America is undergoing a fundamental social transformation of roles and services involving the downsizing of government and a redefinition of the public sector's mandate for providing for the most vulnerable in this society. Correspondingly, this nation's second sector (the world of business and industry) is, as we can observe, facing new international economic challenges that impact how efficiently and effectively American labor must perform. Even within the general public, the country's population base itself is experiencing a profound alteration that impacts how our citizens live. The technology and information revolutions are changing lifestyle choices and career options.

Yet, neither this nation's elites nor its body politic fully realize the scope of this transformation, which is also underway within America's nonprofit sector. The growth and increasing significance of this "Third Sector" of the American enterprise deserves further consideration. Tax-exempt institutions cover a broad segment of educational, social service, religious, healthcare, cultural, and political advocacy agencies.

Increasingly this is the sector of last resort for providing the safety net for those in crisis. It is these "tax-exempt" entities that are now in the forefront of defining social welfare policies and practices, a fact that is applauded by 62% of American citizens in a recent Gallup Poll. These Americans voiced their confidence in this segment of our nation's infrastructure as best able to manage and meet many of the core needs of our society.

Despite these organizations' dependence on charitable support, government contracts over the years have served as a critical component in their service operations, impacting a broad range of social and health related problems. With that funding stream in the process of being curtailed or significantly reduced, new pressures will be brought to bear on many of these agencies to continue to provide quality care.

Possibly more than any other segment of this society, nonprofits directly intersect with the lives of this nation's citizens and immigrant populations. Take for example the fact that 68% of all households in 1995 gave to charitable institutions. In dollar terms this amounts to a little over one thousand dollars per family, representing an eighty-nine dollar increase over the 1993 levels. Religious organizations receive the largest share of charitable support (48%), while Health (27%), Human Services (25%), and Education (20%) represent the next tier of giving. The fact that 90% of all nonprofits were formed since the end of the second World War reflects the growth and prominence this field has played over the past fifty years. Today, there exist over one million nonprofit agencies in the United States, who employ 10% of this nation's work force. America is truly the center of the "Third Sector." Possibly more significant than the numbers themselves, Americans place greater confidence in the nonprofit organizations than in such institutions as the press or political parties. Giving represents a barometer of that support. According the Chronicle of Philanthropy, in 1995 support increased by 5% among the country's top 400 charities, who raised a total of 23.5 billion dollars. These numbers reflect the overall strength of this sector, despite recent high profile scandals and ethics violations that have touched the world of charitable giving.

The Jewish communal system of service is an integral part of this "Third Sector." The 300 national agencies, in addition to the 200 federated structures, represent an important component of this enterprise. Seventeen federations are ranked by the Chronicle of Philanthropy among this nation's largest charities. In addition, numerous national Jewish organizations and Jewishly-affiliated hospitals and universities have been identified in the 1996 listings of the country's major 400 non-profit institutions. The UJA ranks as the sixth largest charity in the nation. Only the Salvation Army ($644 million), the American Red Cross ($465 million), Catholic Charities ($419), American Cancer Society ($381 million) and Second Harvest ($369 million) rank ahead of the UJA ($346 million).

Yet, despite the unique and critical role played by charitable institutions in this society, there is a concerted effort on the part of some in the political establishment to impose a series of new legislative controls on the nonprofit sector. These changes involve both Congressional and IRS proposals to limit their lobbying activities, to impose restrictions on groups that promote products or offer services and to create tax credits as a means of encouraging donors to give to agencies providing direct service to the poor as against other types of charitable donations. While abuses must be addressed, many of the sweeping proposals being offered by legislators will serve only to weaken and even divide this vital sector of American philanthropy and volunteerism.

No doubt, these organizations that comprise the American nonprofit sector have a set of moral and institutional obligations to our larger society. The provision of quality services, the maintenance of accurate business records, consistent and truthful marketing practices, and fair and appropriate compensation of personnel, all represent key ingredients necessary to sustain the future credibility of this system. Nonprofit institutions have a responsibility both to limit fund-raising expenses and to disclose their expenditures. In addition, these agencies need to pursue, whenever possible, initiatives that defuse organizational competition and promote models of collaboration.

The ethical basis of nonprofit organizations is charity, a word derived from the Latin "caritas," translated as "love." The notion of caring as reflected in the concept of love for one's neighbor represents the highest ideal of communal responsibility. Organizations within the nonprofit sector have a mandate not only to serve our society but also to transmit the core values of civic involvement. In turn, the rest of American enterprise has both the obligation and the opportunity to insure the growth and well being of this precious national legacy.