Why does the government grant nonprofits “exempt” status? What value does that reflect? 

Nonprofits are tax-exempt for a variety of reasons. First, certain types of nonprofits relieve the government’s burden by providing services that the public would have liked the government to offer, such as higher education and daycare. By granting tax exemption, the government directly benefits from the work of these nonprofits. Secondly, nonprofits’ work is centered around a public good, including civic engagement, providing arts and culture, and serving marginalized groups. In this way, the government benefits indirectly from the work of the nonprofits. In addition, exempting religious nonprofits from taxation allows for the separation of church and state. The power that stems from this tax exemption implies that access to public services is democratized as nonprofits are enabled to openly address issues that the government may not be concerned about, thereby opening the door to services that the public needs but the government is not required to provide.

Do social service nonprofits replace core government functions?

I don’t think social service nonprofits replace the work of government; rather, I think they complement one another. Social service nonprofits, such as public housing agencies and food assistance organizations, enhance government services that are in the same vein by reaching a broader population and increasing the number of people served. Also, I think that social service nonprofits can more easily cater to the specific needs of certain groups of individuals, such as immigrants, who have cultural and language needs that the government may be limited to accommodate. With the increasing diversity of social needs, the government can only benefit from the work of social service nonprofits. On the other hand, the government should continue to provide social services such as food stamps because it typically has a more consistent stream of funds than nonprofits.