The nation’s largest charities continued a steady if cautious recovery, with some approaching pre-recession levels of revenue as public support tracked with giving estimates for 2014.
The very largest organizations in The NPT 100 – the 27th annual study of the nation’s largest nonprofits by The NonProfit Times – maintained steady revenue increases but it was smaller, budding nonprofits that saw the biggest year-over-year growth. Still others were tentative in their recovery, paring programs that don’t make the grade on return on investment (ROI), or expanding further into nascent areas, such as online advertising or new special events.
Aggregate total revenue for the organizations in this year’s NPT 100 was $75.449 billion, up about 3.6 percent compared to the $72.8 billion last year for NPT 100 organizations in last year’s ranking. Public support totaled about $38.66 billion, almost 4.6 percent more than the $36.97 billion the previous year.
There was more than $350 billion for charitable giving in 2014, an approximately 5-percent increase compared to 2013, which correlates to the top 100 in terms of total revenue and public support, said Daniel Romano, National Partner-in-charge – Northeast Higher Education and Not-for-Profit Practices for Grant Thornton, which helps to compile and analyze data for The NPT 100.
“It’s the fifth straight year of growth, nearing if not reaching pre-recession levels,” he said.
Increases in revenue were reported at 73 organizations, even if it was just 0.28 percent (Brother’s Brother Foundation, $244 million). Nine organizations reported a decrease in total revenue of at least 10 percent from the previous year compared with 34 that reported an increase of that degree.
Nonprofits certainly are dealing with a tentative recovery, Romano said. “The economy is part of it. They also have resources issues. Talent is limited, as well. Organizations are trying to address their resources demands,” he said.
Government support for the 100 organizations increased 3.36 percent, to $10.514 billion, compared to last year. Program revenue rose by more than 3 percent, to $18.96 billion from $18.392 billion the previous year. Other revenue was the only category to decline, down almost 10 percent, from $3.63 billion to $3.281 billion.
Other revenue can include revenue that’s not classified as program or investment income, such as from royalties or net income from fundraising events, rental income or sales of goods or inventory. Some well-known organizations one might expect to see on the list are not there. For one, Cystic Fibrosis Foundation (CFF) dropped off for an unusual reason.
Others have difficulty providing financial data for the most recent fiscal year in a timely fashion, filing a November extension on the federal Form 990 or difficulty collecting numbers from within their federated model. In many cases, a charity generates the overwhelming majority of its revenue through program service, government support or other means, so it fails to reach 10 percent in public support.
Stalwart organizations represented the largest totals for public support, led by United Way, $3.872 billion, and The Salvation Army, $2.115 billion, in addition to groups featuring primarily in-kind contributions (counted as public support in this study), such as Feeding America, $2.016 billion, and Task Force for Global Health, $1.82 billion. It’s the first time Feeding America has eclipsed $2 billion in total revenue.
The largest jumps in public support by percentage, however, are typically found at smaller organizations that have more room to grow or those in the midst of capital campaigns. Capital campaigns helped push public support at the Whitney Museum of American Art to $136.8 million, up 125 percent; $184 million at Museum of Fine Arts, Boston, up 81 percent, and $126 million at the Kennedy Center for Performing Arts, up 63 percent.
The final organization to make the 100 this year was the Whitney Museum, with $178.607 million. The Whitney moved into a new facility this year due to a multi-year campaign to move from Midtown Manhattan to the city’s downtown Meatpacking District. It’s the first time since 2010 that revenue for the last organization on the list was not greater than the previous year (Children International ranked No. 100 last year with $180.378 million. A bottom line of about $200 million ranked in the neighborhood of No. 86 this year, where last year it would have been closer to No. 95.
Wounded Warrior Project (WWP) continues to be one of the fastest growing charities in the country, clocking in at No. 45 with total revenue of $342 million, up 45 percent from $234 million reported the previous year. The Jacksonville, Fla.-based nonprofit raised some $107 million via direct mail, direct response television and online advertising.
Amid a diversified revenue stream, the charity continues to raise more money online, generating $37 million last year, up from $30 million the previous year and $23 million in 2012. This year it’s on pace to eclipse $40 million online.
Wounded Warrior also reported more royalty revenue, almost doubling in each of the past two years, to nearly $10 million last year. The increase is the result of more licensing and affinity agreements, according to Executive Vice President of Communications Ayla Hay.
WWP put away another $28 million into the Wounded Warrior Project Long-Term Support Trust to provide long-term term care for the most severely disabled veterans. That’s on top of $9 million put into the trust the previous year. WWP’s investment portfolio is a moderately conservative mix of both equities and fixed income, aiming to generate growth over the long run while also being prudent in the way funds received from donors are invested, a spokeswoman said. The fund had a balance of almost $37.5 million as of the end of the 2014 fiscal year (September).
The charity aims to raise $1 billion to be able to fund future benefits, with $500 million to be raised during the next five years and $500 million that will come from investment earnings over a 20-year period. “As we gain experience and program and the population this trust is intended to serve we will continue to refine the financial targets,” Hay said.
Patient Access Network Foundation (PANF), up 110 percent to $659 million in public support, was among the largest increases through a variety of factors.
The bulk of contributions for PANF are from pharmaceutical companies, in addition to other donors. There has been an increased awareness of patient assistance organizations as underinsured patients face growing out-of-pocket costs related to their co-payments, deductibles and co-insurance,” according to spokeswoman Meg Finley, in addition to expanding its offerings with new disease funds. Most have sprouted up in the past 10 to 15 years, largely because of the need for them,” she said via an email, as the number of uninsured people has skyrocketed during the past decade. Last year, there were 31 million “underinsured” Americans, almost twice as many as in 2002, according to Finley.
Another patient assistance organization, Chronic Disease Fund (which now goes by the name Good Days), last year ranked No. 70 with $238 million but revenue tumbled to $83 million following some major turmoil, including the retirement of its founder and CEO. Some of those lost donors shifted their funding to PANF, Finlay said.
Among the largest decreases in total revenue were seen by Susan G. Komen for the Cure, down 13.3 percent, and American Red Cross, down 12.8 percent. Komen’s Dallas, Texas-based national office discontinued half of its 3-Day Walk for the Cure events during 2014 and has continued to feel some fallout from the 2012 debacle over Planned Parenthood grant funding. Komen ranks No. 81 with $228 million, tumbling from its more typical ranking among the 40s in recent years. Revenue has dropped each year since reaching a peak of $357 million in the 2012 report but remains more than the $172 million in the 2006 report.
American Red Cross reported total revenue of almost $3 billion, with much of it derived from its Biomedical Services Division as usual. The decline was primarily a result of a new fiscal year that did not include Hurricane Sandy related revenue. While there were no major disasters on the order of 2012’s Sandy or the Haiti or Japan earthquakes of 2010 and 2011, respectively, there were some disasters and relief efforts that pushed some organizations’ revenue up.
Typhoon Haiyan struck the Philippines in November 2013, drawing almost $200 million in relief efforts within a month, which would have appeared on some organizations’ tax forms for this year’s NPT 100. Also seeing a boost last year were Mercy Corps, up 16.5 percent from $236 million to $275 million, and Direct Relief, up 16 percent from $388 million to almost $450 million.
Some organizations also saw a lift from the Ebola outbreak last year, particularly Medicine Sans Frontières/Doctors Without Borders (MSF), which was up 56 percent in total revenue, to $344 million, the bulk of which was in the form of public support, roughly $332 million. International Rescue Committee (IRC) experienced solid growth in giving but also reported considerable increases in contributions from foreign governments, with total revenue rising from $456 million to $562 million, up 23 percent.
Both New York City-based organizations have been experimenting and ramping up efforts when it comes to online and digital advertising.
ASPCA has long been a prominent charity and this year finally returned to The NPT 100 after a long absence. The New York City-based charity often is among the final dozen or so nonprofits cut from the 100 but this year clocks in at No. 95, with $190.805 million after last year’s $171.665 million, which would have ranked No. 102 in 2014 and would have made the cut this year. It marks a continued growth for ASPCA, which has steadily risen from about $134 million in the 2008 study. The charity declined to comment for The NPT 100 report beyond a statement about communications and engaging supporters.
Environmental organizations of all sizes within The NPT 100 reported considerable activity last year. The Conservation Fund was up almost 68 percent to $242.612 million. Ducks Unlimited closed in on $200 million ($197.315 million), and The Nature Conservancy reported total revenue of almost $1 billion.
The Conservation Fund, which is not a membership organization, does not engage in direct mail or buy donor lists, according to Robin Murphy, vice president of marketing and communications. “The Conservation Fund uses its Revolving Fund for our land conservation work,” Murphy said. “When we are asked to conserve high priority land for one of our partners such as the National Park Service (NPS) or a state wildlife agency, we use our revolving fund to acquire the land and hold it until the public agency can buy it back from us. When they do, the money is returned to the revolving fund for the next land conservation project. Our annual revenue correlates with how many conservation transactions we complete each year,” she said.
Last year was the fund’s second-busiest year, with 150 conservation real estate transactions, compared to 125 in 2013. “Our business model is cyclical and lends itself to risks associated with the ebbs and flows of federal and state funding,” she said via email. This large number of transactions demonstrates how its revenue jumped from $144 million in 2013 to $242 million in 2014.
Murphy also said that since The Conservation Fund revised its strategic plan in 2012, it has been implementing the new direction that incorporates conservation initiatives on a broader level than the land conservation work. With these initiatives, the organization has been able to develop revenue streams that were previously consequential of real estate acquisitions (such as revenues include mineral rights and mitigation banks, for example).
Beginning in 2013, The Fund took steps to work with federal agencies and project sponsors (such as energy companies and infrastructure developers) to mitigate the impact of business on the environment and in doing so, realized a significant increase in mitigation fees. The Conservation Fund formed a partnership with Apple to preserve 36,000 acres of working forestland in Maine and North Carolina.
Investment income for the top 100 organizations fared well, up almost 9 percent, from $3.54 billion to $3.85 billion last year. “The economy what it is now – especially the global economy, you cannot bet on that,” Romano said, especially those that have large endowments. Investment assets were up about 6 percent on average, he said, with many organizations are paying attention to their portfolios, increasing diversity with more offshore investments, hedge funds, and such.
Almost half of the 100 organizations increased invested assets versus the prior year, Romano said.
Very few organizations make changes in response to short-term market gyrations. In 2008, charities addressed their portfolio needs and diversified some more with longer term investments, such as limited partnerships. Those types of assets weather storms better than common stocks, which often are liquidated when a need arises. “You try to ease any hits that you have to your portfolio value,” he said.
As always, investment income was dominated by some of the largest charities and their endowments, including:
- The Salvation Army, $610.34 million;
- Shriners Hospitals for Children, $527.63 million;
- Metropolitan Museum of Art, $269.90 million;
- The Y, $242.41 million; and,
- Boy Scouts of America, $242.08 million.
As the revenue side grew for organizations, so did the expense side, up 4.12 percent to $71.287 billion for the organizations in this year’s NPT 100. Only administrative expenses declined, but barely, at less than 0.01 percent, to $5.8 billion. Program expenses led the way, up 4.62 percent to $62.067 billion, with fundraising expenses also up, by 2.54 percent to $3.412 billion.
NPT 100 organizations spent 87 percent of expenses on program, compared with 8 percent on administrative expenses and less than 5 percent on fundraising expenses.
Expenses seemed to go up and down based on income, according to Romano, and changes within administrative expense increases were insignificant. “We do see more organizations doing more with less,” he said.
Total revenue declined to about $200 million for Alexandria, Va.-based American Diabetes Association (ADA), down almost 10 percent last year after a spike to $228 million in 2012. ADA reduced expenses by almost 15 percent. Fundraising expenses dropped by 11 percent, including reductions of 21 and 25 percent, respectively, within postage and shipping, and print and publications.
The cuts generally were across the board “to make sure that we live within our means,” said Chief Financial Officer (CFO) Debbie Johnson. “We’re making sure we kept grants at a level we can sustain and commit to for multi-year grants. It still seems to be an uncertain financial environment,” she said.
A large grant received several years ago explains most of the declines in the past couple of years. ADA received $20.4 million in corporate support in 2012 to kick off the Pathway Research Program. The funds were recorded in Fiscal Year 2012 but would be spent over several years, as grants supported by those contributions are awarded, Johnson said.
“Our financial philosophy is to — as much as possible — get money spent on mission. We don’t keep a lot of reserves, as much as our peers,” Johnson said. The downside is being much more conscientious about trends in revenue and fundraising, and “making sure that we keep our expenses in line,” she said.
ADA in recent years has taken a hard look at return on investment (ROI) and activities that were not generating a high enough ROI were taken out of the system, Johnson said. Pulling back on direct mail acquisition probably reduced expenses by about $3 million, she estimated. Consistent with the industry, Johnson said ADA also is going into the digital and online space where it can.
There’s always a concern about affecting the pipeline of donors, as direct mail certainly is needed for acquisition of new donors and it feeds into planned giving efforts, she said. ADA staff is looking at alternative ways to acquire people for its planned giving pipeline. “It’s not meant to be a long-term strategy,” Johnson said. “Let’s take some time and make sure we like what we’re doing from an acquisition point of view,” she said, and rebuild with acquisition that we’re confident in.”
The organization also examined some of its walk events, especially in markets that were struggling to generate positive net come that could potentially be spent elsewhere. “We wanted to make sure we were spending money intentionally, on things we wanted to,” Johnson said.
The NPT 100 does not include donor-advised funds, which operate more like private foundations, but some of the public charities on the list might give grants and so, some double counting of dollars is inevitable.
For example, while most of its largest grants go to universities for research, American Cancer Society also gave a $4.5 million grant to Dana-Farber Cancer Institute and $1 million to St. Jude Children’s Research Hospital. Its largest grant last year was $5.3 million to the Entertainment Industry Foundation, the people behind Stand Up 2 Cancer.
United Way is always among the largest organizations on the list, this year coming in at No. 4 with $4.142 billion in total revenue. Almost a quarter of that dough, some $1.038 billion, will show up on the revenue side for 21 organizations that are on this list due to the agency’s grantmaking. The largest amounts typically go to some of the largest organizations, including $218 million to American Red Cross, $136 million to Boys & Girls Clubs of America, $122 million to The Salvation Army, and $119 million to The Y.
With all the money that was raised in August 2014 from the Ice Bucket Challenge (IBC), how did the ALS Association (ALSA) not crack The NPT 100 this year?
The challenge did generate more than $200 million in donations worldwide.
For one, this year’s NPT 100 covers the fiscal year ending in 2014. For most organizations, that means either June 2014 or December 2014 but sometimes that’s March 2014 or September 2014.
The ALS Association’s fiscal year ends in January, so the Form 990 used for The NPT 100 would be the year ending 2014. For ALSA, that’s January 2014 – probably the earliest of any organization – seven months before the historic IBC. For that year, ALS Association and its nearly 40 affiliates generated in the vicinity of $65 million in total revenue.
IBC donations likely will appear on ALSA’s Form 990 for the fiscal year that ended January 2015. About $115 million of the $200 million raised globally in the challenge was given to ALSA, which reported revenue of about $138 million for the national office compared with $24 million in the previous year. Overall, ALSA might be in the neighborhood of $180 million in total revenue, assuming $138 million for the national office and at least $40 million for its affiliates, before any financial consolidations are taken into account.
Click here for The 2015 NPT 100.
NPT reporter Don McNamara contributed to this story.
