The nonprofit sector in the US is very fragmented. GuideStar estimates as of July 2015, more than 1.5 million nonprofits registered with the IRS as tax-exempt, not including 6000 nonprofits not registered with IRS but included in GuideStar database. Nevertheless, the nonprofit sector is the third largest workforce in the United States, helped by the emergence of new age philanthropy and social entrepreneurship. The US nonprofit workforce ranks third in size among the 18 major US industries, behind only retail trade and manufacturing.
An analysis by Bridgespan revealed that very few nonprofits could recuperate their profits when accounting for their direct and indirect costs.1 Many nonprofits are becoming more entrepreneurial, diversifying into alternate sources of funding. Even mainstream nonprofits have become entrepreneurial; Chronicle of Philanthropy publishes a list of top 400 nonprofits in the US ranked on the merit of fundraising.2 The growing importance of self-financing in the social sector shows the blurring edge between nonprofits and social enterprise.
# New Age Philanthropy. Rise of the Geeks and technology for giving
A resurgence in philanthropy through an altruistic thrust by young technology billionaires has made the social sector more transparent, causing a paradigm shift in the prevailing social business model. The structural shift boosted nonprofits efficiency and channeled social entrepreneurship. In recent years, new age philanthropists like Bill Gates, Pierre Omidyar, Thomas Siebel, to name a few, brought more accountability into the nonprofit sector. The significant structural change brought by new age philanthropists resulted in an increase in capital resources, innovation, and technical know-how within the giving ecosystem. The new age of giving percolated among many billionaires and millionaires around the world, increasing the number of philanthropists. Example, Warren Buffet and Bill Gates giving pledge movement. Pic source below: givingpledge.org.
Mosquitoes are the greatest killers of all time. We have killed more people than all the wars in history. But no one is impressed by me. #IAmHartmut pic.twitter.com/4BNyyZB8ZR
— Bill Gates (@BillGates) April 23, 2018
Focus on critical sectors, including defining a measurable mission, example, eradication of malaria by a specific date brought a renewed focus on addressing critical issues facing the society. Bountiful budget helped in designing creative solutions as well as attracting the best talent in the industry. A formative change in philanthropy started through a rigorous scientific method for identifying and evaluating critical solutions using statistics and other data-driven models. Furthermore, new age philanthropists are usually successful tech entrepreneurs, well-educated with tangible skill sets, who leverage their contacts to motivate and collaborate with other entrepreneurs, government officials for sustainable social missions. The new age philanthropists provide an impetus, bringing about a mindset change around the world with the rise of for-profit social enterprises, think tanks, micro-lending organizations, and foundations to work towards measurable social change. Philanthropists today take an active participatory role, driving sustainable social change by fostering innovation and best business practices in nonprofits. Further, philanthropists enable social entrepreneurship within the business ecosystem.
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