The Impact of the Volunteer Sector within the United States

Definition

The economic impact of the volunteer sector (also called the nonprofit or third sector) is extensive but nearly impossible to accurately estimate. Given the nature and reporting requirements of the nonprofit sector, accurate and complete statistics are difficult to project. 

The nonprofit sector touches millions of people through employment, volunteer opportunities, and providing services, in addition to impacting the gross domestic product, or GDP.  The INDEPENDENT SECTOR, an advocacy organization for the sector, connects diverse nonprofits, foundations and corporations to improve the common good.  According to the United States Department of Labor, there were nearly 12.3 million nonprofit jobs, which is 10.2% of private employment, within the United States in 2016.  The nonprofit sector contributed an estimated $905.9 billion to the US economy and assets greater than $5.17 trillion. These numbers are expected to continue to grow, according the Urban Institute.  

According to the INDEPENDENT SECTOR in 2018, 63 million Americans served about 8 billion hours to support communities.  The value of service is $24.69 per hour, which is equivalent to $197.5 billion/year.  The Urban Institute found that in 2014, 6.4 percent of the population, which equals 16 million people volunteer each day. The number of people volunteering for an average of one day grew by one million compared to 2013. 

Recognizing the needs that volunteers can address, President George W. Bush called on Americans to join efforts as volunteers to contribute time to unmet social needs.  The Urban Institute reported the highest volunteer rate at 28.8 percent held steady from 2003-2005.  In comparison, the 2014 volunteer rate of 25.3 percent is the lowest reported since 2002.  The nonprofit sector and economic impact is expected to continue to grow. 

Historic Roots

A large part of America's attractive voluntary spirit stems from the religious values of the different faiths. While religious practices reflect the hundreds of different traditions that came to U.S. shores, the common root of these varied testaments is an awareness that "service beyond self" is both an obligation and a joy. It is the ultimate universal truth. (O'Connell 1983)

History demonstrates volunteerism was evident in first civilizations, where survival depended upon working together to achieve the common good, to ensure adequate food, supplies, and shelter.  In a lecture to a class at Grand Valley State University, Dr. Joel Orosz noted the following historic examples: In 1631, John Winthrop preached a four-hour sermon to challenge listeners to "create a shining city on a hill." In 1636, Harvard College, the oldest incorporated entity in the United States, was established to train Puritan ministers that were needed to propagate the faith. Benjamin Franklin organized the first volunteer fire company in the U.S. and when he died in 1790, left $4500 to establish the first foundation to benefit Philadelphia and Boston. These examples are just a few that illustrate the progress of the voluntary sector and its impact on the development of America.

James Madison, the author of Federalist Paper No. 10 and fourth president of the United States, addressed the idea of factions within the government (Frumkin).  He noted in Federalist no.10 that factions are created by a common passion or purpose within the community to address the rights or community interest.  These factions could express their views, become the voice of the minorities, and influence governance.  Factions provided a space for minority voices to come together.  Madison saw within the republic the factions and majority would work together to find common ground.  The majority would rule but also listen to and work with the factions to come to a consensus (Frumkin). 

The formal identification of the voluntary nonprofit sector was noted by the Frenchman Alexis de Tocqueville in his 1831 visit to America. Sent by France to study American penitentiaries, Tocqueville observed "Wherever at the head of some undertaking you see the government in France, or a man of rank in England, in the United States you will be sure to find an association" (Salamon, 1-2). Ultimately, Tocqueville wrote a book in which he "identified this sector as one of the most distinctive and critical features of American life" (Ibid., 7). He went on to observe:

In democratic countries the science of association is the mother of science; the progress of all the rest depends upon the progress it has made—among democratic nations—all the citizens are independent and feeble; they can do hardly anything by themselves, and none of them can oblige his fellow men to lend him their assistance. They all, therefore, become powerless if they do not learn voluntarily to help one another. (Ibid., 15)

Until the New Deal created by President Franklin D. Roosevelt, the public felt that government had no place interfering with needs of society, and those needs were largely met by the church and other nonprofit organizations.

Importance

Kathleen S. Kelly (2002) noted "A historic and deeply rooted cultural belief in the United States is that our country's social needs should be addressed by voluntary action to the greatest extent possible, rather than by government." (p. 34)  With over 1.41 million registered nonprofit organizations and 62.8 million adults serving at least once in 2014 (Urban Institute) the nonprofit sector impacts people daily through volunteer opportunities or employment. 

Ties to the Philanthropic Sector

The ongoing vitality and growth of the philanthropic sector is strongly linked to its economic value within society.  For example, many citizens consider it a wonderful and essential spiritual addition to society that religious congregations exist so that citizens can worship in the ways they see fit. Yet, from an economic standpoint, the congregations exist because they serve a purpose within society that is more than spiritual. Churches, synagogues, temples, and mosques provide needed services (i.e., educational, communal, entertaining) to which a monetary figure can be assessed. Social service-oriented nonprofits, such as community centers and food banks, provide goods and services to under-resourced communities to address a societal, economic needs in addition to solidifying the importance and value of the nonprofit sector.

Key Related Ideas

• Market failure theory describes how the role of the market, providing private goods, is inefficient in meeting the demands of the community.
• Government failure theory accounts for the limited role in which they can provide public goods and services to communities that meet their need. 
• Corporate responsibility is the responsibility of the corporation has to communities and their members.

Important People Related to the Topic

• Frenchman Alexis de Tocqueville was sent to America in the early 1830s to research the success of the young country. It was he who first noted the impact and intriguing role the charitable and volunteer sector played in the thriving economy of the United States.
• Henry Hansman is a lead scholar focused on the law and economics of organizational ownership and design.  Dr. Hansman deepened our understanding by writing extensively about nonprofit organizations, the relationship between contract law and organization law, and historical evolution of organization forms.  He authored The Ownership of Enterprise which address the how different industries and national economies impact ownership form.   

Related Nonprofit Organizations

• INDEPENDENT SECTOR, at https://independentsector.org/, is a coalition of nonprofits, foundations, and corporations committed to strengthening not-for-profit initiative, philanthropy, and citizen action. They perform research on philanthropy and the nonprofit sector, publishes and disseminates information, increases public awareness, and partakes in advocacy.  The INDEPENDENT SECTOR provides the organization's history, mission, and current programs; provides downloadable research documents on giving and service and the nonprofit sector; and has an extensive overview of public policy that affects the volunteer sector.
• The Foundation Center, at http://fdncenter.org, provides information regarding the philanthropic sector. The site provides an online foundation directory, access to grant information, newsletters, a history, training opportunities, upcoming conferences, and more.
• The Urban Institute, at https://www.urban.org/, strives to ensure that everyone has the opportunity and chance to achieve their highest potential within the United States.  The Institute began in 1968 to “help solve the problem that weighs heavily on the hearts and minds of all of us- the problem of the American city and its people.”  The Institute continues to identify challenges communities experience and use evidence to support them.  Partnering with community members, companies, policy makers, and other change agents they work to advance equity and upward mobility for all.

Reflection Question

• What inspires you to serve with your community?
• How do you intend to serve in your community?

Bibliography

• Frumkin, Peter. 2002. On being nonprofit: a conceptual and policy Primer. Cambridge, Mass: Harvard University Press.
• INDEPENDENT Sector. “Independent Sector Releases New Value of Volunteer Time of $24.69 Per Hour.” Last modified April 19, 2018. 
• INDEPENDENT Sector. “America’s Nonprofit Sector- Impact.” Last modified June 2016.
• Kelly, Kathleen S. "America's Voluntary Spirit." Public Relations Strategist 8 (2002): 1, 34-35.
• Mckeever, Brice S. “The Nonprofit Sector in Brief 2015.” The Urban Institute. Last modified October 2015. 
• O'Connell, Brian. 1983. America's voluntary spirit: a book of Readings. New York: Foundation Center.
• Salamon, Lester M. 1999. America's nonprofit sector: a Primer. New York: Foundation Center.
• The Foundation Center. “Mission, Vision, Values.” Accessed November 23, 2018.
• United States Department of Labor. “TED: The Economics Daily.”  Last modified August 31, 2018.