Lester Salamon Nonprofit Innovater Lives On

Lester Salamon Nonprofit Innovater Lives On is a testament to one of NANOE’s greatest influences. Dr. Lester M. Salamon, who died August 20, 2021, has been described as one of the world’s most prolific and influential scholars of nonprofit organizations. That we think of the nonprofit and civil society sector as a sector at all is due in large part to the work of early scholars in the field like Salamon and the research teams he galvanized.

Salamon called the civil society sector “the invisible subcontinent on the social landscape of most countries, poorly understood by policymakers and the public at large, often encumbered by legal limitations, and inadequately utilized as a mechanism for addressing public problems.” Accurate and objective data, he believed, could correct common misperceptions, and would bring recognition, support, and enabling policy. In collaboration with a team of research partners, he dedicated over 30 years to this project.

Salamon would often introduce himself to audiences as a “lazy” researcher; this was tongue-in-cheek, of course. He wrote and edited more than 20 books and penned hundreds of articles. But he called himself “lazy” because he was trying to leverage government statistical offices to do the data collection work themselves and generate the basic information analysts required to generate industry insights. How many people do nonprofits employ, both paid and in volunteer roles? What are their main activities? What are their main sources of revenue? Governments produce similar data for construction, manufacturing, and retail trade. With relatively moderate effort, he argued, statistical offices could do the same for nonprofits. It would take him some 15 years to convince them that it was possible.

Lester Salamon Nonprofit Innovater Lives On

Salamon began his quest for data to counter the Reagan administration’s plans to gut government funding of social services. A smaller government-welfare system would supposedly boost private charitable organizations, presumably funded by donations, to rush in and fill the funding gap.

Salamon had recently served as deputy associate director of the US Office of Management and Budget during the Carter administration and knew better. Government and the nonprofit sector were far more interdependent than most realized at the time. He argued that the US actually utilizes a system of “third-party government,” featuring collaborative forms of public welfare that rely heavily on private, nonprofit organizations and other non-governmental actors. Most government-funded social services are carried out by or in partnership with nonprofit organizations.

For example, consider Medicare. Seniors rarely get care at government-run hospitals. Rather, the government reimburses private caregivers, the majority of which are non-profit providers. Cutting government funding would therefore not enable the growth of nonprofits; instead, it would cut them off at their knees. No amount of private charitable donations would ever fill the void because, as it turns out, the nonprofit sector, especially the service providing component, doesn’t rely on charitable donations as its primary source of income.

But there was no effective way to demonstrate this at the time. The data just were not readily available or widely understood. Today, we know that more than half of nonprofit revenue is derived from fees nonprofits charge for their services, and that government funding—federal, state, and local—comprises about a third of total revenue to the sector in the United States. Philanthropy in all its forms, including foundation and corporate grants, as well as individual giving, is a modest source of revenue.

Most of us know what happened in the 1980s in the US, Great Britain, and elsewhere: government cut funding for social service delivery, charitable donations did not fill the void left behind, and the nonprofit sector was badly wounded and went through a long period of decline and recovery. The misperception about the basic tools of government action had dramatic consequences in this case. Better data might have given the sector a leg to stand on and fight for informed public policy. Why wasn’t the information the sector needed to advocate for itself available when it was needed?

Salamon subsequently realized data about the nonprofit sector was also missing from the economic registers in most every other country around the world, distorting our view of the basic functions of the economy. The reasons, as it turns out, were wrapped up in the national economic accounting standards set by the United Nations.

Quick primer here: Every country has a national statistics office that collects data and produces statistics related to national economic production, gross domestic product (GDP), and national employment. A full list is available here. (The US is unusual in that the statistical production and analysis is divided among ten institutions). These institutions all follow standards adopted by the United Nations Statistical Commission, and these standards are what enable researchers to compare economies and labor data, i.e., the definition of “retail trade” and “unemployed” in the US is the same as it is in Thailand.

These systems made it really hard to “see” the nonprofit sector. The contributions of civil society, both formal nonprofit and informal organizations, were counted to some degree but were not being separately identified. Nonprofits were thrown into other categories for government and corporate institutions, becoming largely invisible in the data as a result. It became impossible to say, for example, what proportion of nursing homes, daycare centers, or dance companies belonged to the nonprofit sector. Once added to the system, these organizations lost their identity as nonprofits. Once lost from view, it was easy to forget that they were worth looking for in the first place.

Mapping Civil Society

To prove the value of the civil society sector, Salamon and an initial team of researchers launched the Comparative Nonprofit Sector Project (CNP Project), a massive global study ultimately covering more than 40 countries involving a network of some 150–200 researchers, over 90 funding organizations, and several hundred nonprofit and philanthropic leaders on six continents. Together they forged a workable common definition of the nonprofit sector—one that captured the diversity of the sector and did not rely on highly variable legal definitions—that could be applied in every country to identify a common set of institutions. It took each participating country about three years to complete the process of testing the definition and generating required information on the history, legal structure, financial data, policy environment and impact of the sector.

The CNP Project produced the first set of comparative data on the nonprofit sector ever available and challenged many conventional beliefs. The research showed that the nonprofit sector globally is a major economic force with a workforce that reaches 10 percent of the labor force in many countries; that the United States does not have the largest nonprofit sector or mobilize the most volunteers per capita; that only about 12–13 percent of nonprofit revenue worldwide derives from philanthropy, with fees and government support making up the vast majority of revenue; that volunteers comprise a striking 45 percent of the full-time equivalent workforce of the sector globally; that the notion that staff replace volunteers on a one-to-one basis is a myth; and that the welfare state and nonprofit sector complement each other.

Importantly, the data also revealed that the global civil society sector includes a diversity of formal and informal organizational types, grouped generally into either expressive (arts, cultural, sports and advocacy, etc.) and service organizations (health, education, social services, etc.) and that this composition varies significantly among countries.

Were the variations random? Not at all. Salamon and his colleagues saw patterns of development that were not explained by culture, religion, or geography—developing a theory of the social origins of the civil society sector to explain the different patterns of civil society development. In short, the path of welfare state development and relations of power in society at large very much influence how large a nonprofit sector a country has, how it is funded, what type of workforce it has, and what its dominant orientation vis-à-vis government and a given society’s social structure may be.

A decade after the launch of the CNP Project, the United Nations Statistical Division agreed to produce standards that would give governments the option to produce separate accounts on the nonprofit sector that embodied the CNP Project definition and approach. Salamon then forged a partnership between the International Labour Organization and the United Nations Volunteers Programme to develop an operational definition of volunteering and measurement methodology, which was in 2013 adopted as an official form of work for labor statistics purposes.

The existence of optional standards is not a guarantee of their adoption, and so Salamon also helped launch a global awareness-building and implementation campaign. In 2017, the UN Satellite Account on Nonprofit and Related Institutions and Volunteer Work incorporated the ILO volunteer work standards and resolved long-standing questions about the inclusion of social economy organizations, which are important components of the third sector in many countries but had previously been challenging to distinguish systematically. The above describes just some of Salamon’s international work and is not even what most Americans know him for.

Domestically, Salamon’s studies of US nonprofit sector are best known. This work resulted in the publication of many books, including America’s Nonprofit Sector: A Primer, now in its third edition (Foundation Center, 2012);The State of Nonprofit America, Volume 2 (Brookings Press, 2012); and The Resilient Sector Revisited: The New Challenge Facing Nonprofit America, Volume 2 (Brookings Press, 2015). And, for many years, he directed the Listening Post Project, which turned around quick-response surveys of US nonprofits to report on key trends and developments affecting them.

Salamon died having succeeded in moving statistical agencies to collect and report on the data that might allow him to be the “lazy” researcher he joked he was. The UN system now embraces many crucial concepts developed by the CNP Project team and its definition and measurement of volunteer work is now fully embedded in ILO guidance systems. Dozens of countries have produced accounts on the nonprofit sector, and some now do so on a regular basis.

More recently, Salamon launched an entire research program dedicated to leveraging the comparatively robust data in the Bureau of Labor Statistics (BLS) to produce timely information about nonprofit employment in the United States, including tracking the impact of the COVID-19 pandemic on nonprofit employment.

There are common threads among Salamon’s projects, including a commitment to objectivity, reliability, and operationalization of the results, but I think two are most salient. First, he was able to distill unifying themes among many discordant opinions and perspectives. He brought disparate groups together and convinced them that they were similar, most notably with the hundreds of colleagues in the CNP Project but he replicated this approach elsewhere. The steering committee of one project in the US included both the League of American Orchestras and the Alliance for Families and Children. He saw the connection between community trusts and health conversion foundations. And he orchestrated many meetings that put government statistical officials in the room with researchers and nonprofit leaders. Most fundamentally, the work Salamon led demonstrated that nonprofits the world over—from small arts organizations in Argentina to large healthcare institutions in The Netherlands—share common features, including a common “production function,” similar funding structure, distinctive workforce patterns, and comparable objectives. Combined, this is what allows researchers to treat nonprofits as a bona fide “economic sector.”

Second, being the “lazy” researcher he was, the launching point for every project started by identifying existing resources that could be leveraged to work for the good of the project. He didn’t invent; he re-tooled.

Unanswered Questions

Salamon witnessed what he called “the global associational revolution,” a period of tremendous growth in the scope and scale of nonprofits the world over in the last 50 years. This growth has not been without its struggles—increased commercialization and professionalization can undermine the spirit of voluntarism and civic activism. Closer nonprofit ties to government welfare regimes drove growth in many places (not all) but also created conflict.

Salamon thought that many of these tensions were the result of a lack of information. If governments realized how reliant they were on nonprofits for the delivery of social services, maybe they wouldn’t hassle advocacy groups so much. If policymakers understand how many people are employed by nonprofits, they are more likely to take the special circumstances of nonprofits into account when making policy. We have seen recently why this is critical: the Paycheck Protection Program was administered by the US Small Business Administration; including nonprofits among the program’s beneficiaries required an explicit amendment to standard agency policy.

Lester Salamon Nonprofit Innovater Lives On

What’s next for civil society? These days, the neoliberal paradigm of the past 40 years that Salamon spent so many years resisting is decaying—as multiple crises, such as COVID-19, a global uprising against anti-Black racism, and the climate emergency drive significant change—even as what replaces it remains highly in doubt. Civil society is being relied on more than ever at a time when its operating space is being constricted. What will the role of civil society and nonprofits be in the future? And how will the composition and functioning of the organized part of the sector itself change as nonprofits confront their own contributions to these emerging social movements?

Salamon would say that the answer to these questions depends on which lens we choose to hold up and look through. He has fashioned a strong pair of glasses through which we might see the big picture. It’s up to us to try them on.

Lester Salamon Nonprofit Innovater Lives On is based on a recent article posted by Nonprofit Quarterly

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