2014 04-np sector

The Nonprofit Sector

Leadership Sioux Falls 28April 2, 2014

Topics We Will Cover

• Statistics on Nonprofits and Philanthropy– US– South Dakota– Local

• Trends:– Governance– Accountability– Public Perception– Regulation

The Statistics are Difficult to Substantiate

• Nonprofit sector very diverse, with few large players

• Government does not allocate resources to data collection on nonprofits on par with other economic sectors

• Employment data is kept by states; some states limit how data can be used

• New reliance on NAICS system is a problem – no distinct category for nonprofits

The Nonprofit Almanac 2008, Urban Institute

Numbers Change, but Proportions Don’t

• Gifts & bequests – 87% in 1970, 83% in 2000• Giving as percentage of GDP constant at

about 2% over past 30 years• Individual giving as percentage of annual

income constant at about 2% over past 30 years

• Corporate giving as percentage of revenue constant at 1.2%

Nonprofit Nation, Michael O’Neill

Nonprofits in the US

Total 501(c) organizations - 1,599,013

Total 501(c)3 organizations - 1,052,495

Total 501(c)6 organizations - 66,985

Nonprofits comprise about 5.5% of GDP

Nonprofits comprise about 9.2% of employment

Source: IRS 2012 Data Book; Independent Sector

Nonprofit Market is Vast

• 75% of US nonprofits have revenue under $1 million

• Largest nonprofits’ revenues only 1.5% of annual giving

• Only ¼ of 501(c)3s file a Form 990/990-EZ

Nonprofits in South Dakota

9,063 Organizations

$8.06 Billion in Income*

$16.9 Billion in Assets

*2013 SD State GDP=$42.464 Billion

Sources: TaxExemptWorld.com, SD GOED

Nonprofits in Sioux Falls

Sioux Falls Development Foundation

(2013 Community Profile)

Major Employers (500+ employees)

Type Number Employees Percentage

For-Profit 15 20,038 44.74%

Nonprofit 6 17,936 40.05%

Government 5 6,289 14.04%

Other 1 524 1.17%

TOTAL 29 44,787 100.0%

Source: 2013 Giving USA

Source: 2013 Giving USA

Volunteering in the US

• In 2013, the number of volunteers reached its highest level in five years, as 64.5 million Americans volunteered through an organization, an increase of 1.7 million from 2010.

• Americans volunteered a total of almost 8 billion hours, an estimated economic value of roughly $175 billion.

• A majority of Americans assisted their neighbors in some way and more than a third actively participated in a civic, religious, or school group.

• Americans overwhelmingly volunteered in schools or with other youth organizations, working to advance the lives of young people.

Source: www.volunteeringinamerica.gov

Where the money comes from and where it goes doesn’t change much over time

75% of gifts are made by individuals – 1.4%-1.6% of GDP

Corporate gifts tied to net revenues (usually 1.2% of pretax profits)

Religion and education are top causes

International causes are usually at bottom*

Corporate giving tied to HQ and operations locations

Nonprofits in the News(usually for the wrong reasons!)

• United Way of America – William Aramony• September 11 charity• American Red Cross – 9/11, etc.• Jerry Sandusky/Penn State/The Second Mile• “Pennies for Charity” and state AGs• Katrina• Nonprofit hospitals• University endowments• Local “Scandal du jour”

Regulatory Trends and Influences

• IRS “Intermediate Sanctions”• Sarbanes-Oxley (SOX) – perception, not real• Senate Finance Committee• House Joint Tax Committee (hospitals)• Panel on the Nonprofit Sector• IRS Governance Best Practices (now included in

2008 Form 990 questions)• IRS Inquiry Letters (hospitals, universities, other

“non-charity” nonprofits)

Conclusions

• Nonprofit sector is big and influential• Nonprofit sector is very splintered• Perception of eroding confidence in charity• Trends toward more public scrutiny• “Where was the board?”• IRS changing role – reluctantly - from pure

financial regulation to broader governance oversight

Thank You!

818 S. Hawthorne Avenue

Sioux Falls, South Dakota 57104-4537

(605) 336-0244 or (888) 4-SUMPTION

www.sumptionandwyland.com