In Chapter 3, we explore the anatomy of America’s nonprofit sector. Organizations can be divided into two basic categories: member-serving organizations and public-serving organizations. Member-serving organizations aim primarily at providing benefits to their members rather than the public at large. They include labor unions, business and professional associations, social and recreational clubs, veterans organizations, mutual insurance companies, credit unions, cemetery companies, and cooperative telephone companies (31). Public-serving organizations exist primarily to serve the public at large rather than primarily the members of the organization. Public-serving organizations are the only ones entitled to tax-exempt status. To be eligible for tax-exemption, organizations must operate “exclusively for religious, charitable, scientific, literary, or educational purposes” (33). However, religious organizations are the only ones automatically entitled to tax exemption (55). The primer primarily focuses on public-serving organizations. These organizations receive their revenue through substantial government support and private giving, and also through fees (service charges, tuition payments, and other commercial income) (38). America’s non-profit sector is larger than most people are aware of, but not the largest in the world (considering that the US is still considered a somewhat young country in comparison to many others).
Chapter 4 is titled “The Nonprofit Sector in Context: The Government and Business Presence.” While tensions exist between the government and the nonprofit sector, a widespread partnership has developed between the two (67). However, the government has a large presence in health, education, and social welfare, and approximately half of the government’s spending is for these purposes (68-69). The largest portion of social welfare spending went to health benefits, the second largest to social insurance, one quarter to education, and under ten percent to be split among the rest of activities. Government and nonprofit sectors have grown and continue to work together, though Americans have a greater reliance on private charity and the nonprofit.
Chapter 5 discusses the historical developments and recent trends within the nonprofit sector. Government involvement in the nonprofit sector began in the 1930s. However, government involvement in social welfare and education is not a recent development in the US. FDR created the New Deal system of social welfare aid which consists of three principal programs: old-age pensions, unemployment insurance, and needs-tested cash assistance. During the 1960s, there was change within the government and nonprofit sectors, including: human service programs, health care for the elderly, health care for the needy, pre-school and other education and research aid, and broadened health care coverage. The 70s included inflation protection for retirees and food aid. It was in the 60s and 70s that the partnership between the government and the nonprofit sector was brought to a state and local level. Private philanthropy is essential to supporting the nonprofit system, but income from government and fees is even more important