Fundraising for Social Change, 8th Edition

chapter ONEThe Size and Scope of the Nonprofit Sector

The word nonprofit is used to identify organizations that work for the public good and that are not obligated to shareholders or owners to deliver a profit. In fact, organizations that are afforded nonprofit status by the Internal Revenue Service are subsidized by tax exemptions, financial donations, and the free labor of volunteers, all of which are designed to enable them to focus on fulfilling their mission rather than on seeking profits. Even though businesses and corporations can work for the public good, they must operate profitably in order to stay in business. Nonprofits balance their budgets by using donations to fill the gap between what it costs to do their work and how much they can earn from it—which is sometimes nothing.

Over the past 40 years, the word nonprofit has gradually replaced the word charity as more and more nonprofit organizations do work that is not strictly “charitable,” such as community organizing, advocacy, arts programming, or environmental protection. The word charity also carried a whiff of noblesse oblige—a sense of “fortunate” people helping the “less fortunate.” This frame has largely been rejected by progressive nonprofits, which seek to work “with” people rather than “for” them.

Many have argued that the term nonprofit, too, is an unfortunate one, as it describes an entire sector by what it is not; they have suggested using the term community benefit organization (CBO) instead. Another ...