Everything you need to know about the nonprofit industrial complex

Politics Explained

Oct 15

What is the nonprofit industrial complex?

The nonprofit industrial complex (NPIC) is a system of relationships between the state, the upper classes and nonprofit and social justice organizations. These relationships result in the surveillance, control and suppression of political movements, according to Incite.

The nonprofit industrial complex helps the rich maintain control of their wealth and resources, and of political and social movements. Furthermore, the nonprofit industrial complex enables the state to suppress radical ideas, preventing any actual change from occurring and ensuring that the status quo remains in place, always in benefit of the upper classes.

As such, the NPIC restricts how one can move and function within nonprofits, funneling our work in certain directions to protect the ulterior motives of the upper classes and the government, ultimately derailing movements that seek to challenge the status quo or uplift marginalized communities. Radical movements are turned into dead ends to ensure that social movements are unable to challenge those in power, thus further amplifying corporate and state interests over the voices of those most impacted by inequity.

To surmise, the NPIC is designed to exploit BIPOC, LGBT+ and other marginalized communities while enriching the pockets of the wealthy and already powerful. According to Community Wealth Partners and the Annie Casey Foundation, only 18 percent of nonprofit employees are POC, which is proof of how entrenched in white supremacy the NPIC is.

A 2014 study by D5 Coalition found that white people comprise 91% of foundation executive directors, 83% of foundation executive staff and 68% of program officers. This lack of diversity shows in how foundations give their money. The same study found that only 7% of foundation grant giving went toward nonprofits that explicitly serve people of color.

Who do nonprofits truly serve?

Not only does the NPIC help keep the upper classes wealthy, it also allows the government and state to monitor social justice movements in a way that restricts true political reform. Through the NPIC, the state maintains and controls dissent to further uphold capitalism by forcing social movements to follow capitalist structures rather than dismantle them. Furthermore, activist efforts are redirected into career-based methods of organizing instead of mass-based, grassroots organizing capable of actually transforming society. The NPIC also allows corporations to mask their exploitative and colonial work practices through "philanthropic" work that once again prioritizes the wishes of the wealthy.

The NPIC also creates an unequal, hierarchical relationship between nonprofits and communities. Pressure from the state and the upper classes requires nonprofits to engage with communities on the terms of those with power, not on the terms of the community itself.

Organizations thus reinforce values that treat inequity as an issue of the individual rather than of systems because this approach aligns with their funders’ worldview. As such, the NPIC makes it so that nonprofits are more invested in their funders’ agendas than in the communities they serve.

Another aspect of the NPIC that supports the wealthy is through mass donations made to nonprofits. To incentivize financial contributions, donations to charities and private foundations are tax deductible. While this is in theory meant to increase support for organizations serving communities, it comes with hidden consequences that are advantageous to those in power.

First, private foundations are established as a legal way for the wealthy to avoid paying taxes on large chunks of their wealth. Second, this mode of donating facilitates further wealth accumulation for the rich. In the United States, foundations are legally required to give away 5% of their assets annually in order to ensure they are active in charitable giving. However, they rarely choose to exceed this 5%, instead investing the vast majority of their endowment in the stock market and growing their assets without ever giving a substantial share to charities.

“The reality is philanthropy is a system that allows rich people to maintain control of their wealth,” explains Dean Spade, activist and founder of Sylvia Rivera Law Project. “Instead of having it be taxed, they can put it into a foundation, which is still a bank account that they get to control what happens to.”

Furthermore, the state has the power to grant nonprofit status, and thus they do so in a way that keeps them safe. For instance, the state is unlikely to grant tax exempt status to an organization whose primary mission is the abolition of the state itself. Thus, organizations with radical, leftist politics are forced to either moderate their mission to comply with the IRS, or they have to forgo 501(c)(3) status and the ability to offer tax exemption to potential donors, which de-incentivizes donating.

Dismantling the NPIC: mutual aid as an alternative

So, now we know that the nonprofit sector is not immune to the pressures of capitalism or structural racism. Contrary to dominant narratives, big philanthropy is not the ultimate solution to inequity and other social justice issues. Once we know what the NPIC is and how it affects movements, we can continue conversations about how the nonprofit sector is complicit in systems of oppression and what we can do about it.

So, how do we dismantle the NPIC and ensure the authenticity of social and political movements?

One alternative to supporting nonprofits is investing in community-centric fundraising.

Community-centric fundraising emphasizes a different framework for thinking about how power flows through our organizations. Instead of reinforcing donors as mission-setters in nonprofits, community-centric fundraising pushes donors to dive deeper into conversations about the root causes of wealth inequity. Hand in hand with community centric fundraising is mutual aid.

Mutual aid is solidarity-based support where communities unite against a common struggle. They take on the responsibility of caring for and uplifting each other. Aid is offered in the spirit of solidarity and reciprocity, with liberation and progress for all as the ultimate goal, rather than any ulterior motives as is in the case of nonprofits.

Mutual aid used to be a term that was mainly used by anarchists and scholars. It’s attributed to Russian anarcho-communist Peter Kropotkin who used the term in his 1902 writing Mutual Aid: A Factor of Evolution. He created the theory after witnessing animals uniting against common struggle rather than competing with each other. Whereas Charles Darwin talked about survival of the fittest, Kropotkin argued that survival is based on solidarity.

Mutual aid firmly believes that everyone has something to contribute and everyone has something they need, creating symbiotic relationships and solidarity in communities that need them the most.

Mutual aid is antithetical to the NPIC. It’s volunteer-run, decentralised, grassroots, organised without any hierarchy, transparent and driven by the needs of community members.

Mutual aid can look like volunteer coalitions doing work such as food distribution or financial aid. While many of these networks have existed for a long time (for example, the houses of ballroom culture or, more recently, projects such as For the Gworls and The Okra Project who support the Black trans community), particularly in underserved communities. There has been a huge rise in mutual aid efforts due to the pandemic, such as grocery deliveries for those shielding and self-isolating. Community bail funds, bystander intervention and cop-watch are more recent examples where strategies for mutual aid are intertwined with community education regarding the underlying systems of oppression that create the need for such community responses.

Mutual aid is necessary when wealth is concentrated within one section of society, when the health care system is flawed and when people must work full-time but still are unable to pull their families out of poverty, while the 1% have enough money to solve world hunger but make no effort to do so. In other words, mutual aid is timely as well as timeless.

Decolonizing and dismantling nonprofits means decentering whiteness and honoring diversity within our organizations while ensuring that the needs of marginalized communities are prioritized above all else. It means that we can’t let one group of privileged people make the decisions for how social change occurs. Instead, we need to move forward with a more collective and community-based decision making framework.