NPO Revenue, Assets, Public Support All Shot Higher

November 10, 2016       Mark Hrywna      

The nation’s largest nonprofits continued to see revenue steadily rise during 2015 through a combination of increased public support, program and other revenue, that made up for declines in government funding and investment income.

Public support was approximately $41.378 billion, up more than 8 percent.
The organizations found in The NPT 100 – the 28th annual study of the nation’s largest nonprofits by The NonProfit Times – derived 80 cents of every $1 in revenue either through public support or program service revenue. About 1 in 8 dollars came come government support and about half of that amount through investment income and other revenue.

Santa Barbara, Calif.-based Direct Relief was typical of an NPT 100 organization on a number of fronts, from seeing increased support in response to a disaster to planning a capital campaign around a new headquarters.

Overall, revenue has been trending on the positive side yet about one quarter of the organizations experienced a decrease, said Daniel Romano, national partner-in-charge, not-for-profit tax services, at Grant Thornton LLP. The Manhattan-based firm helps to compile and analyze data from hundreds of charities for the NPT 100. “Almost all of those that had declines were affected by decreases in net investment income. It’s a trend and it’s continuing this year,” he said.

Total revenue for the largest 100 organizations was estimated at $74.888 billion, or about 2.6 percent more than the same 100 organizations reported the previous year. The total is slightly less than the $75.449 billion in revenue that last year’s top 100 organizations tallied thanks in part to a couple of large organizations not making the cut this year.

While public support was up, not all categories were winners. Government support declined by more than 10 percent, reported at almost $9.1 billion for the 100 organizations. Some organizations are unable to break out government grants and contracts or fee-for-service revenue and report it all as government support for the NPT 100.

Investment income was about $3.034 billion, or 24 percent less than last year. Program service revenue was up marginally, 1.5 percent, to $18.278 billion. Also helping to offset declines in investment income was other revenue, which was up 15 percent, from $2.54 billion to $2.92 billion. “It shows organizations are trying to do other things, that might be relate to programs, maybe conferences, things that they can make money on and draw additional revenue,” Romano said.

The value of investment portfolios increased against investment income that did so poorly last year suggests that nonprofits aren’t panicking and selling off investments, Romano said. As he tells clients: “It’s only a loss when you sell it.” Unrealized losses might sting but they don’t count yet, he said.

Total assets were up an average of at least 5 percent, mostly in restricted accounts. People are donating to organizations but earmarking them for certain uses, whether for endowments or other restricted uses, Romano said. “The average increase is there but they may not be able to use it on everyday matters,” he said.

Expenses were up about 5 percent, slightly exceeding — but generally on par — with increases in revenue. The increases were evenly distributed among the three major categories of program, fundraising and management. A major driver of expenses is probably salaries, Romano said.

There’s been a much more concerted effort on strategic initiatives by large organizations in recent years, according to Romano. The landscape will be really different than anything seen now in 10 years. “Organizations are trying to stay ahead of the curve with strategic focus on those types of things,” he said. In the past year, large institutions including the American Red Cross and Metropolitan Museum of Art have restructured to address operating deficits. Other national organizations in recent years have moved to consolidate affiliates.

“We’ve seen that with a number of organizations,” Romano said. Overall, it’s done with the intent to reduce expenses and streamline the process, he said, with the goal of pulling in chapters to reduce costs and eliminate duplicative administrative costs.

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