Global neoliberal policies that came into effect after the decline of the welfare state toward the end of the 1970s led to an increasing number of nonprofit organizations performing important functions of social welfare, thereby becoming crucial for economic development and progress. When considering the financial size of the nonprofit sector, these organizations clearly represent a significant economic power, particularly in relation to developed countries. The importance of the sector in the literature is currently limited to the social, cultural, and political fields, although nonprofits have become increasingly important both qualitatively and quantitatively. Moreover, the economic value created by them is not particularly known in the public sector. One of the reasons for this phenomenon is that data on nonprofit organizations are limited and are not collected systematically. In summary, although studies on the relationship between nonprofit sector and economic growth are almost nonexistent, most of the studies are related only to conceptual explanations of the financial size of organizations in the sector. The original and significant work in this study is particularly important because a limited number of the available theoretical and empirical works assessing Turkey’s experience, and no studies, including those on the econometric model, are noted in foreign literature.

In this context, the primary aim of this study is to examine the relationship between economic growth and nonprofit organizations during 1975–2006. The causality relationship between nonprofit organizations and economic growth was examined by comparing nonprofit private service organizations’ revenues and gross national product (GNP) variables. According to the results obtained by applying time series methods on annual data, the empirical study performed on Turkey’s sample is considered a foundational contribution to the literature. This study can contribute to the development of the sector by offering information on the nonprofit sector and particular raising the awareness of public institutions. In this context, primarily in terms of the analysis, the conventional unit root tests, namely, Dickey Fuller and Augmented Dickey Fuller, were applied, and the variables were determined as stable at the first difference level with a trend and intercept. According to the results of Zivot and Andrews, applied by considering the structural breaks as the first step in the analysis, which was different from those using in the literature, the GNP was an intercept stationary, and the breaking point for this variable was 2000. We can assume the crisis experienced in November 2000 caused this break. The nonprofit organizations were found to be in a stable trend, with the breaking point in 1993. According to the results of the Toda– Yamamoto approach, which considers structural breaks, no causality was concluded between nonprofit income and economic growth. Since the data covered in the study is attributed to a specific period, the nonprofit sector data should be included in official statistics programs with a more comprehensive and detailed approach to increase the representative power of the obtained results and to conduct more comprehensive research.

In summary, although the share of the nonprofit sector revenue in Turkey’s GNP is increasing and has achieved financial rates of a magnitude equal to that of developed countries, we found no correlation when comparing economic growth in Turkey. The establishment of an effective sector in social and financial fields and forming this structure on a strong foundation is critical to Turkey’s social structure and sustainable development. The liberalization of the market as well as the nonprofit sector and the abandonment of the government’s role in social welfare to an effective nonprofit sector are the most crucial factors in the formation of this structure. To achieve this, the relationships of the public sector with the nonprofit sector must first be arranged within a non-conflicting structure, and a balancing cooperation should be maintained. Although various improvements were made in the European Union accession process in 2004, legal reforms to meet international standards must be implemented and regulated. These improvements should not only be limited to democratic reforms. To support the development of funding strategies for nonprofit organizations, improvements in tax legislation can be applied to solve issues in the financial field. Moreover, similar to developed countries, the diversification of sector actors in accordance with both the legal and social structures can provide solutions to numerous infrastructure problems. However, these reforms should not be copied from a western-centric, reference but should be developed with an appropriate composition, with the development of a new sector model that is adaptable to Turkey’s unique social structure.