The dismantling of the social state wasn’t a conspiracy—it was a bipartisan project carried out in plain sight. For decades, under the banner of “public reform,” both Democrats and Republicans chipped away at public institutions. Austerity budgets gutted public services while governments increasingly turned to private contractors to fill the gaps. The result is what some scholars call the “hollow state”: governments that fund and oversee, but no longer directly provide, core services.
At the heart of this transformation lies the nonprofit sector, particularly those organizations delivering health and social services. And yet, their role in this shift remains largely unexamined.
Since the 1980s, the number of registered nonprofits has ballooned. As public agencies were defunded, state and local governments outsourced essential responsibilities—housing, mental health care, child welfare, addiction recovery, and reentry programs—to nonprofits. While these groups are technically private and mission-driven, many function as government subcontractors, often receiving 90% or more of their funding from public coffers. They operate with limited transparency and minimal public oversight.
It’s important to distinguish these service nonprofits from independent groups—civil rights organizations, media outlets, unions, and many arts organizations—that must remain autonomous from the state to hold it accountable. Confusing these roles has had serious consequences.
As public systems eroded, nonprofits stepped in—not because they were better equipped, but because there was no one else. The burden of structural responsibility was shifted to a fragmented patchwork of organizations never designed to build or sustain long-term public infrastructure. This outsourcing has allowed elected officials to abandon the very idea of public provision, all while appearing compassionate.
Public housing, employment programs, and government-run care systems have been cast as inefficient or bloated. In contrast, nonprofits are framed as flexible and effective. Politicians across the ideological spectrum have embraced this narrative. Rather than invest in public institutions or expand their capacity, they funnel money into nonprofits—sidestepping accountability, avoiding structural commitments, and masking austerity as generosity.
This is not limited to conservatives. Democratic leaders—and even some self-identified progressives—rely heavily on nonprofits. The message is clear: we no longer believe in the possibility of building large-scale public solutions. Instead, we outsource complex social problems to organizations cloaked in moral language and good intentions.
Consider homelessness in cities like New York, Los Angeles, and San Francisco. Despite tens of billions of dollars spent over the past decade, homelessness continues to rise. Much of that money has gone to nonprofits like HELP USA, DocGo, CORE, CAMBA, PATH, and The Doe Fund. These organizations present themselves as charitable actors, but many operate as publicly funded contractors with executive salaries in the hundreds of thousands and little accountability.
A 2024 report by New York City’s Department of Investigation found that from 2017 to 2022, the city spent nearly $20 billion on homeless services contracts. Investigators uncovered widespread mismanagement, nepotism, and contract violations. Many nonprofit executives earned salaries upwards of $600,000—some nearly $1 million.
And what have we gotten for that money? Shelters that are overcrowded, unsafe, and chronically under-resourced. Structural causes—skyrocketing rents, mass evictions, and speculative real estate markets—remain untouched.
With $20 billion, New York could have built more than 60,000 units of permanent, publicly owned housing. It could have invested in state-run shelter systems that evolve into lasting community infrastructure—schools, clinics, cultural spaces. Instead, those funds were routed through a closed loop of developers and nonprofit intermediaries, entrenching the crisis they were meant to solve.
This is the logic of privatized public housing—just like privatized healthcare. First, declare the public option broken. Then, outsource its functions. Finally, declare victory.
We need to reverse this logic. We need to reclaim and expand the public—starting with the idea that government can and must build things that last. This means reimagining the state not as a bloated bureaucracy but as a builder of shared infrastructure. As a caretaker of public life. As a vehicle for collective investment—not just for the next election cycle, but for the next generation.
The expertise is here. Across this country, architects, educators, artists, social workers, engineers, and organizers are already doing the work. What we lack is political leadership willing to act. We need a new wave of public entrepreneurs—people who think long-term, take risks, and build for the common good.
Maybe instead of DOGE, we need DOPE—a Department of Public Efficiency. Lean, democratic, accountable institutions. Not nonprofits bloated with public money, but public systems rooted in citizenship, not charity.
We don’t need moral handouts. We need structural solutions.