The state of the world right now, with immense suffering, the rapid destruction of the environment, and obscene wealth accrual of the ruling class can lead to feelings of overwhelm, helplessness, and despair in many of us. This can spur us into action with the desire to change the world. More often than not, this energy is quickly directed into what has been labeled the “nonprofit-industrial complex.” Donating to nonprofit organizations has become something of a go-to form of activism in the face of these mounting crises. Meanwhile, as capitalism and neoliberalism whittle away at social safety nets and civil rights, more and more people around the world turn to nonprofits for assistance. These organizations position themselves as a correction or solution to the horrors of capitalism.
However, as we will see, they are anything but. In reality, the incremental services provided by these organizations take the place of mass political organizing that could address the root cause of these problems — capitalism. Social change, liberation, and the reorganizing of society cannot be achieved by relying on nonprofit organizations.
Much of my analysis comes from the book, The Revolution Will Not Be Funded, by a collective called INCITE. While I found the book’s collection of essays to be politically eclectic, its overall analysis of the nonprofit-industrial complex is great.
The major focus here is on organizations that present themselves as politically liberal and progressive. Of course right-wing nonprofits, foundations, and think tanks exist as well. Yet these right-wing organizations do not pretend to address the societal ills created by capitalism, as the liberal and progressive organizations do.
The incremental services provided by nonprofit organizations take the place of mass political organizing that could address the root of these problems — capitalism.
We at Firebrand have nonprofit workers in our ranks. Many people in the working class receive important services from such organizations. So I want to be clear that this piece is not about why nonprofits are “evil,” but rather why we can’t look to this industry as a way out of capitalism.
A nonprofit organization is defined as a non-governmental (i.e. private) legal entity organized and operated for a collective, public, or social benefit, as opposed to an entity that operates as a business aiming to generate a profit for its owners. Because nonprofits are private, they are also called non-governmental organizations (NGOs). “Nonprofit” is a bit of a misnomer, because although most nonprofits do not sell goods or services that are paid for directly by the people who are consuming or receiving those things, nonprofits do receive payments from government grants, donations by private individuals, and other fundraising efforts. As with any corporation, the executive directors of nonprofits certainly aren’t hurting salary-wise.
Nonprofits cover a wide variety of groups, from food pantries to political organizations, churches, clinics, and even unions. The Democratic and Republican parties are both considered to be nonprofits, along with many universities, charter schools, and hospitals.
Nonprofits get most of their funding through grants of money or endowments, which are sometimes provided by the government, but mostly through private foundations. Private foundations are also tax-exempt organizations that claim to serve humanitarian purposes. These foundations are structured like corporations and usually funded by wealthy families, who use them as shelters from both income taxes and inheritance taxes. We have all heard of these private foundations; for example the Bill and Melinda Gates Foundation is the largest private philanthropic foundation in the United States and has over $38 billion in assets. Some others you may know include the Ford Foundation, the Bloomberg family Foundation, and the Pew Charitable Trust. These foundations have massive wealth and resources and little oversight or transparency.
Meanwhile, INCITE defines the nonprofit-industrial complex (NPIC) as a system of relationships between the state, the owning classes, foundations and nonprofits, social services, and social-justice organizations. This system links political and financial technologies of the ruling class with state surveillance over public political ideology, especially emergent leftist and social movements. “Industrial complex” ironically calls to mind the military-industrial complex or the prison-industrial complex — systems that join the public and private sectors to profit from human suffering under the guise of greater public welfare.
Anyone who has been politically active in leftist movements has seen the NPIC in action, exerting the will of the capitalist class and the state upon social movements. A recent and very public example of this was the “nonprofitization” of the organic, grassroots Black Lives Matter movement (BLM) into the Black Lives Matter foundation. The foundation helped to stifle the radical potential of BLM, and later became embroiled in scandal around misuse of its funds. The ruling class uses NGOs as a way to professionalize organizing and limit its impact to activities that are deemed acceptable to wealthy donors. The wealthy aren’t exactly interested in smashing the system that they benefit from.
History of the nonprofit-industrial complex in the US
Prior to the Civil War, most charitable work in the US was done by individuals or small organizations that helped people they deemed worthy of charity, such as children or widows. These early forms of charities were focused on helping people on an individual level instead of changing the circumstances that led to their suffering. This is a practice that carries on in the nonprofit industry today.
The nature of charity changed dramatically in the early 1900s. The first multimillionaire robber barons, including Andrew Carnegie and John D. Rockefeller, created a new type of institution: the charity foundation. These foundations supported charitable giving in order to shield their massive earnings from taxation. Carnegie and Rockefeller are often lauded in the media for their philanthropic work, which is laughable upon the slightest inspection.
The NPIC gives the ruling class control and surveillance over public political ideology, especially emergent leftist and social movements.
The real reason Carnegie and Rockefeller went into charity work was because they wanted to preserve capitalism, and they based the structure of their philanthropic corporations around that goal. They had accumulated a ridiculous amount of wealth through worker exploitation and monopolies, which were countered with militant protests and strikes during the bloody and contentious labor struggles of the late 19th century. The robber barons saw the need to placate those workers by alleviating some, but not all, of their material conditions in order to keep things running smoothly for themselves.
In Carnegie’s essay The Gospel of Wealth, he lays out a very clear understanding of class relations and how they have changed in relation to the means of production — which he owned, of course. Carnegie laments how unfortunate it is that the wealthy can just accrue so much wealth while the people who work for him suffer. Yet he can’t seem to think of any other way of organizing society that could possibly be better. Once he has enthusiastically accepted that capitalism is the only way forward, Carnegie urges his fellow millionaires to help him preserve this system by bestowing charity on those who are deserving. Naturally, this meant those who don’t directly challenge capitalism, don’t pose a threat to their bank accounts, and are willing to work. Carnegie believed that indiscriminate handouts would only encourage lazy, drunk, and unworthy people to persist in their ways. This is the seed of the “bootstrap” mentality that still strongly pervades the NPIC.
Almost right away, critics raised alarm bells about this type of philanthropy. They warned that foundations could actually be harmful to the people they were claiming to help. The US Commission on Industrial Relations filed a report with Congress warning that charitable foundations were a “grave menace” because they concentrated money and power for their wealthy donors and allowed them to control the narrative around social issues.
An early example of this new form of control was seen in the wake of the 1913 Colorado miners’ strike against Colorado Fuel and Iron, which led to the Ludlow Massacre of 1914. At the time, 40 percent of Colorado Fuel and Iron was owned by Rockefeller, who had just started his charity organization, the Rockefeller Foundation. As miners in Colorado were organizing and engaging in open warfare against their bosses, the secretary of the foundation made quieting social and political unrest a major priority. The foundation set out to help individual workers, but not unions, because organized workers were a threat to society.
After the Second World War, charitable foundations surged in popularity and scope. One of the largest to come to prominence around this time was the Ford Foundation. Today the Ford Foundation has the stated goal of “promoting human welfare,” which it appears to do by advancing US Imperialism around the globe (something we will get into later). Originally, though, the foundation was established in reaction to President Franklin D. Roosevelt’s tax reforms in 1935 that introduced 70 percent tax rates on large inheritances. The extremely wealthy Ford family thus created the foundation as a way to shelter their income and pass it along in perpetuity to their family without having to pay any inheritance taxes. The foundation is currently worth $16 billion.
The state uses NGOs as a way to professionalize organizing and limit its impact to activities that are deemed acceptable to wealthy donors.
By the early 1960s, foundations were growing at a rate of over a thousand per year, and financial advisors promoted foundations to their clients as tax-shelter tools due to the lack of federal regulation. In response, Congress passed another Tax Reform Act in 1969 that placed some regulations on private foundations, notably requirements to spend a small percentage of their investment returns in order to slow wealth hoarding. This meant that even as foundations were bringing in money through investments, they had to give away a certain percentage of their annual income. This was fixed at 6 percent in 1969, but was lowered to 5 percent in the late 1980s, so that foundations could keep a nice round 95 percent of their gains.
One result of this legislation was the rise of groups that organized themselves as nonprofits, because private foundations could make tax-deductible donations to these types of groups to fulfill the payout rule. 501(c)(3) is the IRS’s designation for these organizations, which are “religious, charitable, scientific, or educational” in nature. An organization must achieve this tax status first to receive grants from private foundations, because we wouldn’t want foundations to just be giving money away without a tax break!
Through the late 1960s and 1970s, there was a surge in radical movements — and the private foundations were not having it. A couple of essays in The Revolution Will Not Be Funded outline how foundations would intervene and shape movements to ensure they didn’t challenge capitalism or the status quo too much. One example is the Ford Foundation’s support of certain Black activist groups, like the Congress Of Racial Equality (CORE), to shift focus away from Black liberation and radical social change and towards Black capitalism and policy reform. The Ford Foundation’s website describes this exact thing on its webpage for civil-rights grants, moving leaders away from “direct protest action” and towards “minority enterprise” and “economic development using investment capital.”
This is a similar trajectory to what we saw with the BLM movement. It was tainted early on with Democratic Party funding, as BLM activists were funneled into what I call “Ted Talk activism.” Then there was the founding of the Black Lives Matter foundation, which no longer does any on-the-ground organizing or challenging of the cops. To quote the BLM foundation directly:
[It] operates as an abolitionist-centered foundation, utilizing a hybrid model to drive impactful change… [By] funding organizations and individuals leading policy and abolitionist efforts, concurrently fostering action in alignment with our core pillars. Additionally, we actively collaborate with organizations and individuals providing direct services that address the essential needs of Black communities.
Quite a far cry from the anti-establishment and anti-police slogans spread by activists in the BLM movement’s founding days!
The revolution will not be a 501(3)(c)
The nonprofit-industrial complex creates a money loop. Wealthy people and their families create foundations that allow them to avoid taxes on a large portion of their money, which is made by exploiting workers. This robs the public of tax money that should go to public services and social-safety nets, which are disappearing at an increasing pace due to decades of neoliberal policies. Foundations can then turn around and offer “relief” to the public whose hardships are the result of capitalism and corporate exploitation in the first place! It is essentially a diversion of funds from the public into the hands of the wealthy, who can then distribute those funds as they see fit.
At present, NGOs represent over $1 trillion in economic activity in the US, which is comparable to the wealth of some of the richest nations on earth. The Bureau of Labor Statistics reported that 12.5 million people held jobs at nonprofits in 2017. According to INCITE, there were 50,000 nonprofit organizations in 1953. Today some estimates count up to 10 million nonprofits registered in the US, all competing for funding from private foundations.
Carnegie and Rockefeller specifically went into charity work to preserve capitalism, and based the structure of their philanthropic corporations around that goal.
Let’s walk through the issue of funding. As we’ve seen, private charitable foundations are created by wealthy families or even corporations (for example, there is a MasterCard Foundation) in order to shelter their income and inheritance from taxation. To maintain their status as tax-exempt corporations, private foundations must give away five percent of their assets annually, a law known as the five percent payout rule. This payout is done in the form of grants to nonprofit organizations or NGOs. For an NGO to receive these funds, which are intended to cover costs, they must apply for various grants offered by these foundations.
In order to qualify for nonprofit status, organizations must structure themselves in a corporate hierarchy, establish strict bylaws, and then register with the IRS as a 501(c)(3). This tax status allows the organization to receive grant money from foundations, corporations, and the government without paying income tax on that money. These things are not required to do the work, of course, but they make nonprofits seem desirable to investors. Once an organization has won a grant, the organization is beholden and accountable to those who fund them, instead of those they serve.
And that money is not guaranteed! Grants come with strings attached, and can be rescinded at any time. INCITE share their personal experiences with this in the introduction of The Revolution Will Not Be Funded. After applying for a grant from the Ford Foundation, INCITE received approval of their proposal to cover general operating expenses for two years. A few months later, after the collective had committed to two large projects centered around domestic violence, the Ford Foundation reversed its decision and took back the money. It seems the foundation had learned of INCITE’s statement of support for the Palestinian liberation struggle.
We have also seen the chaos caused by the recent funding freezes imposed by the second Trump administration, with federal grant money being pulled from various organizations that fill the gaps where government services should be. This funding structure, in which money comes from the capitalist class with strings attached, means that, ultimately, the wealthy are controlling the struggle for social justice.
The stipulations that come with grants often result in what is termed “mission drift”. The IRS requires NGOs to have a stated mission that establishes the goals of the organization, as well as what it does, who it serves, and how and where they are doing the work. However, in order to secure grants, many organizations feel compelled to modify their work or mission statement to fulfill the requirements of funding. Over time, this may shift the nonprofit’s focus away from its original goals of making a material impact on people’s lives and towards quantitative goals like fundraising or meeting corporate-style benchmarks.
Further, there are only so many grants available every year. The competition for these limited funds discourages the kind of collaboration across organizations that could address root causes of social issues. It also results in the professionalization of activist work. The NPIC has developed a professional class of executives, fundraisers, lawyers, grant writers, and compliance officials. These nonprofit professionals have their own network of conference circuits, academic programs, and professional associations. Professionalizing activist work is ultimately unsustainable — the NPIC encourages us to think of social organizing as a career. You do the work in order to get paid. Once a job industry has grown around activist work in this way, the people engaged in it have an interest in keeping the industry alive.
NPIC and cultural hegemony
Italian Marxist Antonio Gramsci theorized a division of the state into civil and political society. Civil society is where cultural institutions such as the education system, the family, and the media shape the ideas and norms of the population — a process that Gramsci termed hegemony, “a ‘consensual’ political practice distinct from mere coercion.”
Political society, according to Gramsci, is comprised of institutions that enforce the will of the state when consent is not obtained. Some of these institutions include the courts, which can tell you that you have to do something, and the police, who will take you away and punish you if you don’t do that thing. Legal sanctions and state repression are functions of the political society. These are ways that the capitalist class uses the state to enforce their will upon the people, whether they consent to it or not.
The “bootstrap” mentality strongly pervades the nonprofit-industrial complex.
The nonprofit-industrial complex falls into the category of civil society, and thus helps create cultural hegemony — manufacturing the dominant ideology and upholding the status quo. In the services they give, the curriculum they write, the media campaigns they deploy, and so on, nonprofits perpetuate ruling-class ideas and frame the politically acceptable solutions to various problems. Of course the politically acceptable solution is never working-class organizing and fighting capitalism.
There are countless nonprofits designed to address the huge issue of homelessness in the US. The solutions promoted by these organizations include vital stopgap services such as homeless shelters or temporary housing, or offering important human comforts such as showers and socks. Helping the homeless organize and advocate for themselves or doing the obvious thing and providing permanent housing is never on the table. Thus, the NPIC helps create the dominant ideology that homelessness should be dealt with through charity. This flows easily into the idea that homeless people who do not comply with being pushed into shelters or “swept” around their city should be punished or forced into shelters by the state (i.e. the cops) — for their own good of course.
Another way this works is through political nonprofits who spring up around certain issues, such as abortion or queer rights, yet funnel their work into lobbying or voting in lieu of mass activity such as strikes, protests, or occupations.
The global impact of NGOs
The NPIC has a large global influence, and it’s bad news on that stage as well. Internationally, both foundations and NGOs have a long and well-documented history of supporting the interests of the US ruling class around the globe under the guise of maintaining peace. They are not official governmental bodies, but often work closely with the US State Department, and the CIA in particular, to gather information from places where official government entities cannot go.
Private foundations, through the vehicle of nonprofit organizations, are the biggest funders of the social sciences and the arts, endowing courses and student scholarships in development studies, community studies, cultural studies, and human rights. On paper that sounds great. However, these grants come with restrictions on what can be done with the funds. In this way, with the power of their purse, wealthy donors and foundations can control narratives and lay out expectations of what is and isn’t acceptable when it comes to addressing the contradictions of capitalism globally.
The way nonprofits are set up with corporate structures and professional activists, while being beholden to billionaires or the government, does not allow those receiving their services to have any agency in their own liberation. Instead of comrades, they become clients.
Many private foundations, including the Ford Foundation, invest in developing countries. The foundation has the stated goal of “promoting human welfare” and has worked closely with the State Department since its inception in 1936. After the Second World War, when communism became public enemy number one, the Ford and Rockefeller foundations began funding various nonprofits that essentially worked as extensions of the US government in countries around the world where the State Department was busy toppling democratically-elected governments.
One example of this was the establishment of a US-style economics course at the University of Indonesia that was backed by the Ford Foundation. Students were trained in counterinsurgency and US hegemony. Those very students played a crucial part in the CIA-backed coup in 1965, which resulted in the slaughter of hundreds of thousands of Indonesian communists at the hands of US-backed General Suharto.
In Capitalism: A Ghost Story, a collection of essays about the impact of global capitalism in India, Arudhiti Roy addresses the important role that some NGOs play by gathering information on activists and resistance movements and stifling them from within. She writes:
The corporate or foundation-endowed NGOs are global finance’s way of buying into resistance movements, literally as shareholders buy shares in companies, and then try to control them from within. They sit like nodes on the central nervous system, the pathways along which global finance flows. They work like transmitters, receivers, shock absorbers, alert to every impulse, careful to never annoy the governments of their host countries. Inadvertently, and sometimes advertently, they serve as listening posts, their reports and workshops and other missionary activity feeding data into an increasingly aggressive system of surveillance of increasingly hardening states. The more troubled an area, the greater the number of NGOs in it.
Can nonprofits be helpful?
What about the well-meaning people who start or join a nonprofit as an earnest attempt to make the world better? Nonprofit workers often enter the industry because they sincerely want to make a difference and help people who are suffering from poverty, oppression, and exploitation.
But when you consider the corporatized structure of the nonprofit-industrial complex and the true goals of its donors to preserve capitalism and their own wealth, it should come as no surprise that nonprofit workers are treated just like any other worker — very poorly!
Take for example Planned Parenthood of the Rocky Mountains (PPRM), the local chapter of Planned Parenthood here in Colorado where I live, and basically a wing of the Democratic Party. In 2017, healthcare workers at PPRM unionized with SEIU Local 105. This effort was largely in response to the closure of six Planned Parenthoods in the Rocky Mountain region as Donald Trump came to power for the first time, notably including one in Casper, Wyoming, the only chapter in the entire state. Low wages were also a factor in the unionization effort. According to the union, as of 2016, the median annual wage for Planned Parenthood employees in this region was $35,000 annually.
Throughout the union’s efforts to organize, PPRM CEO Vicki Cowart, whose annual salary was around $355,000 at the time, refused to meet with the workers. Instead, she deployed the usual anti-union tactics of captive audience meetings and flyers encouraging employees to vote no because unions were “harmful to patients.” Once the vote to unionize passed, Planned Parenthood challenged it via the National Labor Relations Board (NLRB), and hired a law firm, Fisher Phillips, that advertises “union avoidance” amongst its services. In April 2018, the Trump-appointed NLRB sided with Planned Parenthood. However, shortly after that PPRM called off their attack and recognized the union.
If the issues that we face are rooted in capitalism and imperialism, how can we expect nonprofits, which are often complicit in the same systems, to solve them?
With this example we can see many of the threads discussed in this piece at work. Planned Parenthood is a large nonprofit that provides reproductive and sexual healthcare and sex education in the US and around the world. The organization receives money from the federal government through USAID and Medicare, as well as through grants from private foundations such as the Bill and Melinda Gates Foundation and the Ford Foundation. Any funds from the federal government cannot be used to fund abortion. The Bill and Melinda Gates Foundation has that same stipulation on money it donates. With reproductive rights constantly under attack by the ruling class in this country, people who want to fight back are drawn to support Planned Parenthood in an earnest attempt to do something. The dominant ideology frames this as an acceptable way to engage with the issue. Because nonprofit workers typically believe deeply in the mission of the organization, they are inclined to accept lower wages and poor working conditions.
However, Planned Parenthood has no problem appealing to Republican-led governments — who campaign on defunding abortion clinics, including Planned Parenthood’s — when it comes to something that may impact their bottom line, like the unionization of their workers. This perfectly illustrates the futility of looking to the NPIC as a way out of capitalism. If the issues that we face are rooted in capitalism and imperialism, how can we expect nonprofits, which are often complicit in the same systems, to solve them?
The nonprofit-industrial complex can’t save us
The funneling of people who want to change society into nonprofit organizations takes the place of mass movements that could fight for socialism. The way that nonprofits are set up with corporate structures and professional activists, while being beholden to billionaires or the government, does not allow for people receiving these services to have any agency in their own liberation. Instead of comrades, they become clients. The activity of nonprofits is severely limited by what is deemed acceptable to their financial backers. The nonprofit landscape is highly competitive, discouraging collaboration and the building of actual power or solidarity. The people who give out the funding will not grant money to any project that directly challenges the inequality that allowed them to amass that money in the first place, and therefore, no matter how earnest or well-meaning an individual NGO or nonprofit worker may be, there are limits built in to this system that do not allow them to challenge capitalism and eradicate the need for their organization.
What is needed, is of course a mass movement from below, of class-conscious workers. To quote Hal Draper in Two Souls of Socialism:
The heart of Socialism-from-Below is its view that socialism can be realized only through the self-emancipation of activized masses in motion, reaching out for freedom with their own hands, mobilized “from below” in a struggle to take charge of their own destiny, as actors (not merely subjects) on the stage of history.
In other words, the nonprofit-industrial complex can’t save us, only we can.
Illustration by Josie Norton
