Nonprofit Literature Blog

Nonprofit Almanac: Sector Trends and Statistics

Since 1997, the Urban Institute's Nonprofit Almanac has been collecting data from various government and nonprofit sources to provide "the most comprehensive statistical picture of the nonprofit sector available." The 2012 edition now provides information about how the nonprofit sector was affected by the Great Recession. In the foreword, Robert Reischauer, President Emeritus of the Institute, states that "while the data reveal that the ... sector continued to grow [during this period of slow economic growth], adding jobs while business and government shed them, growth has been uneven."

The Almanac also highlights trends between 2008-2010 that revealed a decline in individuals making contributions and bequests, as well as a decline in interest in dividend income. Data also showed an increasing gap between nonprofit income and expenditures, and found that the "growth of the sector is being financed largely by borrowing or drawing down of reserves, trends that are likely to weaken affected parts of the sector over the long haul."

These trends, as well as many others, are discussed in the book's five chapters: The Nonprofit Sector and Its Place in the National Economy, Wage and Employment Trends, Trends in Private Giving and Volunteering, Financial Trends, and The Size, Scope and Finances of Public Charities.  Below I've selected some statistical items from each section to give you an idea of what's available. You may also want to view the graphical highlights of each chapter provided by the Urban Institute.

The Nonprofit Sector and Its Place in the National Economy

• There is about 1 nonprofit for every 175 Americans.
• In 2010, nonprofits contributed $804.8 billion to the gross domestic product (GDP); this equates to 5.5 percent of GDP.
• In 2010, the nonprofit sector employed 13.7 million people.

Wage and Employment Trends

• In 1998 nonprofit employees made up 8.8 percent of nonfarm workforce; in 2010 it was 10.6 percent.
• Health care and social assistance account for 56.1 percent of nonprofit wages.
• Utilities have the largest average annual compensation per employee, at $88,830; that subsector also accounts for the highest growth rate in wages and employment.
• Educational services has the highest annual growth rate of average annual compensation.

Trends in Private Giving and Volunteering

• Private giving reached an estimated $290.89 billion in 2010, but when looked at in constant dollars, actually dropped 11 percent from 2007 when private giving reached its historical peak at $310.57 billion.
• Foundation assets plummeted 17 percent from 2007 to 2008; in 2008, however, foundation giving reached an all-time high of $46.8 billion, largely fueled by the Bill and Melinda Gates Foundation.
• Volunteers spent 14.9 billion hours volunteering in 2010, largely for religious and educational institutions.

 Financial Trends

• Nonprofit revenue was $1.16 trillion in 2010.
• After the recession, asset income was the hardest hit revenue source, declining 13 percent in 2008, 5 percent in 2009, and over 7 percent in 2010.
• Nonprofits have had a surplus of funds two times in the past 10 years and have run deficits in eight years.
• More than half of consumption expenditures in 2010 were in health care; another 16 percent in education, and 10 percent in social services.

 The Size, Scope and Finances of Public Charities

• In 2010, nearly 1.6 million nonprofits were registered with the IRS.
• Sixty-three percent of public charities were founded in the past 20 years.
• Human services nonprofits account for one-third of public charities; education accounts for one-fifth and is the second-largest subsector.
• California has the most public charities (42,479) while Wyoming has the fewest (1,077). However, less populated states like Wyoming have the highest nonprofit density per person.

For more statistical information on nonprofit organizations, search the Catalog of Nonprofit Literature using subject heading "nonprofit organizations--statistics".  I also recommend you browse through GrantSpace's Knowledge Base Articles on statistics. For more big picture views of the nonprofit sector, check out America's Nonprofit Sector: A Primer, and The State of Nonprofit America. I discussed them both in a previous posting.

 -Rob Bruno   
Catalog/Reference Librarian
The Foundation Center--NY

Using Lifecycles to Manage Change

The cover of John Brothers and Anne Sherman’s Building Nonprofit Capacity: A Guide to Managing Change Through Organizational Lifecycles (Jossey-Bass, 2011) shows a battery being recharged. It’s the perfect image for a work that focuses on “recharging” declining or stagnant nonprofits by better understanding where they came from, where they are, and where they want to go. The authors (who together have over 25 years of consulting experience) use the concept of organizational lifecycles to “help nonprofits become stronger by approaching lifecycle advancement as a type of change management to help leaders … and effectively shepherd a change process in their organization.” 

What is an organizational lifecycle? Brothers and Sherman define it as “a predictable pattern that most nonprofits will follow over time.” The most basic timeline is start-up, growth, maturity, and decline.  But there are variations on the theme. Organizations that grow too quickly almost certainly will fall just as fast; on the contrary, organizations that are cautious and deliberate grow slowly, but decline at the same rate.

In Chapter Five, “Decline”, the authors provide advice on dealing with this poorly understood lifecycle. Perhaps the key section in this chapter is “The Arc During Crisis” which offers solutions to those hit especially hard in the current economic downturn. They discuss how to deal with revenue loss, staff and board readiness, and point out that an effective solution is to “allow partners and funders into the conversation about successfully pulling through [a] tough economic situation.” The chapter concludes with an interview of Thomas Wolf, author of And the Band Stopped Playing: The Rise and Fall of the San Jose Symphony (Wolf, Keens & Co., 2005). He answers questions about the characteristics of organizations that have successfully, and not so successfully, moved through decline. Wolf also talks about innovation in nonprofits in light of the current funding environment and the impending leadership gap caused by baby boomer retirements.

The book ends with a recap of overarching themes. “When it comes to growth, more often than not, slow and steady wins the race” is one. Other words of advice include “Reaching the top of the lifecycle does not mean your journey has ended” and “turnaround is about taking risks that are big but also well informed.”  The authors also remind us that the entire premise of the lifecycle is based on the assumption that to get where you need to go, you need first to know where you are.

Building Nonprofit Capacity includes numerous illustrations, a sample board report card that can be used to help members stay on task and develop their role, and extensive notes for further reading.  It is available in all Foundation Center Libraries under call number 608 BRO.

Rob Bruno
Catalog/Reference Librarian
The Foundation Center--New York

Here is a Google Books preview:

Managing Foundations and the Risky Business of Philanthropy

Technically a revised and expanded edition of their previous work Creating a Private Foundation (2003), the new publication Managing Foundations and Charitable Trusts by Roger Silk and James Lintott now takes into account recent challenges facing philanthropists in the current economic downturn.

Primarily written for those contemplating creating a new foundation or who already have a foundation, charitable trust, or other charitable entity, Managing Foundations covers the basics of charitable giving, the business of philanthropy, and provides descriptions of various planned giving vehicles. It also gets into the nuts and bolts of investing and asset allocation, donor-advised funds, and Charitable Remainder Trusts (CRTs).

There is much here for the general reader as well.  The Bernard Madoff scandal was for many the symbol of everything that went wrong financially in late 2008, and it had a large impact on foundations, jeopardizing the investments of at least 23 charities. In the chapter “Fraud, Inflation, and Market Risk” the origins of his Ponzi scheme are explained in detail, revealing that Madoff may have “strategically targeted private foundations because of the 5% payout rule.” Since many foundations adhere to the rule (spending at least 5% of assets every year) Madoff would only need a fraction of their assets on hand for withdrawals.  This helped sustain the Ponzi scheme even longer than otherwise possible. The authors state that the scheme served as a cruel reminder that investors “need to concern themselves not merely with issues of return on capital, but more fundamentally with the issue of return of capital.”

Another chapter covers unintended consequences of charity, or “The Road to Hell.” Starting with an explanation of how well-intention government programs (i.e. sustainable biofuels) can lead to adverse results (increased starvation of the world’s poorest people) the book lays out how the same can happen to private charitable giving. For instance, some felt that the Bill & Melinda Gates Foundation's AIDS program in Africa had the unintended consequence of leaving gaps in the supply of services for non-AIDS medical issues.  How can this be avoided?  One suggestion is that philanthropists focus more on programs that alleviate poverty, instead of on the conditions/manifestations of poverty such as preventable disease.

So, while intended for donors and philanthropic advisors, Managing Foundations can also serve as guide for grantseekers who want to know more about the motivations, concerns, and challenges of grantmakers in times of financial instability.  It’s also hopeful. The authors are quick to point out in the preface that despite the stalling economy charitable giving is actually higher than it was ten years ago and thriving.

Managing Foundations and Charitable Trusts is available at the Foundation Center's New York, DC, San Francisco and Atlanta libraries under call number 514 SIL MAN.

 

Rob Bruno
Catalog/Reference Librarian
The Foundation Center--New York

 

Here is a Google Books preview:

Dealing with the Fundraising Roller Coaster

Kim Klein has released a new book, Reliable Fundraising in Unreliable Times: What Good Causes Need to Know to Survive and Thrive. The volume provides advice to help social justice organizations strengthen their financial positions, handle financial crises, and overcome other fundraising challenges.

For general advice:

-Look in Chapter Four for Klein’s ten fundamental truths about fundraising
-Check Charter Six to learn how to create a healthy working environment for your development office
-Discover some quick tips on evaluating your fundraising program and strengthening your donor base in Chapters 8 and 9.
-Learn how to develop your volunteer fundraising team in Chapter 11.

If your nonprofit is facing a financial crisis:

-Chapter 15 will help you with immediate next steps
-Chapter 16 provides guidance on damage control
-Chapter 17 explains fundraising approaches for the next six to twelve months

Find out more from Klein’s book Reliable Fundraising in Unreliable Times (Chardon Press, 2009) by visiting our libraries or previewing it in Google Books.

What Can Foundations Do About Risk?

Helmut Anheier, Director of the Center for Civil Society at UCLA's School of Public Affairs, recently wrote an essay on the economic downturn and role of foundations in addressing risk in a global community. He noted that, “Foundations can create arenas where risks are enunciated, exaggerated, discounted, debunked, assessed and debated. They can build arenas that encompass information, expert knowledge and reasoned deduction as well as fears and prejudice, but above all, they can help provide forums for expressing and communicating differential knowledge about risk, be it in the field of finance, health care, the environment, communication or housing.” He also points out that since foundations are independent from election politics and market forces, they are in a unique position to advance this dialogue.

Indeed, an ongoing discussion on risk management can help local and global communities anticipate outcomes and understand systemic risk in various sectors.

What are your thoughts on this topic? Who is the risk manager at your organization?

The full essay can be found in the 2009 edition of The Europa International Foundation Directory (published by Routledge) and is also available on several web sites. (Google Search)

Arts Groups and Media Projects

Many observers are concerned about the future of arts groups during these difficult times. If this is an area you would like to explore, take a look at the Spring 2009 issue of the Grantmakers in the Arts (GIA) Reader and turn to the article, “Puget Sound Funders Act Together: The Impact of the Economic Recession on Cultural Organizations.” The article by Holly Sidford and Helicon Collaborative describes research based on interviews with representatives from 28 cultural groups. Among the findings are suggestions for grantmakers when funding is limited:

“None of those interviewed expect increased funding from foundations and public agencies, at least in the short-term. But all suggested that funders could help in other ways: by reducing application paperwork or extending current grants an additional year; encouraging program collaborations, joint marketing and resource-sharing; offering loan guarantees or lines of credit; hosting workshops on effective ways to manage the recession; and encouraging arts groups to find solutions in concert with nonprofits outside the arts.”

The rest of the article can be accessed at the Grantmakers in the Arts web site. In the issue, the editors of GIA Reader also note the new blog, Economic Turmoil and Change, which will allow GIA to provide information and updates more effectively.

For example, a June 1st entry mentions the launch of Grantmakers in Film + Electronic Media’s database of media projects in progress. Grantseekers that meet eligibility requirements can submit profiles of their projects. The database will help grantmakers target media projects that match their mission and interests. Click here to access the database.

New Fundraising Book Discusses Scenario Planning and Strategies

What is the outlook for our economy? Will the graph of recovery indicators look like the letter V, U, or L? Nonprofits may use scenario planning to help decide on an appropriate strategy for the future. In his new book, Fundraising When Money is Tight, Mal Warwick explains the disadvantages of aggressive or defensive strategies, and explains why he favors a more selective approach that is suitable for any scenario.

Warwick also nine specific steps nonprofits can take to help them survive for the short and long term. Chapters from the book cover a number of topics, including: resource allocation, cost reductions, direct mail, donor segmentation, donor relations, questionnaires, online fundraising, and other areas.

Find out more:

-Look for the book at our library/learning centers: Fundraising When Money is Tight: A Strategic Guide to Surviving the Tough Times and Thriving in the Future.  A limited preview is also available at Google Book Search.

-Listen to the podcast with Mal Warwick, where he explains how to plan for leaner times, avoid common mistakes, strengthen your case for giving, and step up your efforts

-Or join us for the webinar with Warwick on Tuesday, July 14, 2009.

Foundations, Volunteers, and Philanthropists: Three Reports

Let’s take a quick look at research findings that were released during the past week:

1) Yesterday, the Foundation Center issued a new Research Advisory that analyzed how foundations have been responding to the economic crisis. Two-thirds of surveyed foundations anticipate reductions in grants in 2009, and over half of respondents expect to engage in non-grantmaking activities (such as partnerships, convenings, and technical assistance). The findings are based on survey responses from more than 1,200 U.S. foundations. Learn more…

2) As noted in Philanthropy News Digest, findings from the 2009 Deloitte Volunteer IMPACT Survey indicate that nonprofits and corporations should explore pro-bono or skilled volunteerism, especially at a time when cash grants are limited. The executive summary includes next steps for corporations and nonprofits; full survey results are available in a separate file. Learn more…

3) The Center on Philanthropy at Indiana University analyzed individual giving in 2002 and 2006 (representing recent recessionary and growth periods) to estimate contributions for 2009. The data suggests that total giving for households earning between $100,000 to $200,000 will be in the range of $4,500 nationally. Households earning between $200,000 to $500,000 will contribute in the range of $20,000 to $25,000. Regional Differences in Giving, 2002 and 2006 can be found in the new issue of Giving USA Spotlight. Published by the Giving USA Foundation, the issue is available for review at the Foundation Center library/learning centers.

Grantmaking in 2009: What Can We Expect?

Nonprofits uncertain about their financial outlook may find planning and budgeting especially challenging during the current economic downturn. Charities will estimate with varying levels of success how much they will be able to raise with their next campaign.

To help ease the level of uncertainty faced by charities, some foundations and corporate funders have issued statements regarding their grantmaking.

"These grantmakers deserve credit for letting their grantees know what to expect over the coming year, so they can prepare,” said Steven Lawrence, senior director of research at the Foundation Center.

You can track statements from grantmakers at the Foundation Center’s Focus on the Economic Crisis web site.

For an analysis of these announcements and plans, read the new research advisory Grantmakers Describe the Impact of the Economic Crisis on Their Giving, co-authored by Steven Lawrence and Lawrence T. McGill, senior vice president for research.

Foundation Center Research

The Foundation Center has recently released two reports:

A First Look at the Foundation and Corporate Response to the Economic Crisis (free PDF)
Steven Lawrence, Senior Director of Research, describes the range of support provided by institutional funders, based on preliminary data from nearly 50 grantmakers. While some funders are helping to prevent foreclosures, others are providing emergency assistance. Foundations are also interested in supporting research and education to develop a better understanding of the financial crisis.

Key Facts on Family Foundations (free PDF)
The Foundation Center’s annual update indicates that family foundations provided $18.5 billion in grants in 2007. Larger family foundations in the grants sample favored education programs and prioritized giving for the economically disadvantaged.

Visit the Foundation Center’s web site for more Research Advisories and reports.