What I don’t like about nonprofits

Nonprofits do some of the most important work in the United States.  I regularly read reporting from nonprofits such as EdSource, NPE, and Pew Research.  I give to nonprofits that support education research, preservation of nature, run aquariums and more.  Nonprofits provide essential services, education, and entertainment. The vast majority of the nonprofits have an annual operating budget of less than $500,000. They operate as a small business but receive donations and nonprofit tax status. They are sometimes valuable entities. They also push policy agendas, influence curriculum and offer money with their own magic solutions.

My problem with nonprofits is two-fold: they are influential and they fill gaps that shouldn’t exist.

  1. Nonprofits fill gaps: many non-profits fill gaps not addressed sufficiently by the community. Soup kitchens provide food to those who don’t have enough. Nonprofits run after-school enrichment programs, tutoring centers, and sports. They provide free medical care and legal advice. Nonprofits educate small children through preschool programs and public television. They fundraise through events and individual asks to donors. And when I get asked to donate, I often give, but really I would prefer not to be asked at all. It isn’t that I don’t want to give, but I would rather these programs not exist separately. I would prefer to just pay more in taxes and have the government run these services for all, so that it isn’t a matter of who is lucky enough to get extra support. And while you can argue that many programs run by non-profits supplement government-run programs, the fact that additional nonprofit support is necessary means that these programs are underfunded. It would be better for society if instead of individuals such as myself choose which nonprofits are worthy of our support, the given to non-profits was simply paid in taxes. To put this in context, according to NPTrust Americans gave “$449.64 billion in 2019.” Corporations gave “$21.09 billion in 2019.” This money is spread over a wide variety of nonprofits from churches to after-school programs to arts schools to political action organizations. The money that is given could go into the government to expand and enhance existing programs. For example, putting the money given by individuals into schools would increase school budgets by 50%, approximately $6,000 per student. Just imagine what could be done in terms of teacher pay, classroom size, and after school programs.
  2. Nonprofit influence: while most nonprofits are small, the big ones such as the foundations wield considerable influence over policy. In the Gates Foundation 2018 annual letter, Melinda Gates wrote “World leaders tend to take our phone calls and seriously consider what we have to say. Cash-strapped school districts are more likely to divert money and talent toward ideas they think we will fund.” Although Melinda acknowledges the influence they have, she is unapologetic. The foundation simply is acting as a policy maker without actually being part of the government. Foundations employ experts who testify in front of legislatures. The Gates foundation even used their funds to launch a separate lobbying group. The reality is that nonprofits often in their influence over policy makers and in the ways in which they provide funding shape policy.

Nonprofits are not inherently bad in their goals. They want to help. Theoretically, their goals come from a good place, but with hundreds of different nonprofits pushing different policies, we waste a tremendous amount as a society tinkering while not really getting anywhere.

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