The Johns Hopkins Gazette: January 3, 2000
January 3, 2000
VOL. 29, NO. 16


Q&A: Lester Salamon on the influence of nonprofits

Johns Hopkins Gazette Online Edition

Lester Salamon is a principal research scientist with the Institute for Policy Studies and also director of the Center for Civil Society Studies at Johns Hopkins. Salamon has spent a large part of his career studying philanthropy and the nonprofit sector. His recent work has focused on the worldwide scope and influence of this sector.

Salamon recently spoke about his research with Glenn Small, of the Homewood Office of News and Information. The entire interview, excerpted here, can be heard in RealAudio at:

Q: Could you describe the Johns Hopkins Comparative Nonprofit Sector Project and tell us how you got involved in such a massive undertaking?

Fundamentally, we discovered that there is a huge part of social reality, a set of institutions in societies throughout the world, that simply were not being recognized and not attracting the attention we thought they deserved. These are private, nonprofit organizations; that is, organizations that operate outside the boundaries of the state and outside the market system. This is a set of institutions that we're increasingly looking to to solve some of these social, economic and political problems that we're facing, yet we know very little about them. Very little data exists about them. There is very little recognition of their role, either in the press or on the part of government. And so we thought that one way to try to correct this would be to create some basic data to put this sector on the economic map of the world, to bring it out of the shadows and into the light.

Q: This project has been going on for a number of years, involving literally hundreds of researchers across the world and a number of different countries. Can you say how many countries are involved and some of your findings? For instance, you've discovered it's a $90 billion industry with more than 19 million people employed.

We are now working in 40 countries, including developed countries in Europe and Asia and on actually five of the seven continents of the world. Of those countries, we've recently completed our work in 23 of them and have produced a book, called Global Civil Society: Dimensions of the Nonprofit Sector, which is an attempt to report on what we found. And what we found is really quite striking. We found, for example, that this is not a $90 billion industry but a $1.1 trillion industry--that is the expenditures of nonprofit organizations just in the 23 countries that we were able to gather data on. To put that into perspective, if this were a separate country, it'd be the eighth largest in the world. It employs 19 million full-time-equivalent paid workers. It engages another 10 million full-time-equivalent volunteers.

Q: Also, it's growing quite rapidly, as well, and playing a larger role in its interaction between the market and government, is that right?

We seem to be in the midst of a very significant development worldwide. I refer to it as a "global associational revolution," a massive upsurge of organized private nonprofit activity in virtually all parts of the world. This is partly a product of the growth of the service economy since these are, in many cases, service institutions, providing health care and education and day care and services of that sort. But it also, I think, has other causes, too, that relate to the general ideological change in thinking about the role of the state, the realization that there are limits on what the state can provide, and on what the market can offer, and there is a need for a third way to provide people with services and to meet human needs and address public problems.

Q: For those who may not have a clear understanding, just how would you define this so-called nonprofit or civil society sector? I mean, what does it include and what does it not include?

I think the easiest way to explain this is to say it includes entities that have five characteristics. First of all, they are organizations. Second, they operate outside the boundaries of the state, of the government. Third, they don't distribute profits to their members, and therefore are different from a typical private business organization. Fourth, they're self-governing. And finally, they're voluntary. Included therefore are a pretty wide array of types of organizations, stretching from private universities like Johns Hopkins, private hospitals like Johns Hopkins Hospital, social service agencies like Catholic Charities, religious-affiliated service organizations and advocacy groups working, for example, for human rights, civil rights or improvement of the environment.

Q: As a group, a lot of them, though, get money from governments and from private companies as part of their budget. Does that make them beholden to any of these groups?

I think that so long as the organizations maintain a reasonable balance in the sources of their income, they're able to fend off being controlled by any one institution. By their very nature, these institutions are in some sense dependent. If they don't get money from government, they have to turn to wealthy individuals. If they don't get it from wealthy individuals, they have to turn to corporations. One of the trends we're seeing is the increased reliance on fees and service charges, essentially commercial sources of income. This is a product, I think, of the decline of government support to them.

Q: From what you've studied across the world, what are some of the big challenges facing nonprofits as we approach the next century?

I think this sector, despite its growth, remains a rather fragile plant. In many countries, the basic legal structures for them are underdeveloped, sometimes very nonsupportive of these institutions. There are countries where you must get the approval of the state, and particular ministries of the state, in order to form a nonprofit organization. So clarifying the legal structure, I think, is one major priority around the world. Other priorities would be the challenges of visibility and of professionalism. And then, finally, I would say we need to build up the infrastructure for this sector, by which I mean the research, the knowledge, the training, but also the institutions that can support this sector as a sector.

Q: Quite a lot of people have gotten rich in the last decade. How has that economic largesse translated to the nonprofit sector, or has it?

It has done so far less extensively than I think many of us had hoped, but we're still in the early stages. So there are great expectations still. I think we're seeing the impact of the stock market escalations, and the new wealth, the Silicon Valley wealth, in a kind of new style of philanthropy in this country. People refer to it as "venture philanthropy," and it takes two forms--first, a much more aggressive approach on the part of philanthropists toward the output of the programs to which they are contributing, a kind of investment approach to charitable giving; and, second, there is increased interest in a kind of new form of nonprofit that is a cross between a traditional nonprofit and essentially a business.

Q: Speaking of philanthropy, there is a perception that the United States is the leader or one of the leading countries in terms of giving. How true have you found that to be in your work?

Well, I think it's probably true that in terms of giving we are the leader, if you mean by giving private individual contributions. We give something on the order of 2 percent of personal income. And one of the striking realities of the past 15 to 20 years is that despite the growth in income, the share of income going to charity has barely held steady and probably declined. And that's distressing.

Q: Another country I was interested in asking you about is China. You were there earlier this year. Could you give us an idea of the state of nonprofits or voluntary organizations over there?

It's really quite fascinating. The Chinese government and party have announced a new slogan. They refer to it as "small government, big society." They want to shrink government, and they want to grow society; that is, they want to shift functions from the government sphere to the private sphere. It sounds very much like Ronald Reagan. The vehicle for doing this, in part, is to create a private nonprofit sector that can shoulder some of the social tasks that have traditionally, in recent Chinese history, been state functions. That is not to say they're hoping to create a truly independent nonprofit sector, anymore than they've created a truly independent private business sector.

Q: And that's a good sign?

I think it's a good sign. And I think it's going to be difficult for them to control. These organizations will begin to acquire a life of their own.

Q: Over the course of all these years that you've been studying nonprofits and philanthropy, can you say what has been the most striking or interesting trend or development?

Well, I think the most striking trend has just been the explosion of interest in this field. It has been a phenomenon. When I got into it 10 or 15 years ago, it was a sidelight. Nobody was really interested in it, and nobody could quite believe that I was going to waste my time focusing on it. And since that time, this field has literally exploded. It is really an incredible phenomenon. It's partly a product of the fundamental rethinking that's going on around the world about how we cope with major social problems. And all the rethinking is leading back, from various different avenues, to this set of institutions and to the basic idea that it represents--and that idea is the idea of people taking initiative on their own, privately, to solve public problems. This is an exciting idea. It's an idea that's caught on all over the world.