By Barry Silverberg
Every Texan has, or will, interact with a nonprofit entity during their life.
“In communities across America, charitable nonprofit organizations are working to address local needs: protecting and educating children, training the workforce, nursing the sick, supporting our elders, caring for returning soldiers, rebuilding cities, fostering faith, elevating the arts, protecting natural resources, and more. Some nonprofits successfully pursue their public-spirited missions with very little government interaction; but often governments turn to nonprofits to provide vital services to citizens and fulfill commitments and programs established by policymakers. In all cases, charitable nonprofits are essential partners with state and local governments in solving problems and implementing solutions.”
National Council of Nonprofits
Nonprofits are also essential partners with business and business with nonprofits.
Yet it is not uncommon to hear the question “Aren’t there enough nonprofits?” followed by complaints as to the number of solicitations and appeals businesses and other donors face; followed by the incorrect statement that “there are more nonprofits in our state or community than anywhere else.” Not true.
What is actually being said in most cases is that current and new nonprofits are not being as effective as they could be with better governance and greater investment from business and government. Not handouts. Not charity. Investment.
Few question the right of an entrepreneur to establish a business. Yet it is not uncommon to question the motivations or wisdom of a socially committed nonprofit entrepreneur creating a new nonprofit. Just as we allow market forces in our capitalist society to determine the sustainability of a business, so should allow such forces to underpin the creation of new entities seeking to benefit society.
Nonprofits, as well as businesses, should be measured by their Return on Investment (ROI); though the nature of that ROI differs considerably. Understanding those differences takes more than half-hearted participation on a nonprofit board. It takes the same commitment and passion that creates successful business people. And there is much the business community can learn from the nonprofit sector, just as there is much the nonprofit sector can learn from the business sector.
Today, Texas has about 42,000 charitable, 501(c) (3), nonprofits. Despite the sector’s economic contributions and scope of services, the sector comprises largely small and medium size organizations: 92.1 percent have total annual revenues of less than $1 million, with the vast majority having total annual revenue of less than $100,000.
Accordingly, they rely heavily upon individual, foundation, business and federal and state support.
They also rely upon a positive environment in which the state encourages citizen engagement and supports the growth of the sector.
The Texas nonprofit sector employs more than six times as many workers as the state’s oil and gas extraction industry and 20 percent more than the state government. Nonprofit employees represent 3.8 percent of the total Texas workforce (1 out of every 26 workers), which is below the U.S. average of 7.2 percent. Health services account for 55 percent of all Texas nonprofit employment, including jobs at hospitals, health clinics and residential care facilities.
Nonprofits contribute to the reduction of labor force inequalities by hiring disadvantaged groups of workers. The nonprofit sector brings a significant share of private employment to both urban and rural areas. Nonprofits also take advantage of the power of volunteers. In 2009, 24 percent of Texas residents volunteered, slightly under the national average of nearly 27 percent. Overall, 567 million hours of service were donated in Texas, worth a total of $11.8 billion according to the Corporation for National & Community Service.
Nonprofit contributions to the welfare and cultural enrichment of Texans are often underrated and misunderstood.
Nonprofits are complex entities which require their boards and their members to understand and fulfill their legal roles, responsibilities and authority and share clear expectations of appropriate performance with their professional leaders. Those ought to be high expectations by both volunteer and professional leaders. Many of those volunteer leaders do and must come from the business community.
But nonprofits are not businesses. They operate with appropriate business practices and should take pride in sector values of transparency, accountability, inclusion and engagement. To understand who and what nonprofits are requires the same time and commitment it takes to understand any other industry or business opportunity.
To continue helping Texans of all walks of life and socio-economic levels to enjoy the quality of life of which we are justifiably proud in Texas, greater understanding of the nonprofit sector is essential. Business people should join nonprofit leaders in building a stronger “culture of advocacy” such that the needs and interests of Texas nonprofits, individually and collectively, are made known and seriously considered by local, regional and state influentials – policy and decision-makers – within government and within business.
Recognize that nonprofits are facing a double-whammy. Even as government, business and donor support is declining, the needs nonprofits address are increasing exponentially. Nonprofit organizations are the first responders to those affected by natural disasters, economic downturns, family emergencies, and all of the challenges faced by families in need.
Nonprofits also provide untold opportunities for cultural enrichment, personal and professional development, and form the foundation of American civil society and the values we prize as a state and nation.
The nonprofit sector goes by a number of common names: the third sector . . . social sector . . . the voluntary sector . . . independent sector . . . civil sector . . . and more. Mostly, however, the nonprofit sector is the invisible sector. Expected to be there when needed for ourselves, our families, our friends, the entities that comprise the nonprofit sector require constant nourishment and support; especially from business leaders who best understand the need for sustained capacity to achieve success.
Business leaders are needed to serve as leaders in the Texas nonprofit sector at all levels: community, regional and statewide initiatives. Understanding what creates great enterprises, business leaders can bring that experience to encouraging nonprofit power . . . the power to do good.
Barry Silverberg is President & CEO, Texas Association of Nonprofit Organizations (TANO), and Director, Center for Community-Based & Nonprofit Organizations at Austin Community College. TANO helped promote the creation of the Texas Nonprofit Council to strengthen collaboration between public programs and the nonprofit sector. email@example.com or via www.tano.org
Jun 20, 2015 Comments Off on The State of the Nonprofit Sector
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