In New Orleans, a nonprofit sector that grew in response to Hurricane Katrina is still going strong more than 10 years later. That the city’s nonprofits—which are rebuilding the city, educating and providing health care to residents, and supporting jobs and housing—continue to grow financially and in number says something about New Orleans. It reflects the city’s needs, values, and people, just as the growth and decline of local nonprofits tells us something individual about every American community.
“Nonprofits are voluntary organizations. They are an expression of our voluntary will, of the communities we want to see, of the change we want to be able to deliver,” said Shena Ashley, director of the Urban Institute’s Center on Nonprofits and Philanthropy.
To look at the sector is to see a Detroit nonprofit offering job training to young adults, a homeless shelter in Durham, a Houston refugee center, an arts organization for Chicago teens, a religious hospice in South Carolina, and a prisoner reentry program in Florida, among roughly 300,000 active, reporting public charities across the United States.
The Urban Institute analyzes changes in nonprofit organizations’ gross receipts (or the funds received from all sources in a fiscal year) to track the sector’s growth and decline. In 2014, the most recent year for which we have data, 36 percent of public charities grew financially by more than 10 percent over the previous year. About 28 percent saw their gross receipts decline—falling more than 10 percent from 2013 to 2014.
When nonprofits lose revenue “that translates often in a very real way to fewer programs, fewer offerings, fewer services for the very populations they are trying to support,” said Urban Institute’s Brice McKeever, who conducts research for the Institute’s National Center for Charitable Statistics. “If a youth services organization doesn’t go under but stops offering afterschool programs, that’s a huge issue to the local community.”
But the national picture can only tell us so much. The sector is diverse and local context matters, which is why our interactive tool allows you to slice the data by city, state, and nonprofit type.
What we find is that Portland, Oregon, saw the largest growth among arts organizations of any other metro area over the past five years. That immigrant organizations are growing as strongly in Minneapolis as they are in much larger metropolitan areas like New York. And that efforts to revitalize philanthropy in Miami appear to be working.
“This is our sector. It’s the people’s sector, and it reflects all the dynamics and change happening in our country,” Ashley said. “To look at them is to look at us.”
On average, universities and hospitals tend to be the biggest and most highly resourced nonprofits by far, driving the sector’s overall growth in revenue and employment. Their size means they often dominate the policy conversation about nonprofits, but changes directed at these types of nonprofits can also have implications for the rest of the sector—something policymakers should keep in mind. Congress’s scrutiny of the tax-exempt status of billion-dollar university endowments, for example, could affect small endowments at local child care centers. Similarly, new requirements for overtime pay and community needs assessments may be easy for large hospitals to absorb but could be a strain on smaller hospitals and home health care providers.
Growth and decline are not the only changes we see in the nonprofit sector. Some nonprofits disappear from the data from year to year: 4.3 percent of reporting nonprofits disappeared from the rolls between 2004 and 2008, while a slightly higher number (5.0 percent) went missing between 2008 and 2012. It’s unclear from tax forms whether those nonprofits have shuttered, have gone dormant and will later reemerge, were absorbed by a larger organization, or have shrunk to the point where they no longer need to report to the IRS.
Nonetheless, in general, the nonprofit sector continues to grow. An estimated 14.4 million people, or over 1 in 10 employees in the United States, are employed by a nonprofit. And despite the shocks of the recent recession, the nonprofit sector grew proportionally faster than the government and business sectors from 2007 to 2010. What’s more, the nonprofit sector makes up 5.4 percent of our gross domestic product, meaning that it has an increasingly large impact on our national economy, as well as our local communities.
Ashley encourages people to use the tool and take a closer look at the nonprofit sector in their cities and communities. Are certain areas underserved while nonprofits compete for clients in others? If we see growth in certain types of nonprofits, what does that say about how our communities are changing and aiming to shape their own futures?
“All of us should care about growth, and not just that [the sector] is growing, but how is it growing and is the direction of that growth consistent with our values,” Ashley said. “The sector belongs to your community.”