An Overview of the Non Profit Sector in the United States

In the United States there are three distinguishable sectors of where a good or service is provided. These three sectors include the government sector, the private for profit sector, and the independent nonprofit sector. The acts of the nonprofit sector are not new, as charity and philanthropy have been around for as long as humans have graced the Earth. However, the nonprofit sector as it exists in the United States is the newest of the three sectors as it was officially created in 1980. The nonprofit sector in America displays a unique opportunity for many businesses and associations as the freedoms of the American people shine brightly in their participation in the nonprofit sector.

The nonprofit sector has seen tremendous growth in the brief history of its existence in the United States. Since 1940, the number of registered tax-exempt nonprofits has risen from 13,000 to over 1.5 million at the turn of the century. In 2005 alone, charitable giving was documented at $60 billion. A major explanation for such tremendous growth in the nonprofit industry would have to be the tax-exemption that these organizations get from the government. Additionally, the government has passed legislation that is favorable to donating money to charity and for philanthropic use. One such legislation would be the Tax Act of 1936 which allowed corporations to deduct charitable gifts up to 5% of federal taxable income. With incentive to give and a wealthier nation prospering, the nonprofit sector has seen tremendous growth which has led to a plethora of nonprofit institutions serving a number of different causes. With such a large number of nonprofits operating today, one can only speculate as to whether this is a good or bad thing.