The West doesn’t know what to call Buddhism. Is it a philosophy? The answer is no, not in the modern sense of the word. Is Buddhism a psychology? Again, the answer is no. Is Buddhism a religion? Not in the Western sense of what religion means which is mainly about worshiping God.
From the Indian perspective Shâkyashâsana (the cultus of Buddhism) is a Dharma. So what does Dharma mean within the Western framework of religion? Unfortunately, Dharma has many definitions depending upon the context in which it is to be used. It is somewhat like the Chinese word Tao which is translated with the English word “way.”
Surprisingly, the best meaning of Dharma which comes closest to West’s idea of religion is to be found in the Manava Kartavya Sastra which comes from the Mahabharata.
"It is most difficult to define Dharma.Dharma has been explained to be that which helps the upliftment of living beings.Therefore, that which ensures the welfare of living beings is surely Dharma.The learned rishis have declared that which sustains is Dharma” (Shanthi-parva 109-0-11).
Ultimately, that which sustains all living beings is spiritual which comes by various names in Buddhism. To try and directly commune with that which sustains all living being is a contemplative process which is dhyâna. The Buddha discovered four levels of dhyâna by which he attained awakening or bodhi.
Perhaps the closest thing we have to the Indian notion of Dharma in the West is mysticism. But mysticism comes in many different shapes in the West. It is always looked upon with suspicion; even downgraded as an immature form of religion. Of mysticism, Josiah Royce will say:
“Mysticism is the always young, it is the childlike, it is the essentially immature aspect of the deeper religious life. Its ardor, its pathos, its illusions, and its genuine illuminations have all the characters of youth about them, characters beautiful but capricious” (The Problem of Christianity, pp. 216—217).
His remarks turn the relationship between mysticism and religion upside down insofar as religion—not mysticism—is the immature aspect of mysticism; its inadequate form. If the mystic directly communes with what sustains all of life, religion can only manage to worship an abstract representation of this sustaining spirit which is often more human than transcendent.
Trying to pigeon hole Buddhism as being a religion or a philosophy will never work. Because of this, the West is not quite ready for Buddhism. Perhaps the worst of all attempts at pigeon holing Buddhism is to think of it as a form of secular humanism. This view is too limited. It totally misses what is truly great in man, namely, spirit and his capacity to awaken to it.