Organizations Push Past 40.5 Billion Dollars

The times they are a changing, sang Bob Dylan. Though he certainly wasn’t singing about the NPT 100, an organization based in his home state of Minnesota is as much a part of the changing times as any of the new organizations listed in the sector’s oldest ranking of the nation’s largest nonprofits.

St. Paul, Minn.-based Lutheran Services in America has ascended to the top spot, despite continued growth by the YMCA of the USA.

Rounding out the top 10 are some old and deceptively new faces. Salvation Army climbed to the third spot, ahead of United Jewish Communities (UJC), which debuts (after creation via merger last year) at number four. The American Red Cross, Catholic Charities USA, Goodwill Industries International and Boys and Girls Clubs, complete the sweep of the first eight slots by human service organizations.

Jumping up six slots to number nine is The Nature Conservancy, and falling a couple pegs to 10th is Fidelity Investments Charitable Gift Fund.

UJC is the culmination of the merger of three organizations, United Jewish Appeal, the Council of Jewish Federations, and the United Israel Appeal. Previously, UJA was a consistent member of the list.

To be included in the NPT 100, nonprofits must raise at least 10 percent of total revenue from public sources. And the organizations must, therefore, derive less than 90 percent of their revenue from program services, government grants or foundation gifts.

The editorial staff of The NonProfit Times triple-checks the data, which was compiled this year with the help of the Boston office of accounting and management firm Grant Thornton LLP. Data were gathered through an exhaustive, nearly yearlong examination of federal Form 990s, organizational annual reports and personal contact with several hundred organizations.

Bob Leavy, who heads the nonprofit practice at Grant Thornton LLP, said he was intrigued that, while overall revenues grew at the NPT 100 organizations, the percentage of expenses allocated remained stable. Total expenses held at 86 percent of total revenue in both ‘99 and ‘98.

“I think that’s very interesting that the organizations, as they grew, spent proportionate amounts in each area, suggesting perhaps that there isn’t an efficiency that comes from size,” he said. “It’s tough to trust conclusions from that, but they basically raised 10 percent more and spent 10 percent more in every area.”

Looking at the quadrants within the NPT 100, total expenses for the top 25 organizations’ comparable data went up 7.9 percent as program expenses went up 7.5 percent. The middle 50 organizations had similar growth (both quadrants just above 15 percent) in total expenses; organizations 26-50 spent 18.2 percent on program versus 15.8 percent for 51-75.

Leavy noted that the overall increases in public support to the top 100 might indicate that Americans are slightly more generous than in previous years, but the growing emphasis organizations have placed on investment returns also plays a notable role. “(Growth in public support) may be a function of a good economy and a good stock market in particular,” Leavy said. “The average person isn’t looking for those kinds of vehicles (gifts of stock), because the average person’s gifts are small enough that they give when they want to give.”

Leavy also noted that the total revenue increases among the NPT 100 seemed in line with Giving USA figures, which have indicated charitable donations rising at approximately 10 percent the past couple years.

The evolution of donor assisted funds at the emerging financial service charities, such as Fidelity Investments Charitable Gift Fund, are pointing to a different type of donor than among the majority of NPT 100 organizations. “When you start with a minimum of $10,000, that is not the average giver,” he said.

He noted the growing consulting industry to help the nouveau riche who may not come from a charitable background. “The use of those funds allows them to do that,” he said. “(Donors get the) immediate tax deduction, feel good about giving and have more time to decide where the next installment will go.”

Leavy also noted the growing importance of marketing among the leaders. “A lot of them have not (fully developed their marketing approach), and they’re beginning to recognize that they have to,” he said. “I think a lot of people have rested on their reputation.” Though he disliked using the term “marketing” when referring to nonprofits, “by not (better communicate their efforts), they’re losing to other organizations and falling back in their market share,” Leavy said.

Method to the madness

Another change in this year’s index is the in-kind category, with an eye toward the future. The category has been renamed “Financial Service/

Product Distribution.” As detailed in one of the following stories, the emergence of financial service charities, particularly Fidelity Investments Charitable Gift Fund, the Vanguard Charitable Endowment Program and the Schwab Fund for Charitable Giving, have made their description as an in-kind organization untenable.

Debuting or returning to the NPT 100 after an absence are: Lutheran Family Services (1); United Jewish Communities (4); Public Broadcasting Service (24); the Museum of Fine Arts, Houston (75); Summer Institute of Linguistics, known also as SIL Interna-tional (89); Lincoln Center for the Performing Arts (92); and Mennonite Board of Education (99).

Those that missed this year after being among the top 100 last year include The Arc of the United States; WellStar Cobb Hospital; Fox Chase Cancer Center; and the National Audubon Society, which fell to $64.7 million. All except National Audubon did not meet the 10 percent public support minimum.

The buy-in this year to make the NPT 100 was more than $82 million. There were interesting stories on the outskirts of the listing, as well. For example, Compassion International of Colorado Springs, which landed at 101 with $81.9 million, is focusing on the World Wide Web to try to increase its marketing presence. And virtually out of nowhere, Museum Associates (Los Angeles County Museum of Art) zoomed up to 102 ($81.4 million) largely through an increase of program service revenue.

The other near misses included The Navigators ($79.3 million — 103), Christian Aid Ministries ($79.0 million — 104), Northwest Medical Teams International ($78.5 million — 105).

It’s also worth noting how the various revenue categories are determined for the NPT 100. While public support and government revenues are relatively clear from the lines of a Form 990, investment income is defined as the sum of lines 4, 5, 7 and 8c (Column A) of the 990. That is interest on savings and temporary cash investments, dividends and interest from securities, other investment income — often with attached schedules — and the gain or loss on securities.

“Other revenue” is the sum of net rental income or loss (line 6c), gain or loss on investments other than securities (line 8c, Column B), the net income or loss from special events (line 9c), the gross profit or loss from sales of inventory, and other revenue listed in line 11.

The main charts also include more asset information than has previously been available. Many of the organizations, however, do not collect such data from their affiliates, which is the reason behind the Not Availables.

Who The NPT 100 Are And Where They Ranked

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