Today is Labor Day, a U.S. federal holiday born out of the efforts of 19th century labor unions to celebrate the contributions and achievements of American workers. While some might not think of labor unions as part of the social sector, they are in fact 501(c)(5) nonprofits and have been included in Candid’s data tools for years. In honor of Labor Day, this blog—the first in a two-part series—offers insights into the various roles that unions play within the social sector, based on data from available recent tax filings (2016 and on).
What is a union?
Unions are workplace-focused, membership organizations that advocate and negotiate on behalf of their members. The right to form a union became federal U.S. law with the 1935 National Labor Relations Act (NLRA). To form a union, a majority of employees in a workplace must express the desire to form one by signing authorization cards and holding an election, or by their employer agreeing to voluntarily recognize their union. Once a union is recognized or a union election is certified by the National Labor Relations Board (NLRB), the union can negotiate contracts on behalf of the employees it represents (known as collective bargaining).
There are three core benefits of union membership:
- Unions negotiate with employers for better employee wages and benefits.
- Unions create processes of accountability around workplace concerns.
- Unions offer their members professional development and training opportunities.
Below we share some lesser-known elements that go beyond the basics of what constitutes a union.
1. Unions are 501(c)(5)s. Within the tax code, unions are designated as nonprofit organizations under section 501(c)(5), a designation they share with agricultural or horticultural organizations. Much like 501(c)(3) charitable organizations and 501(c)(4) social welfare organizations, 501(c)(5) organizations are required annually to file a Form 990, 990-N, or 990-EZ with the IRS. Unlike 501(c)(3)s, however, donations to 501(c)(5) organizations are not tax exempt.
2. Unions are both local and national. Unions are usually structured around large national/international organizations that contain smaller local organizations (also known as “locals”). Locals tend to deal directly with members, handle contract negotiations, and conduct on-the-ground organizing. National unions tend to deal with overall strategy, and frequently provide programs and resources for the locals. Unions finance these activities largely with direct dues from members.
3. Unions are diverse. While there is often a perception that unions predominantly consist of white, male, blue collar workers, union membership is diverse in terms of race, gender, age, and industry. A recent Bureau of Labor Statistics report found that a larger proportion of Black workers were union members compared to the proportion of other races.1 And while union density has fallen across the private sector, union density of certain women-dominated professions like nursing have slightly increased. In fact, hospital nurses now have a unionization rate three times that of the private sector as a whole.
4. Unions award grants. According to the latest Candid data, unions paid out $252 million in grants. $115 million of that came from the National Education Association (NEA), by far the biggest union grantmaker. They were followed by the American Federation of Labor & Congress of Industrial Orgs (AFL-CIO), which granted $23 million. Some NEA grants went to local and state affiliates, while others went to progressive organizations like the Center for Popular Democracy and to educational organizations like the Consortium for Educational Change.
5. There is a correlation between union membership and charitable activities. Much like other community institutions (such as churches, YMCAs, etc.), unions embed themselves in charitable networks, mobilizing their members for volunteer opportunities, and establishing convenient ways to contribute to charity (this will be discussed further in part two of this blog).
6. Unions fight for the economic interests of working people on a larger scale. Unions push for pro-worker legislation and appropriate corporate regulations. They also play a central role in ensuring that existing labor laws are followed by helping to uphold safety and discrimination laws in organized workplaces. To accomplish these goals, unions involve themselves in the political process by lobbying the government, participating in campaigns, and donating to candidates. In 2020, unions spent $8 million on political campaigns and another $49.2 million on lobbying.
While unions are a part of the social sector, their interactions with other social sector forces have not always been amicable. These disagreements often arise from genuinely different views of what would be better for society, but at times they can derive from a parochial attitude whereby unions focus solely on members’ immediate interests. For instance, during the Civil Rights era, some unions (such as United Auto Workers and their leader Walter Reuther) enthusiastically supported the movement. Other unions continued to discriminate against Black workers, seeing them as competition for white members. And while some education reform advocates see charter schools as a way to provide choice for parents and stronger accountability, teachers unions see them as an attempt to strip resources from traditional public schools. Police unions have also opposed criminal justice reform and police accountability measures.
Keeping these criticisms in mind, the next blog post will discuss how unions collaborate with other social sector forces. We will detail what Candid’s data shows about the size and scope of unions in the U.S., analyze new trends in unions’ engagement with the wider social sector, and conclude with suggestions for future research.
 Bureau of Labor Statistics, Union member 2020. https://www.bls.gov/news.release/pdf/union2.pdf