The NonProfit Times, a business publication focusing on nonprofit management, reported that the United States has more than 1.5 million nonprofit organizations.1 Dr. Lester Salamon, a professor at Johns Hopkins University, conducts seminal research on nonprofit proliferation abroad, studying what he defines as the “global associational revolution.” Yet despite this explosion of nonprofit activity, confusion still sometimes exists about what a nonprofit actually is and does.
Part of the confusion stems from nomenclature. Nonprofit organizations are also called not-for-profits, or NPOs. There does not seem to be any definitive preference or consensus as to which of these terms is correct; thus, all are used. However, the terms NPO, nonprofit, and nongovernmental organization (NGO) are not always interchangeable. While nonprofits are invariably NGOs, not all NGOs are nonprofits with 501(c)(3) status. The designation 501(c) is a subsection of the U.S. Internal Revenue Code, which lists provisions granting exemption from federal income tax to various charitable, nonprofit, religious, and educational organizations.
Peter Hero, president of the Community Foundation Silicon Valley, in an op-ed titled “Language Matters: It Is Time to Change Our Name” asserts that using the term nonprofit to describe an entire sector of organizations that work to support issues of public interest for noncommercial purposes is misleading. “What other sector of our society defines itself by what it is not?” he asks.2
Because of this misnomer, Hero contends, many who work outside of the nonprofit sector view it not as the vibrant, well-managed, and vitally important part of society that it generally is, but rather as a group of “wellmeaning but marginal and haphazardly managed organizations.” For Hero, referring to the nonprofit sector by a name that better affirms its value