Commentary: Statistics Show Growth in Nonprofit Sector

By Troy, Carol Wilkinson | THE JOURNAL RECORD, February 3, 2005 | Go to article overview

Commentary: Statistics Show Growth in Nonprofit Sector


Troy, Carol Wilkinson, THE JOURNAL RECORD


Statistics indicate that the nonprofit sector is continuing to grow, currently employing one in 11 U.S. workers and representing 7 percent of the gross domestic product.

Nearly 800,000 charities are now listed on the Internal Revenue Service's official roster, twice as many as in 1990.

In an article in The Chronicle of Philanthropy concerns were expressed. The article noted that as more and more organizations are created, leading to fierce competition for private donations and government aid, a growing number of people in and out of the nonprofit world are asking whether too many groups are overlapping and draining resources from those charities that do the best work.

In Oklahoma, conservative estimates indicate that there are 9,000 nonprofit organizations. This count does not include the faith- based nonprofit community.

The proliferation of charities has attracted attention in powerful quarters, including the U.S. Senate. Some policy-makers and nonprofit experts have suggested that an examination of how charities get started and raise money is overdue. Some lawmakers believe established organizations need to be asked more frequently to prove that they deserve to keep charity status.

While the Senate is considering whether new charity laws are needed, some nonprofit and legal experts are urging the IRS to deny charity status to organizations that are duplicating efforts already under way.

Some nonprofit observers also want foundations to reduce the number of charities they support and provide financial incentives for charities to merge. Others hope that Americans can be encouraged to seek more data on which nonprofit groups are achieving results and to stop supporting groups that demonstrate little more than good intentions.

Without legislative changes, getting donors to cut off the flow of funds to charities that perform poorly is one of the only options, say legal experts. The federal government doesn't evaluate whether charities are doing high-quality work and therefore continue to deserve tax-exempt status.

A charity run by a well-meaning but inept person is something that our system doesn't know what to do with, says Evelyn Brody, a professor at Chicago-Kent College of Law who specializes in nonprofit tax law. …

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