November 19, 1998 | Read Time: 10 minutes
Spending by non-profit groups in 22 nations exceeds $1-trillion — and is growing rapidly, says a global team of researchers
As complex social problems around the world challenge the capacities of governments and businesses, non-profit organizations are growing rapidly in number and influence, according to a new report.
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Growth in Non-Profit Employment, 1990-95
Voluntary organizations account for an increasing portion of the economic activity of many countries. Annual spending by non-profit groups now exceeds $1.1-trillion in the 22 nations that are participating in a study directed by researchers at the Johns Hopkins University, in Baltimore. That aggregate sum, the report notes, eclipses the national economies of all but seven countries in the world.
Most of the growth has been fueled by increases in the amount that charities receive in fees and other types of “earned income,” and secondarily by gains in government support. Philanthropic gifts have been a relatively minor factor, the researchers say.
This massive upsurge of organized voluntary activity constitutes nothing less than a “global associational revolution,” say the report’s authors, who attribute the trend in large part to growing doubts about the ability of either government or the market system to deal effectively with society’s most pressing problems. In this context, they say, the actions of private citizens working for the common good form a “third way” that is proving to be increasingly attractive.
The report, released last week at the annual meeting of the European Foundation Centre, synthesizes data collected by researchers in some two dozen countries under the guidance of the Institute for Policy Studies at the Johns Hopkins University. It is part of an ambitious attempt to map the scope and nature of the non-profit world in every region of the globe.
The existence of a vibrant non-profit sector is increasingly being viewed not as a luxury but as a necessity for peoples throughout the world,” says the report. “Such institutions can give expression to citizen concerns, hold governments accountable, promote community, address unmet needs, and generally improve the quality of life.”
Some of the results may surprise people. For example, contrary to a widespread perception, “America is not the leader in this field in terms of employment or volunteerism” on a proportional basis, notes Lester M. Salamon, who directs the Johns Hopkins Comparative Nonprofit Sector Project and is the report’s principal author. The Netherlands, Ireland, Belgium, and Israel all have a larger share of their populations employed in non-profit organizations than does the United States, where about 8 per cent of all employees work for such groups.
The United States still dominates in terms of the absolute size of its non-profit universe, however. Of the 19 million people working for voluntary organizations in the 22 countries for which data were collected in 1995, 45 per cent of them were in the United States. Nine Western European countries employed an additional 29 per cent of non-profit workers, followed by Japan (11 per cent), five Latin American countries (10 per cent), Australia and Israel (3 per cent jointly), and four Eastern European countries (1 per cent).
On average, non-profit employees form 5 per cent of the non-agricultural labor force, the report says. But the proportion ranges from 0.3 per cent of all workers in Romania to 12.4 per cent in the Netherlands.
The current decade has seen rapid growth in non-profit activity in many countries: From 1990 to 1995, non-profit employment grew four times as fast as jobs among other parts of the work force, with an average increase of 4 per cent a year. The growth was particularly strong in Western Europe, and in the fields of health and social services.
Those two fields — plus education — employ two-thirds of all non-profit workers. There are striking regional variations, however. The highest proportion of non-profit employees in Latin America — a heavily Roman Catholic region with a tradition of parochial schooling — work in education: The figure in Peru is nearly 75 per cent. In Austria and the Czech Republic, by contrast, where most schools are run by the state, education employs fewer than 9 per cent of non-profit workers.
Similarly, more than one-third of the non-profit workers in Hungary, Romania, and Slovakia work in the fields of culture and recreation — areas that received generous government support during the Communist era. Environmental groups — which were among the earliest independent groups to be organized in that region — also employ substantially larger proportions of non-profit workers than those in other regions do: more than 6 per cent, compared with less than 1 per cent in every other region surveyed. For the most part, education, health, and social services in those Eastern European countries employ well under 25 per cent of non-profit workers.
“This reflects the expectation that Central and Eastern European citizens still have about the state’s obligation to provide for citizen welfare,” the report says.
Non-profit organizations in the nations surveyed get their revenue from diverse sources. Fees and other commercial income provide the most revenue for voluntary groups — about 47 per cent, on average. Government payments and grants provide an additional 42 per cent, while private gifts from individuals, corporations, and foundations make up the remaining 11 per cent.
Those proportions vary significantly from one country to the next, however. Ireland’s non-profit groups, for example, rely heavily on government financing, to the tune of 78 per cent of their total income; earned income contributes just 15 per cent of the total. In Mexico, by contrast, 85 per cent of non-profit revenue is earned income, while just 9 per cent comes from the government.
The share of donated income also ranges widely, from less than 2 per cent of non-profit revenue in the Netherlands to 36 per cent in Romania. The latter figure reflects the large influx of foreign grants to Romania; in 1995, 60 per cent of its non-profit revenue came from outside the country, says Daniel Saulean, who coordinates the research program of the Civil Society Development Foundation, in Bucharest, and is participating in the Hopkins study.
The study’s findings have several implications for champions of non-profit groups around the world, say the report’s authors:
* For countries in Eastern and Central Europe, the challenge is to overcome public perceptions that non-profit groups lack legitimacy — an outgrowth of some early charity scandals right after the fall of Communism, when few legal constraints on voluntary activity were in place. Continuing efforts are also needed to train non-profit leaders and to build the capacities of their organizations to become self-sustaining, the authors say.
* In Latin America, non-profit organizations divide into two camps: traditional charities and other organizations with strong ties to the social, political, and economic elites, and relatively newer grassroots groups that challenge the status quo. Steps must be taken to bridge this divide, and to promote an understanding of a single “non-profit sector” with common interests and needs, the authors say. Training of non-profit leaders is needed there too, especially for the newer groups. And non-profit organizations must wean themselves from a dependence on government support, perhaps by building stronger ties with businesses.
* In developed countries of the West, the challenge for non-profit groups is to keep in touch with their missions and constituents by avoiding the dangers of becoming too bureaucratic or commercial. Efforts to encourage private philanthropy are needed to counteract pressures for greater reliance on business and government support, the authors say. Improved public accountability must be part of that effort. And greater steps are needed, amid the integration of European Union countries and the worldwide globalization of economies, to insure that non-profit activities can flourish across borders while legitimate national interests are protected.
The emerging picture of non-profit activities in Latin America and Eastern and Central Europe may also hold lessons for grant makers, who have sometimes grown impatient with slow and fitful progress toward a more robust network of voluntary organizations.
“To grow and nurture a stable civil society takes more than just a few years of investment,” Mr. Salamon says. “Building this kind of a sector requires a significant investment over a considerable period of time.”
Grant makers also bear some responsibility for the people whom they have encouraged to operate non-profit groups. “We have to stick by them for a decade or more if they are to grow and prosper,” Mr. Salamon says. “There is a lot of energy that can potentially be released, but it does require more than a casual or short-term commitment.”
The report’s findings suggest to some observers that voluntary organizations are likely to become closer partners with government and industry.
“The most important thing this study is showing is that the nature of governance in the next millennium is going to change quite significantly,” says Kumi Naidoo, secretary-general of Civicus, which promotes citizen activism around the world. “We’re going to have, both globally and within national boundaries, a more enlightened form of governance” in which governments and non-profit leaders jointly develop and implement social policy.
What’s more, he says, as electoral politics loses some of its luster, many people are embracing a more direct form of democracy in which citizens take responsibility for improving their communities.
The first phase of the Hopkins project, published four years ago, reported on eight countries. Although the new report covers 22 countries, three important regions are not represented: Africa, Asia, and the Middle East. Mr. Salamon hopes to rectify those omissions in the project’s next phase, but he says it has been difficult to get financing to study those areas.
The scramble for funds to conduct the research has underscored some of the very diversity the project is attempting to capture. Paul Dekker, a political scientist with the Dutch government’s Social and Cultural Planning Office who is coordinating the project research in that country, observes that some Europeans were initially skeptical about the self-promotional aspects of the Hopkins project.
“We were not used to the American way of selling research,” such as trumpeting that the non-profit sector is larger than a country’s biggest private enterprise, Mr. Dekker says. “More than once we had to persuade our Dutch partners that these Americans had to shout like that to get attention and money, but that they actually were nice people and serious researchers.”
Mr. Salamon says the project, simply by collecting information, is encouraging the idea that voluntary groups have a broad commonality of interests. But the challenge can be daunting, since many countries have very little data about such activities.
Mr. Naidoo, the Civicus secretary-general, formerly was involved in efforts to organize researchers in South Africa to participate in the Hopkins project. That country lacks even basic information about its non-profit organizations, he says: Estimates of their numbers range from 20,000 to 55,000. Ascertaining such statistics, he says, can have a very practical result.
“We were keen to have reliable data to enhance the capacity of the non-governmental organization community to lobby for additional resources and to encourage greater giving,” Mr. Naidoo says.
Some U.S. grant makers have recognized the value of sketching in the dimensions of non-profit activities abroad. The Hopkins project is the first attempt by Peruvian researchers to measure such activities and assess their impact in their country, observes Cynthia Sanborn, a political-science professor at the Centro de Investigacion de la Universidad del Pacifico, in Lima, and a participant in the international study. The center has received grants from the Ford and W. K. Kellogg Foundations to carry out that research.
Mr. Salamon says the research findings will eventually be presented in a series of reports focusing on the individual countries in the study. He also plans to reissue an updated edition of The Emerging Sector, which summarized the first phase of the research.
The authors hope that, over time, their work will focus more attention on the non-profit world, which they say “remains the ‘lost continent’ on the social landscape of modern society, invisible to most policy makers, business leaders, and the press, and even to many people within the sector itself.”
Copies of the Hopkins project report, “The Emerging Sector Revisited: A Summary,” are available for $8 prepaid each, including shipping and handling, from Wendell Phipps, Center for Civil Society Studies, The Johns Hopkins University, 3400 N. Charles Street, Baltimore 21218; the fax is (410) 516-7818 and the e-mail address is jh_cnpsp@jhunix.bcf.jhu.edu.
