Freedom fosters a culture of giving
Published September 21, 2023
By John Hood
When natural disasters or other emergencies hit our state, North Carolinians respond in droves — and I’m not just referring to the crucial and praiseworthy work of public employees who work in emergency management, public safety, and public works.
North Carolinians respond in many other ways, large and small. They form, fund, and staff nonprofits that provide both immediate and long-term relief. They work for private companies that maintain, repair, and replace critical infrastructure; or rebuild homes and businesses; or supply and staff stores, restaurants, and service providers. They volunteer. They step in personally with cash, food, or labor to help friends and neighbors.
In a free society, we organize ourselves into a variety of social institutions. Some are governments, and necessarily so. There are tasks that demand, not just market transactions or voluntary associations, but universal institutions that require, not request, our compliance.
But most social institutions are private. We choose whether to interact with them. We choose whether to give them time or money, either in exchange for goods and services we value more highly (from commercial enterprises) or in exchange for the feeling that we are doing good (from charitable enterprises).
While describing society as comprising three sectors — for-profit, governmental, and nonprofit — is sometimes thought of as a Western or even a specifically American practice, the underlying logic is universal. Gandhi famously described it this way: “If I want to deprive you of your watch, I shall certainly have to fight for it; if I want to buy your watch, I shall have to pay for it; and if I want a gift, I shall have to plead for it; and, according to the means I employ, the watch is stolen property, my own property, or a donation. Thus we see three different results from three different means. Will you still say that the means do not matter?”
Our state’s nonprofit sector — alternatively called the social sector, voluntary sector, or nongovernmental (NGO) sector, depending on source and context — is large and highly developed. According to the latest data from the group Independent Sector, there are some 40,000 nonprofits in North Carolina, including more than 30,000 classified as 501(c)(3) organizations. That latter category includes groups that collect tax-deductible contributions to provide goods and services to the public as well as foundations that give money away.
Nonprofits employ more than a tenth of North Carolina’s workforce, and deploy even more labor as volunteer hours. A few of these nonprofits are among the largest and most complex enterprises in North Carolina, such as private universities and hospitals. But most nonprofits are relatively small, often running on a shoestring and addressing essential needs in communities from the mountains to the coast.
To classify social institutions as either for-profit, governmental, or nonprofit in organization and function is not to say that the three sectors are rigidly separated. A major source of revenue for North Carolina nonprofits, for example, is government itself in the form of direct grants or payments for services rendered (think Medicare payments to hospitals or tuition aid for college students).
These interactions explain why comparing nonprofit sectors across countries can be tricky. Some countries have large nongovernmental organizations but relatively little private giving. Others appear to have smaller nonprofit sectors by the numbers but feature large-scale volunteering, often through religious institutions, which isn’t really accounted for in official statistics.
Most analysts agree, however, that few people on Earth are as generous as Americans are. Private giving, for instance, accounts for about 2% of the gross domestic product in the United States. It’s about half as much in Canada and Great Britain, only about .4 percent in Scandinavia, and even less in France, Japan, Germany, and Italy. As for North Carolina, we rank 10th in America in charitable giving as a share of income.