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Five Things That Didn’t Make It Into Candid's Latest Key Facts Report

Thursday, June 4, 2020   (0 Comments)
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By Anna Koob
June 2, 2020

Click here for link to original article.

In April, Candid released “Key Facts on U.S. Nonprofits and Foundations.” It’s our first attempt to produce high-level insights from Candid’s combined data repository since Foundation Center and GuideStar joined forces last year. And because we wanted to keep it to four pages, there’s a whole lot of information that didn’t make the cut.

Here are some things we would have highlighted if we’d had more space:

1. There’s a difference between the focus of public charities and foundation grant dollars

Human service organizations rank as the largest (27 percent) category of U.S. charities by number of organizations. But U.S. institutional funders award a markedly smaller proportion of overall grantmaking to human services nonprofits (12 percent). Instead, the majority of grant dollars focus on health (28 percent) and education (24 percent)—a fact that is reflected both in the largest grant in our 2017 data set (a $476 million grant from the Bill & Melinda Gates Foundation to the Switzerland-based Global Fund to Fight AIDS, Tuberculosis, and Malaria) and the type of organizations receiving the most grant dollars (elite universities).

Religious nonprofits make up the second-largest (19 percent) category of U.S. nonprofits. Many may not think of churches and other religious organizations as public charities or nonprofits, but they are. In fact, the number we’re able to identify undercounts the total substantially—most churches do not register with the IRS, and we’re only able to capture those that do. Although it’s been estimated that about one-third of individual donations go to churches, foundations—or at least the largest foundations in the U.S.—prioritize other causes.

2. In general, less-populated U.S. states have more charities per person than more populous ones

In “Key Facts,” we included a heat map based on per capita distribution of charities by state. Some of the states that rank smallest by population—Wyoming, Alaska, Vermont—show the largest number of public charities per capita, whereas some of the larger states rank lower when the number of charities is considered alongside population size. For example, California has by far the largest number of charities, 137,989. By number of charities per person, however, California ranks 41st.

This seems to suggest that there might be some minimum threshold of charities that need to exist in each state, regardless of population size, to meet social needs and support a nonprofit ecosystem. Food banks, for example, are essential, whether they serve hundreds or thousands.

Heat map of the United States showing number of charities per capita by state

3. Program revenue—not charitable contributions or grants—is the largest source of nonprofit revenue overall

Many readers might be surprised by the finding that in the aggregate, 72 percent of public charity revenue comes from program services, compared with 22 percent represented by contributions such as individual donations or foundation grants.

Two factors may be inflating this figure, however. The first is that we only have data on revenue sources from public charities with overall revenue above $50,000. The smallest tier of public charities is far and away the largest segment of the nonprofit sector overall. These organizations are less likely to be bringing in program revenue. Second, the largest public charities disproportionately depend on revenue through program fees—think large nonprofit hospitals and universities charging tuition.

This finding supports the idea that, contrary to the name, many “public charities” are not fully reliant—and may be only partially reliant—on charity to support their operations. Some have highly diversified revenue streams.

Public charities by source of annual revenue. Program services, 72%. Contributions, 22%. Other, 7%.

4. At least 18 percent of public charities have received a grant, but that proportion varies a lot depending on the size of the public charity

Triangulating between the IRS Business Master File and two legacy databases, GuideStar’s extensive repository of IRS 990 filings and Foundation Center’s large collection of grants data, allowed us as Candid to look into a basic question for the first time: “How many public charities get grants?” The finding: in 2017 some 18 percent of public charities received at least one grant. We highlighted this overall figure, but the proportion varies a lot depending on the size of the organization—from 8 percent on the smaller end to 76 percent for the largest organizations.

We believe that our methodology undercounts the number of organizations receiving at least one grant and hope to refine this approach for future research. But these figures, in combination with the finding on program service revenue, make it clear that foundation grants are a relatively modest piece of the full nonprofit-revenue picture.

Public charities receiving a grant by annual revenue. $0-99K, 8%. $100K-499K, 45%. $500k-999K, 61%. $1M-4.9M, 68%. >$5M, 76%.

5. Foundations aren’t the only grantmakers

Is a grantmaker the same thing as a foundation? It’s a practical question more than it is a legal one. A foundation, we decided, in the U.S. context, includes private foundations (a tax code term) and community foundations (which are technically public charities under the IRS tax code; our working definition of these could be a subject for another blog post). Traditionally, Foundation Center focused its data collection efforts on these organizations that exist primarily to award grants, generally to a number of different recipients.

Many other types of nonprofits also award grants, however. We decided to use the term grantmaker to refer to all organizations with grantmaking capability, not limited to foundations. And, as Candid, our combined databases now allow us to say something about this grantmaking:

In addition to the 119,791 private and community foundations awarding $82 billion that we identified in “Key Facts,” we also uncovered an additional 75,063 public charity grantmakers awarding $192 billion—more than double total grantmaking by foundations.

Side-by-side: foundations and public charity grantmaking. 119,791 private and community foundations, awarding $82B. 75,063 public charity grantmakers, awarding $192B.

To ground this large figure, it’s important to note two things:

  1. grantmaking public charities are diverse and include large donor-advised funds and organizations formed to raise money for/make grants to a specific university or hospital alongside small charities with more modest grantmaking programs; and
  2. the $192 billion (awarded by other public charity grantmakers) includes some double counting of the $82 billion awarded by foundations, since foundations may provide funds to a public charity that then re-grants them.

Closing thoughts

Delving into the billions of pieces of data that Candid collects about millions of nonprofits is a weedy enterprise that suggests so many different lines of inquiry. This time around, we tried to limit ourselves to the essentials. But it’s a testament to our excitement about the research possibilities of Candid data that this four-page fact sheet of key stats could have easily become a 40-page report, not including methodology notes. We look forward to offering more in the way of essential figures and analysis. Let us know what you’d like to see more of!

Methodological Notes

Organization-level analysis for “Key Facts on U.S. Nonprofits and Foundations” was based on the IRS Business Master File (BMF) from December 2019. The BMF is the IRS’s master record of organizations registered with it as tax exempt; it includes basic information on these organizations. Generally, the analysis focused on organizations exempt under subsection 501(c)(3), otherwise referred to as charitable organizations. There are two types of charitable organizations: public charities and private foundations. For analyses requiring organizational data going beyond that available on the BMF (such as sources of revenue or total giving), we relied on the most recent IRS filing for the subset of organizations required to submit these filings, going back no later than 2015. For the majority of organizations, these figures reflect the fiscal year ending in 2017.

Analyses of grants data were based on an annual set of all grants of $10,000 or more awarded by 1,000 of the largest U.S. private and community foundations, with the exception of the analysis of the proportion of public charities receiving grants, which considered the full set of grants awarded by U.S. 501(c)(3) grantmakers that Candid has collected and indexed. In either case, the referenced grants were awarded or authorized in the organization’s fiscal year ending in 2017.

 

 

 



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