Nonprofit FAQs
Ten Basic Questions Answered
- What are nonprofits?
Nonprofits include a wide range of entities such as social welfare organizations,
social and recreational clubs, employee pension funds, religious organizations,
business leagues, and credit unions. Unlike many for-profit organizations,
they do not operate for the financial benefit of individual shareholders.
Instead, they serve public interests.
- How many nonprofits are there in the United States?
More than 1.4(updated in 2000) million groups are recognized by the
Internal Revenue Service as nonprofits. Of these, 600,000 organizations
had charitable, tax-exempt status under Section 501(c)(3) of the Internal
Revenue Code in 1994, meaning that they serve broad public purposes.
IRS data on nonprofits do not fully reflect the enormous scope of the
sector, however. Small organizations with gross receipts under $5,000
and most religious organizations are not required to apply to the IRS
for tax-exempt status, and organizations with gross receipts of less
than $25,000 do not have to file yearly information returns. Nonetheless,
the IRS has data on the larger nonprofits, and they account for roughly
98 percent of the total revenues, assets, and expenses of public charities.
- Which regions or states have the most public charities per capita?
Nationally, there were 6.8 public charities per 10,000 residents in
1994. The Northeast had the highest density, at 8.3 charities per 10,000
residents, and the South the lowest at 5.9. The highest densities tended
to be among states with relatively small populations—Vermont, Alaska,
North Dakota, and Montana. The lowest concentrations were in Utah, Mississippi,
Nevada, Louisiana, and Alabama.
- Has the number of charitable organizations grown?
Yes. Between 1989 and 1994, the number of public charities reporting
to the IRS grew by 6.3 percent annually, compared with national population
growth of 1.1 percent. The most rapid growth of nonprofits occurred
between 1989 and 1992, at an average rate of 7.3 percent. That growth
rate slowed to 4.8 percent per year between 1992 and 1994.
- Did charitable organizations grow faster in some regions of the country
than in others?
Regionally, the growth rates of charitable organizations mirrored those
of population: public charities grew more rapidly in the South and West
and more slowly in the Northeast and Midwest. Six states—New Mexico,
Utah, Colorado, Nevada, Idaho, and Oregon—numbered among the top
ten in growth rates for both population and public charities.
- Which types of public charities have grown the fastest?
In the early 1990s human services organizations added the greatest number
of charitable nonprofits to the sector—15,800, or more than twice
the number of any other type of nonprofit organization. But the fastest
rates of growth were among environment/animal and education organizations:
the first grew by 56 percent and the second by 44 percent. The slowest
rate of growth was among health organizations.
- What kinds of charitable organizations are the most common?
Human services organizations. Nationally, more than one in three public
charities that report to the IRS is a human services organization. Examples
include Boys and Girls Clubs, foster grandparent programs, senior citizen
centers, employment and training programs, food banks, homeless shelters,
and adolescent pregnancy programs. The next most common types of public
charities, in order, are health, education, and arts and culture. In
general, small public charities are much more common than large ones.
- What types of charities have the most assets?
Health and education nonprofits. Nationally, health organizations hold
half of all nonprofit assets and education organizations nearly 30 percent.
Public support dollars, however, are spread more widely: roughly three-quarters
of public support money goes to human services, education, and health.
- Which kinds of public charities spend the most?
Nationwide, health activities claimed the lion's share of total expenses
among public charities in 1992, at 63 percent. Education accounted for
17 percent of all expenditures, followed by human services organizations
at 11 percent. All other types of public charities, combined, reported
less than 10 percent of all expenditures in the sector.
- What issues do nonprofits face at the turn of the century?
Raising the financial and human capital needed to sustain and expand
service programs, especially in light of heightened expectations that
nonprofit organizations will be able to fill the gap left by reduced
federal government support for many social services.
Measuring the quality and efficiency of nonprofit service providers.
Acquiring and using ever advancing technology to serve the needs of the
public.
Source:
Carol De Vita
Urban Institute
2100 M Street, N.W.
Washington, D.C. 20037
References
State Nonprofit Almanac 1997: Profiles of Charitable Organizations, by
David R. Stevenson, Thomas H. Pollak, and Linda M. Lampkin, 1997, Washington,
D.C.: Urban Institute Press;
Nonprofit Almanac: Dimensions of the Independent Sector 1996-1997, by
Virginia Ann Hodgkinson et al., Independent Sector, 1997, San Francisco:
Jossey-Bass Publishers.
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