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Public support for the nation’s largest charities crawled its way upward last year. However, its size as a piece of the revenue pie shrank as the NPT Top 100 organizations focused on generating program service revenue. Investment income overall was flat though some of the largest organizations enjoyed a bounce-back due to a rebounding stock market, as more charities braced for government support to continue to dwindle.
Organizations in this 24th annual NPT 100 report boasted public support of $33.374 billion, falling below 50 percent of their total revenue of $66.875 billion. The same 100 organizations saw public support of $33.159 billion amid overall revenue of $65.43 billion in the prior year, almost 51 percent. The NPT 100, an annual study of the largest charities in the nation, covers the fiscal year ending in 2011.
Faced with dwindling support from government and weaker charitable giving from a smaller pool of donors, the nation’s largest nonprofits have turned to other revenue streams.
“Some things cause concern as far as the markets are concerned, and the ability to raise money,” said Dan Romano, National Partner-In-Charge, Tax Not-for-Profit and Higher Education Practices, for Grant Thornton, which helped The NPT analyze the financial data. “There’s a constant need to generate new sources of revenue,” he said.
Program service revenue was the second-largest portion of funds for NPT 100 organizations, comprising about one-quarter of revenues at $16.767 billion. Government support was $11.1 billion, up slightly from $10.745 billion, accounting for more than 16 percent of all revenues. Other revenue and investment income each contributed about 4 percent to the overall revenue pie, at $2.859 billion and $2.763 billion, respectively.
On the expense side, NPT 100 organizations spent $55.416 billion on program, $5.257 billion on administration and $3.138 billion on fundraising — for total of $63.711 billion.
Giving has been slow to rebound overall after huge drops in 2008 and 2009. But, chief financial officers are generally upbeat about the industry and it’s been a decent year, according to surveys, with investment returns trending upward, said Romano.
In his experience, Romano said organizations with strong balance sheets and diversified revenue sources continue to receive favorable credit ratings and an easier time finding new financing. “That might be a minority of nonprofits but they comprise a big part of the NPT 100,” he said.
Diversifying revenue streams
The rebound in the stock market has helped those such as Shriners Hospital for Children and museums with large endowments. “We’re seeing more of a turnaround now, because our fiscal-year clients are reporting better investment returns than December 2011 year-ends. Next year, will see some nice returns,” said Romano.
At the same time, museums are enjoying a huge spark in attendance, which means good things for other revenue streams, such as membership dues and earned income from related activities — from parking and restaurants to gift shops and magazine.
The American Museum of Natural History in New York City reported its highest attendance in history, surpassing record-breaking attendance in 2010, almost half of which was international. Ticket sales were up slightly, with membership dues about flat, but food sales jumped from $5.8 million to $7.45 million. At the same time, government support dropped by a third, from more than $50 million in 2010 to $34 million last year.
Cultural organizations “have to push more for public support and they have done that,” Romano said. “Their campaigns were created to seed that type of support, as opposed to relying on government funds,” he added.
A variety of revenue streams contributed to arts and culture organizations seeing big boosts within the NPT 100. For some, investment income spiked, like the Metropolitan Museum of Art in New York City, which jumped to $218 million from $78 million the previous year.
The Museum of Fine Arts, Boston, was No. 101, the last cut from the NPT 100. Since a massive capital campaign that funded the new American Wing and other efforts, the museum has seen attendance soar from 865,000 to 1.2 million, according to CFO Mark Kerwin. Ancillary services, such as parking and restaurants, have increased due to the higher attendance. The museum’s Shapiro Courtyard, which can seat 700 people for dinner, has become a hot venue in Beantown, and its American Wing hosts 20 to 30 special events.
Federal and state budgets continue to be strained and funding cuts are especially evident among arts charities. They are trying different ways to reach donors. Instead of just asking for cash, donating securities might be more advantageous to an individual,” Romano said. “They’re being more creative in the way they solicit contributions,” he said. Bequests are on the rise as well, with nonprofits seeking those types of contributions when people don’t have cash available right now.
Those that did gain on the revenue and public support side had comparative increases on the expense side, especially on programs. “There’s a direct correlation, I think, between public support and program services,” said Romano.
Some of the other largest increases in total revenue belonged to a variety of organizations: No. 48, Catholic Medical Mission Board (CMMB) was up 69.65 percent; No. 17, Shriners Hospitals for Children, 68.9 percent; No. 33, Metropolitan Museum of Art, up 68.5 percent, and No. 39, Art Institute of Chicago, up 55 percent. They represent a mix of charities that rely on varying revenue streams.
What’s it worth?
CMMB received a huge boost, $127 million in donated pharmaceuticals to fuel its revenue jump. In-kind organizations in general are well-represented in the NPT 100.
For the Atlanta, Ga.-based Task Force for Global Health, nearly all of its $1.16 billion in revenue was in the form of pharmaceutical donations through Global Heath Solutions, Inc., which files a separate Form 990.
Meanwhile, other in-kind organizations continued to change how they value donated pharmaceuticals. Last year’s NPT 100 documented a huge decrease for Feed The Children (No. 35) due to changes in valuation while this year, those changes were made at Operation Blessing International (OBI) Relief and Development Corporation (No. 57), which saw a drop of 44 percent in total revenue.
The vast majority of the change in revenue for OBI was for non-cash contributions of drugs and medical supplies, specifically de-worming medications. Clothes and household goods were still valued at about $50 million, as was food inventory. But, in-kind pharmaceuticals plummeted from $337 million to $143 million. Grants to organizations outside the United States also dipped, from $346 million to less than $150 million.
“The most conservative course of action was to discontinue recognition of any value for financial reporting purposes until an accepted industry standard could be identified,” Chris Roslan, a spokesman for OBI with Roslan & Campion Public Relations in New York City, said via email. The Norfolk, Va.-based charity also had a big boost the previous year for its disaster relief effort in Haiti, including the largest medicine donation in its history. Of the $473 million in revenue for OBI in last year’s NPT 100, Haiti-related contributions totaled $162 million, including gifts in kind and cash.
From the inception of OBI’s anti-parasite program in 2005 to the end of 2011, Roslan said the organization distributed more than 44 million doses and recognized $301.6 million of contribution revenue, for an average valuation of about $6.85 per pill.
“The industry is looking at that now, as far as what should be accounted,” said Romano, with the Financial Accounting Standards Board (FASB) looking to see how to best value those types of donations in the nonprofit world.
MAP International in Brunswick, Ga., also adjusted its valuations, which resulted in a large decline, and dropped out of the top 100 altogether, tumbling from $209 million and a No. 75 ranking, to $140 million last year.
Counting some revenues twice is all but assured in the NPT 100, with grantmaking occurring among an aggregate of $60 billion revenue in organizations. It is especially true with United Way, which passes along its revenues. United Way reported revenue of $4.139 billion last year, with $3.903 billion of that in the form of public support.
One-fifth of the organizations that made the 2011 NPT 100 received some part of United Way’s distribution, totaling more than $1 billion. Four of the largest groups in the study received more than $100 million in funding from United Way:
- American Red Cross (5), $217.082 million;
- The Salvation Army (6), $121.243 million;
- Boys & Girls Clubs of America (8), $119.607 million; and,
- YMCA (1), $118.141 million.
Another four organizations received at least $50 million from United Way:
- Boys Scouts of America (20), $81.648 million;
- YWCA (25), $71.016 million;
- Catholic Charities (3), $70.979 million; and,
- Girl Scouts of the USA (24), $63.144 million.
All eight of the organizations ranked within the top 25 nonprofits in the study, meaning they reported at least approximately $700 million in total revenue. Others that received funding through United Way included: Big Brothers Big Sisters (52), $48.577 million; American Cancer Society (18), $38.148 million; American Heart Association (27), $22.312 million; Goodwill Industries (2), $15.548 million; Mental Health America (61), $15.301 million; Alzheimer’s Association (67), $3.822 million; American Diabetes Association (76), $3.433 million; National Multiple Sclerosis Society (70), $1.937 million; Cystic Fibrosis Foundation (46), $985,011; and, Special Olympics (58), $743,661.
One aspect of the NPT 100 that separates it from other studies is the requirement that organizations raise at least 10 percent of revenue from public support. Two of the largest organizations on last year’s list fell below that threshold: Alexandria, Va.-based Volunteers of America, $1.018 billion (9.87 percent), and Duarte, Calif.-based City of Hope and its affiliates, $1.015 billion (8.71 percent), both of which get a substantial amount of revenue through program service.
Hospitals often generate much of their revenue through program services. The NPT 100 includes several health- or research-related organizations that get enough public support to qualify, but most of their revenue comes either from program service or government support: Fred Hutchinson Cancer Research Center (No. 32); Dana-Farber Cancer Institute (No. 15); and, Children’s Hospital Los Angeles (No. 23).
Just barely qualifying, Legal Aid Society (No. 94) reported total revenue of $175.975 million and made it by the slimmest of margins with public support of $17.441 million, just 10.08 percent.
Among those returning to the NPT 100 this year is American Museum of Natural History (No. 85), United Nations Foundation (No. 87), WGBH Foundation (No. 89) and Scholarship America (No. 93).
New to this year’s NPT 100 is The George W. Bush Presidential Foundation at No. 99 with $161 million (based on its 2010 Form 990). The Dallas, Texas-based foundation, which is expected to file its 2011 form by the Nov. 15 extension, ramped up as construction nears completion for a 2013 opening of the George W. Bush Presidential Center at Southern Methodist University (SMU). The foundation typically files its Form 990 on a Nov. 15 extension and did not make available other financial statements for Fiscal Year 2011.
Dropping off the NPT 100 from last year due to a decline in total revenue were Medical Teams International, Robin Hood Foundation, U.S. Olympic Committee, National Cancer Coalition, American Nicaraguan Foundation and the Entertainment Industry Foundation. Disaster relief organizations were affected with fundraising response to the 2010 Haiti earthquake coming off the books.
The No. 100 organization this year was the Lincoln Center for Performing Arts in New York City, at $159.273 million, about 2.6 percent more than last year’s No. 100, Christian Aid Ministries, at $155.208 million.
The last five out of the top 100 were Museum of Fine Arts, Boston ($157.082 million), Muscular Dystrophy Association ($156.588 million), Children International ($156.422 million), Wycliffe Bible Translators ($149.634 million), and Jewish Federation of Metropolitan Chicago ($149.369 million).
At least 15 of the NPT 100 had total revenue of $1 billion. The top six nonprofits remained in the stratosphere with more than $3 billion in revenue: YMCA of the USA, Catholic Charities USA, United Way, Goodwill Industries International and The Salvation Army.
Among the newcomers to the billion-dollar club was Feeding America (11), which experienced one of the largest jumps in revenue, from $698 million to $1.185 billion. The Chicago-headquartered organization saw the largest increase in total revenue among NPT 100 organizations, up almost 70 percent.
The demand on Feeding America and its affiliates spiked when the economy went south. Unemployment is the single primary factor in increasing food insecurity, so as a result of high unemployment the organization continues to see record numbers seeking help, according to Maura Daly, chief communications, programs and development officer. Often times, the loss of one job within a household takes that household from food secure to food insecure, she said.
Feeding America’s retail store pickup program has become one of the organization’s fastest growing food streams during the past five years mostly due to the number of new retailers joining, including Sam’s Club and Wal-Mart. “With the dramatic decline in support from the federal government, in terms of food, we saw private sector increase their donations over the course of the last fiscal year, which has enabled us to see a slight increase in the amount of food we distributed,” Daly said.
The next fiscal year, which closed June 30, is looking like it will be even greater, eclipsing $1.5 billion.
“We have seen increases coming predominately from available growth in our retail store donation program,” said Daly. “At the same time, federal commodities have been dramatically declining, and we know the private sector can’t continue keeping pace for those declines. With each passing year, the run rate within that retail store donation program becomes smaller, because we’re ramping up, adding more stories, and at some point will become tapped out at accessing food at available retailers,” she said.
It’s the first time that another food channel for Feeding America has exceeded the poundage of the U.S. Department of Agriculture.
With more people hungrier than ever, Daly said it’s important that they don’t continue to see a decline in federal support, its most stable source of food. Federal commodities are down 29 percent during the past year while retail and produce are both up 22 percent. “The problem with that is the cost to our network,” said Daly.
Storage and transportation for federal commodities is paid for by the federal government but it costs Feeding America 24 cents per meal in its retail program and 17 cents per meal for its produce program. The most costly food streams are where more food is coming from, Daly said, so “the cost of doing business, frankly, is more expensive.”
Cents per meal might not seem like much until you consider volume. In 2011, Feeding America’s network of more than 200 food banks distributed some 641 million pounds, almost double the 2010 amount of 364 million pounds.
Critical to last year’s increase were contracts that Feeding America entered into with four national donors to distribute grocery products directly to local members. Those contracts amounted to 311 million pounds distributed to member food banks, which translated to about $517 million in donated goods and services.