The third sector (nonprofit) globally is witnessing profound structural transformations imposed by geopolitical and economic changes, as well as increasing societal and governmental scrutiny.
In this context, Michael Cipriani's thesis, based on his observations at the 17th International Conference of the International Society for Third Sector Research (ISTR), emerges as a critical document highlighting a fundamental gap in the current literature and practices of the sector. This gap lies in the excessive focus on "how" (The How) to manage and direct charitable resources, at the expense of answering the more existential and economic question: "why" (The Why) does this sector exist in the first place?
This article attempts to provide a deep analytical reading of this thesis from the perspective of the nonprofit economy, exploring the economic and institutional dimensions of global charitable transformations, while reflecting these transformations on the reality of the nonprofit sector in the Kingdom of Saudi Arabia within the framework of "Vision 2030".

Economics of "How": Reducing Transaction Costs and Restructuring Authority

The article points to the focus of researchers and practitioners on improving mechanisms for delivering charitable funds and mitigating power imbalances.
From an economic perspective, this trend can be interpreted through two angles:

  • Institutional Shift in Social Investment:
    The shift in discourse from classical "philanthropy" to "private social investment" reflects a trend towards adopting market economy tools in the nonprofit sector.
    This shift aims to maximize "social return on investment" (SROI), but at the same time creates a state of institutional isomorphism that may strip the sector of its flexibility.
  • Trust-Based Philanthropy:
    Economically, this trend is a clear attempt to address the "principal-agent problem" and reduce "transaction costs".
    Traditional models filled with constraints and excessive oversight raise administrative compliance costs and waste resources that should have been directed to actual services.

The Paradox of Democracy and the Economics of Existential Justification (The "Why?" Question)

The greatest analytical value in the article lies in its call to move beyond procedural mechanisms and seek an existential justification for the sector.
In the nonprofit economy, we usually rely on the theory of "government failure" or the theory of "market failure" to justify the existence of the third sector.

However, the author highlights "paradoxes within democracy", as the concentration of wealth in classical philanthropy creates a paradox of directing huge amounts to influence social policies without going through democratic allocation mechanisms. Therefore, merely stating that the third sector "fills gaps" is no longer sufficient; rather, theories must crystallize that focus on the sector's role in building "social capital" and stimulating economic innovation.

Shrinking Civic Space and the Cost of Institutional Survival

The article warns of the phenomenon of "shrinking space for civil society globally".
From an institutional economics perspective, increasing hostility towards the sector translates into a sharp rise in "regulatory costs".
When governments impose strict restrictions, organizations shift from "maximizing social benefit" to "administrative survival struggle". Here, improving "how" becomes merely a tactical solution that lacks the capacity to protect the sector.

The Nonprofit Sector in Saudi Arabia: State-Led Institutional Expansion as a Counter Model (Vision 2030)

In contrast to the global phenomenon of "shrinking civic space" highlighted by Cipriani, the Kingdom of Saudi Arabia, through "Vision 2030", offers a different economic model characterized by "state-led institutional expansion".
In this model, the state intervenes not to constrain the sector, but to empower it to become a strategic partner in the national output.

  • Institutionalizing "How" to Serve "The Purpose":
    The vision did not settle for supporting random charitable work, but worked to structure it economically by establishing the "National Center for the Development of the Nonprofit Sector". This transformation contributed to the sector's transition from mere charity to financial sustainability and social investment, achieving tremendous growth in the number of nonprofit organizations to reach 5,700 organizations by the end of 2024, an increase of 252.76% compared to 2015.
  • Targeted Economic Impact (GDP and Workforce):
    Vision 2030 clearly answers the question "why does the sector exist?" by linking it to macroeconomic targets. The sector aims to raise its contribution to GDP from less than 1% (specifically 0.2% as a baseline) to 5% by 2030.
    Recent indicators for 2024 have shown tangible progress, recording a contribution of approximately 0.99% to 1.4%. The sector also aims to employ 1.1% of the total workforce by 2030, having reached 0.64% in 2024.
    Saudi Press Agency
  • Building Social Capital:
    The sector's role in enhancing social cohesion is evident by exceeding national targets; the sector attracted 1.2 million volunteers in 2024, surpassing the target of one million volunteers six years before 2030, with the economic value of volunteering per individual reaching about 138.94 riyals.


Cipriani's article serves as a wake-up call for researchers in the nonprofit economy; immersing in improving giving mechanisms (how) without building a strong narrative justifying its existence (why) exposes the sector to fragility. However, the Saudi experience, as evidenced by the indicators of Vision 2030, offers a unique approach that integrates both; where governance and empowerment tools (how) are developed as a key lever to achieve the greater economic and social purpose, transforming the third sector from a burden or marginalized entity into a fundamental driver of economic growth and a major contributor to job creation and building sustainable social capital.