Mark Hager, Ph.D.,
ASU School of Community
Resources & Development
This topic gets trotted out a lot, so maybe that just means it's worth having again. We discuss it in one of my graduate seminars, but a blog post is probably a good place to gather up people's reactions in the comments section. Really, I'd love to hear your thoughts.
In my last blog post, I suggested that the idea of "sector" has taken hold, which means that we need a way to refer to all the organizations that fall inside such a sector. Clearly, to me anyway, the frontrunner is "nonprofit organizations" operating in a "nonprofit sector." The word nonprofit is in the Lodestar Center's full name, it's in my job title, and it's in the name of my professional association. If our goal is to communicate clearly, then nonprofit sticks because most people know what we mean when we use it.
The problem is that this isn't always the case. At a dinner party, when you tell somebody that you work for a nonprofit organization, there's a fair chance that your drinking buddy will react something like, "Oh, yeah, a nonprofit organization. Those things that can't make a profit." Well, no... the defining characteristic of the nonprofit organization is that it returns all of its surplus income ("profit") to furthering its mission, rather than feathering the pockets of owners. But the moniker "nonprofit" doesn't exactly make that clear. There are at least three shortcomings with the name: (1) it defines the sector in economic rather than social terms; (2) it does so in a confusing way; and (3) it approaches these organizations in terms of what they are not or what they cannot do, rather than what they are and what they seek to add to our lives.
Can we do better?
Well, there are a host of alternatives, some of which already have some currency. One alternative is to go with the U.S. federal term: the tax-exempts. A defining characteristic of the "sector" we're trying to name is that they don't pay federal income tax, so tax exempts, or exempt entities, sums it up pretty well. You hear these terms regularly in regulatory and legal contexts. However, it's a bit dry, and not generally used outside of those circles. Maybe we should adopt these as preferred terms?