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Indiana has long embraced a governing philosophy rooted in a relatively small public sector. Many Hoosiers value that approach because it creates flexibility and allows individuals, businesses and communities to direct resources toward the causes and priorities they value most.
This model has its advantages. But it depends on something that’s easy to overlook: a strong, well-supported nonprofit sector and a shared understanding of how responsibilities are divided across society.
Today, as federal resources tighten, state priorities evolve and local governments face increasing pressure, Indiana is confronting a question that can no longer be avoided: Who is responsible for what?
The scope of the nonprofit sector
After a global pandemic and recent budget reductions, greater need and greater responsibility have increasingly shifted toward nonprofits and philanthropy. At the same time, economic disruptions have placed real pressure on basic needs such as housing, food security, child care, and household stability. These are circumstances often far beyond the control of indivudal families.
In our region, it can be tempting to assume nonprofits will simply fill these gaps. After all, central Indiana is a nonprofit and philanthropic epicenter, home to nearly 20,000 organizations, many of which provide the kinds of human services that alleviate the worst of the above impacts. Statewide, 460,000 Hoosiers are employed by nonprofits.
But size alone is not enough. Even a sector this large cannot indefinitely absorb growing public needs without a clearer understanding of where nonprofit responsibility begins, where government and business responsibilities remain, and how all sectors should work together.
Let’s start with some basics around our sector’s commonly misunderstood financial structure.
What “nonprofit” actually means
Like any enterprise, nonprofits must pay staff, manage facilities, invest in technology, comply with regulations and plan for the future. That requires revenue and long-term discipline.
Unlike for-profit companies, though, nonprofits generate revenue through donations, grants, earned income, sponsorships and government contracts.
What makes us “nonprofit” is our legal mandate that all surplus revenue gets reinvested into our mission rather than distributed to owners or shareholders. For us, community members are the shareholders.
Despite that model, nonprofits must now absorb growing community needs without a readily apparent way to grow operating resources, workforce or long-term capital.
For some, philanthropy is viewed as the answer to that funding gap.
Philanthropy does play an essential role in Indiana. It can be targeted, responsive, innovative and collaborative. It can invest where public systems cannot or will not. It can bring partners together and help launch new solutions.
But philanthropy was never designed to become the permanent payer of last resort.
When we expect charity to underwrite reductions in public investment, we create a fragile model that relies on donor preference rather than broadly supported policy.
That uncertainty affects nonprofit organizations, business leaders, civic leaders and residents alike.
The right tool for the job
So what would a clearer division of labor look like?
Generally, it would mean each sector being rightsized for the challenges it is best positioned to address.
The federal government helps establish a baseline of stability and opportunity, especially in housing, food, health care and the environment.
State government supports education, workforce readiness and statewide economic development.
Local governments focus on implementation, infrastructure, public safety and quality of place.
Businesses create jobs, invest in talent and strengthen communities through growth and partnership.
Nonprofits fill gaps, respond to emerging needs and serve neighbors with trust, proximity and compassion.
Philanthropy catalyzes new ideas, bridges funding gaps and improves already-functioning systems.
Individuals contribute through civic engagement, volunteerism, charitable investment and care for one another.
Whatever arrangement we choose, every sector can function better when it clearly understands its role.
The central Indiana advantage
With responsibilities clearly defined, our region offers unparalleled talent, generosity and research capacity to maximize our collective impact.
We’re home to the first-of-its-kind Lilly Family School of Philanthropy, the top-ranked O’Neill School of Public and Environmental Affairs and the Polis Center research and data hub. Together with strong employers, civic institutions and generous residents, these assets form a uniquely capable regional ecosystem for good.
To be clear: Indiana can absolutely continue to choose smaller government. But smaller government works best when the surrounding systems are strong and their responsibilities are well defined. Otherwise, individuals and entire communities can too easily fall through the cracks.
That means stronger nonprofits, steadfast philanthropy, engaged business leadership and honest accountability about who is responsible for what.
If we want central Indiana to remain competitive, compassionate and resilient, now is the time to define our responsibilities clearly and support the institutions that make our model possible.•
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Bartenbach is CEO of the Central Indiana Community Foundation.
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