The $4 Trillion Question
The Untapped Power of Progressive Nonprofits
Welcome to the fourth and likely final installment in this exploration of the forces driving nonprofit workers and social change movements. Over the past few weeks, I’ve been sharing my experiences and observations about why some of us just want to feel good about our contributions to social change. While these feelings are understandable, I believe they’re standing in the way of the change we seek.
Links are below if you want to read Parts 1-3 or a related offshoot (When Politics Becomes Identity).
Today, we'll examine the vast and, in my telling, untapped power that progressive nonprofits possess, and how their reluctance to fully wield it undermines their stated missions.
We'll explore how these organizations, despite controlling trillions in assets and employing thousands of well-connected professionals, often fail to leverage their true potential for creating systemic change. To make the social impact they claim as their mission, these large nonprofits and their relaxtionary-minded staff need to recognize how much power they actually have, commit to using all of it, and consider new approaches for their activism.
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The Financial Power Nonprofits Aren't Using
Nonprofits control vast financial resources. The nonprofit workforce is the third largest employment sector in the entire United States economy. It is bigger than manufacturing or construction, and about the same size as the restaurant and hotel industry. Nonprofits paid more in wages than either the finance and insurance sector or the retail sector of the American economy.
Nonprofits contribute over one trillion dollars to the American economy, raise over half a trillion dollars annually in the US from donations and philanthropy, and hold trillions of dollars in financial assets.1 When it comes to financial clout, nonprofits control substantial monetary resources.
This chart from the St. Louis Federal Reserve shows the growth in Total Assets held by Nonprofit Organizations. Many of these entities are hospitals or electrical co-ops, but there are two points to highlight. First, the overall trend is up up up…to $14 trillion. Second, the nonprofits focused on social change, politics, and advocacy hold about $4 trillion in assets.
Source: Board of Governors of the Federal Reserve System (US) via FRED®
Nonprofits are growing in other ways, too. "Nonprofits outpaced economy-wide for-profit job growth by a factor of 3:1 (18.6% vs. 6.2%)" from 2007 to 20172. Donations to nonprofits and nonprofits' financial assets have also grown at a steady clip. "From 2006 to 2011, revenue and assets for all public charities increased 10.6 and 11.5 percent" respectively, versus only 5 percent U.S. GDP growth. Nonprofit financial growth outpaced the U.S. economy from 2011 to 2016, too, with growth of "20.2 percent for revenues and 25.8 percent for assets, after adjusting for inflation," which compares to less than 14 percent for U.S. GPD over the same time period.3
What are they doing with that power? Control of capital is one of the most significant sources of power in contemporary American society. Those who desire social change need to recognize this truth and ask how this power is being used.
The Power Hiding in Plain Sight
There's another source of power nonprofits could tap. When I reflect on my years in the nonprofit sector, I'm struck by how the very people working to change systems of power are often deeply embedded in those same systems. Ossified by their relaxtionary consciousness, nonprofits and their workers are reluctant to use their connections to drive change.
The staff of large, national nonprofits largely come from elite educational backgrounds and economically secure families. Their networks include the very decision-makers in politics and business that nonprofits seek to influence. When we say we're campaigning to sway elected officials or corporate leaders, we're often talking about nonprofit employees' classmates, friends, and family members.
Credit: rawpixel.com
I experienced this firsthand after working on my very first environmental campaign in West Virginia and later during election work. My college friends, many heading to prestigious graduate programs or influential careers, would toast my "noble" work while keeping comfortable distance from it. I accepted their praise without asking them to leverage their own growing influence, maintaining an unspoken arrangement: they got to display progressive credentials without burden, and I received validation for choosing a "virtuous" path.
This dynamic represents a fundamental failure of nerve. The social justice movement has provided language that helps explain this dynamic by identifying "allies" versus "co-conspirators." I was glad to have allies, and my friends could rest easy in displays of allyship. We all enjoyed "the luxury of idealism in a comfortable chair among friends." My friends got the luxury of idealism, I kept them as friends, and we all sat in comfortable chairs. Nothing risked, and some spiritual fulfillment gained by all parties.
We've been content with "allies" when what we need are "co-conspirators.” It’s hard to do if you have a relaxtionary consciousness, but we need people willing to risk something meaningful for the change they claim to support.
Beyond Comfortable Activism
My argument is big portions of the nonprofit sector's approach to change has become too comfortable: too focused on activities that provide spiritual fulfillment rather than meaningful impact. Consider how we use our resources:
We gather signatures that often gather dust
We prioritize easily countable metrics over difficult confrontation
We design fundraising appeals around making donors feel good rather than solving complex problems
We control trillions in assets yet deploy them conservatively (or not at all)
What if we reimagined how nonprofits use their considerable power? What if, instead of merely trying to influence existing systems, we actively created alternatives?
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Alternatives: Using Power in New Ways
Social change can happen in three ways: influencing the decisions our society makes, changing who the decision-makers are, or altering the structures society uses to make those decisions.
Most progressive nonprofits devote their resources to the first two approaches: influencing decisions through campaigning and lobbying, and picking decision-makers through electoral politics. I'd like to suggest that nonprofits might consider giving more attention to changing the structures in our society for making decisions.
Here are some creative ways nonprofits could use their capacities. These are just some initial thoughts I've been exploring that might spark your own ideas.
1. Use Financial Resources Differently
Beyond just funding advocacy, nonprofit organizations could become direct investors in the solutions they champion.
The top twenty-five largest environmental nonprofits could pool just a portion of their net assets and build solar power generation infrastructure capable of powering millions of homes. This would increase the share of U.S. electrical generation from solar by double digits, drive down costs, and give a massive boost to clean energy procurement.
Copyright: CC BY Patrick McCully.
Along the same lines, they could establish revolving loan funds for community-owned renewable energy, create nonprofit banks that prioritize environmental justice investments, or develop cooperative ownership models for sustainable infrastructure.
Health-oriented nonprofits, which control over one trillion dollars in assets, could use just a portion to generate interest income. At a reasonable 4% per year, they could produce enough cash to send every food-insecure household in the United States over $3,000 annually. That would more than double the assistance households get from federal nutrition programs (and that's pre-benefit cuts, so even more of an increase now).
Health-focused organizations could also leverage their investment portfolios to transform healthcare delivery systems, fund community health worker programs at scale, or create nonprofit pharmaceutical manufacturing to address drug pricing and access issues.
Some of these ideas are impractical and wouldn't happen. I know that. My purpose in suggesting them is to draw attention to the financial capacity of the nonprofit sector in our country. Maybe these ideas are impractical. But where are the ideas of comparable scale and ambition?
2. Reallocate Decisions from Private to Public Spheres
Nonprofits could work to move some private sphere decisions at least partially into the public sphere. For example, shifting decisions about new drug prices into a public structure, similar to Germany's system where a central body evaluates the benefits of new drugs and health insurers jointly negotiate prices. Or a tremendous victory we've had domestically is the creation of the Consumer Financial Protection Bureau.
This work could extend to creating democratic oversight mechanisms for technologies that affect public welfare, establishing community governance structures for essential resources like water and internet access, and developing participatory budgeting processes for public investments.
Other opportunities abound for reallocating decisions from the private sector to the public one. We could be creating public review processes for insurance rate increases and housing rental rate increases, or reinstating and expanding the fairness doctrine for media outlets.
Our society should be debating why decisions are happening where they are, especially the ones we take for granted.
That reallocation would require decision-making by government, and thus the kind of campaigning and advocacy many nonprofits are adept at doing to compel government to action. I want to encourage more thinking in this direction so we're training our efforts at these sorts of changes.
Creator: rawpixel.com / Consumer Financial Protection Bureau
3. Create New Structures
Some social problems result from myriad private decisions that can only be rectified by creating new structures. For example, establishing a "right to repair" that requires manufacturers to provide consumers and independent repair businesses equal access to repair documentation, diagnostics, tools, and parts.
Nonprofits could pioneer new governance models that distribute decision-making power more equitably. They could establish community land trusts at scale, develop platform cooperatives as alternatives to extractive tech platforms, or create commons-based approaches to managing shared resources. The Nature Conservancy is already a pioneer in this direction, and it would be fruitful to extend these concepts in new directions and push them to new frontiers.
4. Offer Public Services
Services provided by public entities would be governed by different decision-making structures than private services. If nonprofits can influence public entities to provide key services, this provides greater involvement for the public in decision-making.
Nonprofits themselves could become providers of essential services with democratic governance structures. They could establish community-controlled broadband networks (shout out to Chorus AI customer Mission Telecom), develop public-interest artificial intelligence systems (shout out to the great work Change Agent and Working Families Party are doing, respectively), invest in electric vehicle charging infrastructure, or create cooperative models for childcare, elder care, and other essential services.
5. Alter Existing Public Structures
Several existing structures prevent effective governing:
Senate filibuster rules should be amended, since they currently allow senators representing as little as 10% of the population to block votes on most legislation. Probably controversial opinion: I don't think the filibuster should be eliminated entirely, but 10% of the population shouldn't be able to halt the legislative branch from governing.
We obviously should address unlimited corporate political spending to influence elections.
I love ranked choice voting in my NYC mayoral primary elections. Rank The Vote and other organizations are doing awesome work to bring it to more places.
Peter J. Yost, Wikimedia
Beyond advocating for these changes, nonprofits could develop and test alternative democratic structures in their own governance, demonstrating how more participatory and representative systems can function effectively. They could create shadow governance bodies that model how reformed institutions would operate and make decisions.
By reimagining how they use their considerable power, progressive nonprofits can actively create the more just and sustainable alternatives they envision. This requires courage, creativity, and a willingness to risk the comfort of traditional approaches. I think the potential impact is worth it.
Moving Beyond Spiritual Fulfillment
The route forward requires getting spiritual fulfillment elsewhere, because the social change we need is too important to sacrifice for it.
Something is fundamentally off track if nonprofits are not using all their power to impact social issues. I have argued they choose most activities to fulfill their staff spiritually, not because those activities are well-suited for influencing decision-makers. They're not even using their two most significant sources of power: the personal relationships of their staff and their control of vast financial resources.
Millions of people die daily from preventable causes, and over twelve percent of all species are threatened with extinction. Nonprofits have a moral imperative to be as effective as possible in helping solve these problems.
The power that nonprofits and their employees possess is formidable. It's time they recognized it and used it to its full potential, even if that means sacrificing some spiritual fulfillment along the way.
Catch Up
In Part 1, we examined how "relaxtionary consciousness" and "achievement-subject culture" drive many of us into nonprofit work—how our privileged position allows us to pursue spiritual fulfillment while our achievement-oriented upbringing pushes us to excel in ways that cultural elites deem virtuous.
In Part 2, we explored the three different mindsets that explain why social change often stops short: revolutionary consciousness (those ready to flip the table and build something new), reactionary consciousness (those fighting to protect what they have), and relaxtionary consciousness (those with the privilege to seek purpose through activism).
In Part 3, we confronted the uncomfortable truth that relaxtionary consciousness often falls short of creating meaningful change, as campaigns are designed more for spiritual fulfillment than impact.
For a personal exploration of how politics becomes intertwined with identity, check out my essay When Politics Becomes Identity. In this piece, I share my experience working on the 2008 Obama campaign and how I unwittingly merged my identity with political outcomes. I examine how this merging of politics and personal identity creates a problem for American politics, leading to resistance to criticism and inevitable disappointment when political leaders can't deliver the spiritual fulfillment we seek from them. This reflection complements the themes of relaxtionary consciousness explored in this series, offering a personal case study of how our search for meaning through social change can sometimes undermine the very change we hope to create.
NCCS Project Team, 2020
Salamon & Newhouse, 2020
NCCS Project Team, 2020