Nonprofits Worth $887.3 Billion To U.S. Economy

October 28, 2014       The NonProfit Times      

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The tax-exempt sector in the United States represented 5.4 percent of the nation’s gross domestic product (GDP) during 2012, contributing $887.3 billion to the economy. And of those tax-exempt entities, 501(c)(3) public charities accounted for slightly more than three-quarters of the sector’s revenue ($1.65 trillion) and expenses ($1.56 trillion) and more than three-fifths of nonprofit assets ($2.99 trillion) during 2012. Comprised of approximately 1.44 million nonprofits registered with the Internal Revenue Service (IRS) in 2012, the sector has grown approximately 8.6 percent since 2002. Those are among the statistics in the biannual Nonprofit Sector in Brief report by the Urban Institute’s Center On Nonprofits and Philanthropy. It’s a compilation of statistics from various sources throughout the sector. According to the authors, total private giving from individuals, foundations, and businesses totaled $335.17 billion during 2013, an increase of just more than 4 percent from 2012 after adjusting for inflation. According to Giving USA, total charitable giving rose for the fourth consecutive year in 2013 (Giving USA Foundation 2014). However, after adjusting for inflation, giving is still lower than at its pre- recession peak in 2007 ($348.03 billion in 2013 dollars). An estimated 62.6 million adults, 25.4 percent of the U.S. population, volunteered at least once in 2013. This volunteer rate is the lowest it has been since 2002. The highest rate was 28.8 percent, which was reported in three consecutive years: 2003, 2004, and 2005. Fully 6.1 percent of the population, or 15.1 million people, volunteered on an average day in 2013. The time volunteered in 2013 was worth an estimated $163 billion. The value of volunteer time combined with private giving accounted for just less than one-half a trillion dollars ($498.17 billion), and volunteer time represents a third (32.7 percent) of the total. According to the report, from 2002 to 2012, the number of nonprofits registered with the IRS increased from 1.32 million to 1.44 million, a jump of 8.6 percent. “These 1.44 million organizations contain a diverse range of nonprofits, including art, health, education, and advocacy nonprofits; labor unions; and business and professional associations,” the authors wrote. The total number of nonprofit organizations operating in the United States is unknown, according to the report. “Religious congregations and organizations with less than $5,000 in annual revenue are not required to register with the IRS, though many do.These unregistered organizations expand the scope of the nonprofit sector beyond the 1.44 million organizations this brief focuses on,” according to the authors. Only roughly 35 percent of nonprofits registered with the IRS in 2012 were required to file a Form 990, Form 990-EZ, or Form 990-PF with the IRS. “These reporting nonprofits stated $2.16 trillion in revenues and $4.84 trillion in assets,” according to the authors. Between 2002 and 2012, finances for reporting nonprofits showed healthy development, with both revenues and assets growing faster than GDP. After adjusting for inflation, revenues grew 36.2 percent and assets grew 21.5 percent, compared with 19.1 percent growth for GDP. Some 50 percent of the total revenue for public charities was from fees for services and goods from private sources. This figure includes tuition payments, ticket sales, and hospital patient revenues (but excludes Medicare and Medicaid) and is driven largely by hospitals and higher education nonprofits, both of which derive their funding primarily through fees for goods and services. Fees from government sources, such as government contracts and Medicare and Medicaid payments, accounted for almost one-quarter of public charities’ revenues (23.1 percent) in 2012. Private charitable giving represented 12.9 percent of total revenues, and government grants represented another 9.2 percent. Combining government contracts and grants into a single category, the government provided nearly one-third (32.3 percent) of 2012 nonprofit revenues, according to the report. Expenses grew at 31.1 percent (after adjusting for inflation) during the same period. Revenues grew 2.9 percent from $2.10 trillion in 2011 to $2.16 trillion in 2012; assets increased 4.5 percent from $4.63 trillion to $4.84 trillion. Expenses also grew from $1.99 trillion in 2011 to $2.03 trillion in 2012, an increase of 2 percent.