The “Four Failures” 24

2.2 Interdependence Theory 35

2.3 Social Origins Theory 36

3.1 Chapter Introduction 40

3.2 The nonprofit mission 41

3.3 Nonprofit Accountability 44

3.4 Nonprofit Ethics 47

4.1 Chapter Introduction 54

4.2 Shape(s) of Nonprofit-Government 55

4.3 Nonprofit organizations as partners 55

4.4 Benefits and Challenges of 63

4.5 Nonprofits as Advocates and 67

5.1 Chapter Introduction 71

5.2 Defining volunteering 73

5.3 Why Do People Volunteer 76

5.4 Valuing Volunteering 78

5.5 Considerations for Managers 81

6.1 Chapter introduction 87

6.2 Defining philanthropy and charitable 88

6.3 Why people give 92

6.4 How else do organizations raise 97

7.1 Chapter Introduction 104

7.2 Defining Advocacy 106

7.3 How Nonprofits Advocate 106

7.4 Advocacy Activities 112

8.1 Chapter Introduction 121

8.2 What are Social Enterprises? 121

8.3 What is Social Entrepreneurship? 123

8.4 Activities of Social Enterprises 125

8.5 Social Enterprises vs. Corporate 128

8.6 Benefit Corporations and “B-Corps” 129

9.1 Chapter Introduction 135

9.2 INGOs Versus NGOs 137

9.3 Theories of International NGOs 139

9.4 What INGOs and NGOs Do 140

9.5 The Management of INGOs 142

9.6 Ethical Considerations of INGOs 147

This project was funded by Open Oregon Educational

Cover image is: “Nonprofit” by Sharon Sinclair (EKG

Image: “‘Volunteer Point’” by Stefan 1981 is licensed under CC BY-NC-ND 2.0.

The study of nonprofit organizations and the nonprofit sector

Let’s look at some recent examples:

• The Covid-19 pandemic, and the 2022 inflation that

communities, from housing to food insecurity. As stated

One or more interactive elements has been

• On the other hand, in 2021, The New York Times

As these examples demonstrate, nonprofit organizations are

This book was designed to be used in an undergraduate-level

nonprofit organizations and topics of interest to nonprofit

After reading this chapter, you should be able to:

• Define the difference between a nonprofit

Image: “Nonprofit” by Sharon Sinclair (EKG Technician Salary) is licensed

1.1 What are nonprofit