Measuring sincerity

The Non-Profit Sector in a Changing Economy
OECD Observer

How can we assess the economic and social importance of non-profit groups? Attention is increasingly being turned to measuring and acknowledging the impact of this “third sector”, a huge swath of organisations and activities that both overlap and slide between government and regular business.

These range from non-governmental advocacy groups like Greenpeace and Amnesty International, or humanitarian agencies like Médecins Sans Frontières or the National Housing Trust, to media watchdogs like Public Radio Capital and the International Press Institute, as well as charities, churches, grocery co-operatives and children’s agencies.

The UK-based Institute of Physics Publishing, for instance, is non-profit in that any profits have to be reinvested rather than distributed.

The non-profit sector is clearly a more significant force than is commonly thought, and this OECD publication provides some useful insights.

According to a sample of 35 countries studied by the Johns Hopkins Comparative Non-profit Sector Project, nearly 39.5 million people are employed full time in the non-profit sector. Industry expenditure totals US$1.33 trillion. The non-profit sector employs 3.6% of the working-age population, including 46% of public sector employment. Taken as a separate economy, it would be the sixth largest economy in the world, making it roughly as large as some G7 countries.

During the 1990s, these associations, co-operatives, foundations and federations blossomed, helped along by a wave of venture philanthropy and a spirit of social entrepreneurship. Between 1990 and 1995, non-profit employment increased by 23% compared to 6% for the economy as a whole. It was in this environment that people like Bill Gates launched well-funded philanthropic foundations.

Just because they are non-profit does not mean they do not suffer in hard times. On the contrary. But the third sector is likely to stay and grow.

The United Nations Economic and Social Council published a handbook last year on how to compile statistics on the non-profit sector for national accounts. And the US has even calculated an average dollar value of a volunteer hour, at US$16.05, which is used as a reference by many American organisations. Clearly, everything has a price.

©OECD Observer No 236, March 2003

Economic data

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