The State of Nonprofit America by Lester M. Salamon, editor

Published by: Brookings Institution Press, 2002
Pages: 563+xi pp
Price: $28.95

The nonprofit sector is large, complex and “messy,” having grown in recent decades from a largely unanalyzed and rather poorly understood group of highly disparate institutions and organizations into a far more recognizable–and recognized–important segment of the U.S. economy. Comprising 12% of America’s Gross National Product, the total nonprofit workforce of paid and voluntary workers is some 17.5 million, 50% more than construction and finance, insurance and real estate sectors combined and close to that of the entire U.S. manufacturing sector.

Nonprofit organizations have survived or thrived over the past decade… because they moved, often decisively, toward the market.
There has not previously been a comprehensive, but accessible, overview and assessment of the state of America’s nonprofit sector that is informative to volunteer board members, executives and staff, policy makers and others. Happily, The State of Nonprofit America expertly fills that gap.

Edited by Lester Salamon, Director of the Center for Civil Society Studies at the Johns Hopkins Institute for Policy Studies and former Deputy Associate Director of the U.S. Office of Management and Budget, The State of Nonprofit America crisply analyzes the present state of the nonprofit sector; reviews major characteristics, trends, opportunities and risks within various components of the sector and the sector overall; and places the sector in the larger context of the post-September 11th world.

The book covers cross-cutting themes, including commercialization and for-profit competition; devolution and the changing shape of government-nonprofit relations; accountability; demographic and technological issues; and the contributions of the nonprofit sector. In addition, there are insightful essays on eleven individual sub-sectors, from health and education to community development and international assistance to foundations and corporate philanthropy to individual giving and volunteering.

With rich attention to detail and sources, Salamon argues that nonprofit organizations have survived and thrived over the past decade and are far more robust and adaptive than is sometimes thought by general observers because they moved, often decisively, toward the market. In particular, he notes that nonprofits as a sector have taken active advantage of growing demand for services, expanded fee income, launched commercial ventures, forged partnerships with businesses, adopted business-style management techniques, mastered new consumer-side forms of government funding, reshaped organizational structures and adopted sophisticated market and money-management techniques.

This has brought a set of unfamiliar challenges to the sector, including a growing identity crisis, increased demands on nonprofit executives and Board members, new threats to nonprofit missions, disadvantaging of smaller organizations and a potential loss of public trust. To deal with these risks, Salamon urges a rethinking and affirmation of the benefit of the sector, better capitalization, improving buy-in by third-party payers and encouraging private giving for high-priority community benefits.

All of these have important implications at the level of policy. Yet the analysis also suggests a new set of questions for nonprofit leaders at the level of practice: how to ensure that organizational structure and capacity that was built for an earlier age meets the ecology of the new landscape; how to structure partnerships in ways that harmonize mission and markets; and how to develop pricing strategies that are market-sensitive but also mission-driven.

STRATEGY MATTERS © No 2
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