Inside Philanthropy

A blog on philanthropy and nonprofit news and issues. A publication of Philanthropy Journal.

October 15, 2007

Nonprofits, philanthropy are big business, officially

The nonprofit sector and philanthropy are starting to get some respect, at least from official agencies that track economic data.

Now if only political and business leaders actually would treat nonprofits and givers as the important players they can be in developing and delivering solutions to our most difficult social problems.

According to a new report by Johns Hopkins University, data from official statistical agencies in eight countries show the civil-society sector contributes roughly as much to gross domestic product in some countries as do the construction and finance industries, and twice as much as the utilities industry.

The eight countries whose official statistical agencies generated the data are the first to put into effect new guidelines from the United Nations Handbook on Nonprofit Institutions that the United Nations Statistical Division issued in 2003.

The data show the civil-society sector accounts on average for 5 percent of gross domestic product in the eight countries, and over 7 percent in some countries, including Canada and the U.S.

The utilities industry, including gas, water and electricity, accounts on average for only 2.3 percent of GDP, in comparison, while the construction industry accounts for 5.1 percent and the financial “intermediation” industry, including banks, insurance companies and financial-services firms, accounts for 5.6 percent.

Nonprofits in Belgium, Canada, the Czech Republic, Japan and the U.S. have been growing at an average rate of 8.1 percent, nearly twice the 4.1 percent growth rate of GDP.

Philanthropy, including volunteering, generates up to one-third of nonprofit revenue, with the rest coming from government and fees.

Within philanthropy, volunteering outpaces gifts of cash by nearly two to one and accounts, on average, for roughly one-fourth of nonprofits’ economic contribution.

These data underscore the huge impact that nonprofits and philanthropy have on our economy.

Sadly, policymakers and leaders in government and business continue to treat nonprofits as marginal players in social change.

That is a big mistake, particularly because government, while it has the most resources to invest in social change, is sorely lacks the vision and will to make change happen.

And while a growing number of corporations pay lip service to the “triple bottom line” they can measure through their financial results and their social and environmental impact, the corporate world still has failed to embrace nonprofits as the important players they are and can be in delivering critical services and fixing social problems.

The official data show the charitable marketplace is big and growing quickly.

Now, government and business leaders need to learn how to build that marketplace into the way they do business.

1 Comments:

  • At 1:57 PM, Anonymous Frank K. /simon, Jr. said…

    While nonprofits and philanthropy are not recognized yet as big business, that perception is likely to remain in spite of healthy growth. The article states the government has the most resources to invest in social change but lacks the vision to change. Too many nonprofits fail first to create then cast their own vision.

    Government program funding is great, but charities must avoid falling into an entitlement mindset. And they have bills to pay. As big business, nonprofits must operate as a business with an eye on the future.

    Nonprofits are more than the sum of their programs. By sharing their vision with donors and business leaders, charities can start to build and manage the relationships necessary for long-term fund development and financial stability. To appeal to business, nonprofits must operate like the businesses they are.

     

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