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2014 04-np sector

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Describes the impact of the nonprofit sector in national, state, and local economy. Outlines regulatory trends and media scrutiny leading to increased regulation and public skepticism about charity.

Prepared for a leadership group sponsored by the Sioux Falls Area Chamber of Commerce to demonstrate that the nonprofit sector is integral, rather than an adjunct, to economic life.

Published in: Business, News & Politics
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2014 04-np sector

  1. 1. The Nonprofit Sector Leadership Sioux Falls 28 April 2, 2014
  2. 2. Topics We Will Cover • Statistics on Nonprofits and Philanthropy – US – South Dakota – Local • Trends: – Governance – Accountability – Public Perception – Regulation
  3. 3. The Statistics are Difficult to Substantiate • Nonprofit sector very diverse, with few large players • Government does not allocate resources to data collection on nonprofits on par with other economic sectors • Employment data is kept by states; some states limit how data can be used • New reliance on NAICS system is a problem – no distinct category for nonprofits The Nonprofit Almanac 2008, Urban Institute
  4. 4. Numbers Change, but Proportions Don’t • Gifts & bequests – 87% in 1970, 83% in 2000 • Giving as percentage of GDP constant at about 2% over past 30 years • Individual giving as percentage of annual income constant at about 2% over past 30 years • Corporate giving as percentage of revenue constant at 1.2% Nonprofit Nation, Michael O’Neill
  5. 5. Nonprofits in the US Total 501(c) organizations - 1,599,013 Total 501(c)3 organizations - 1,052,495 Total 501(c)6 organizations - 66,985 Nonprofits comprise about 5.5% of GDP Nonprofits comprise about 9.2% of employment Source: IRS 2012 Data Book; Independent Sector
  6. 6. Nonprofit Market is Vast • 75% of US nonprofits have revenue under $1 million • Largest nonprofits’ revenues only 1.5% of annual giving • Only ¼ of 501(c)3s file a Form 990/990-EZ
  7. 7. Nonprofits in South Dakota 9,063 Organizations $8.06 Billion in Income* $16.9 Billion in Assets *2013 SD State GDP=$42.464 Billion Sources: TaxExemptWorld.com, SD GOED
  8. 8. Nonprofits in Sioux Falls Sioux Falls Development Foundation (2013 Community Profile) Major Employers (500+ employees) Type Number Employees Percentage For-Profit 15 20,038 44.74% Nonprofit 6 17,936 40.05% Government 5 6,289 14.04% Other 1 524 1.17% TOTAL 29 44,787 100.0%
  9. 9. Source: 2013 Giving USA
  10. 10. Source: 2013 Giving USA
  11. 11. Volunteering in the US • In 2013, the number of volunteers reached its highest level in five years, as 64.5 million Americans volunteered through an organization, an increase of 1.7 million from 2010. • Americans volunteered a total of almost 8 billion hours, an estimated economic value of roughly $175 billion. • A majority of Americans assisted their neighbors in some way and more than a third actively participated in a civic, religious, or school group. • Americans overwhelmingly volunteered in schools or with other youth organizations, working to advance the lives of young people. Source: www.volunteeringinamerica.gov
  12. 12. Where the money comes from and where it goes doesn’t change much over time 75% of gifts are made by individuals – 1.4%- 1.6% of GDP Corporate gifts tied to net revenues (usually 1.2% of pretax profits) Religion and education are top causes International causes are usually at bottom* Corporate giving tied to HQ and operations locations
  13. 13. Nonprofits in the News (usually for the wrong reasons!) • United Way of America – William Aramony • September 11 charity • American Red Cross – 9/11, etc. • Jerry Sandusky/Penn State/The Second Mile • “Pennies for Charity” and state AGs • Katrina • Nonprofit hospitals • University endowments • Local “Scandal du jour”
  14. 14. Regulatory Trends and Influences • IRS “Intermediate Sanctions” • Sarbanes-Oxley (SOX) – perception, not real • Senate Finance Committee • House Joint Tax Committee (hospitals) • Panel on the Nonprofit Sector • IRS Governance Best Practices (now included in 2008 Form 990 questions) • IRS Inquiry Letters (hospitals, universities, other “non-charity” nonprofits)
  15. 15. Conclusions • Nonprofit sector is big and influential • Nonprofit sector is very splintered • Perception of eroding confidence in charity • Trends toward more public scrutiny • “Where was the board?” • IRS changing role – reluctantly - from pure financial regulation to broader governance oversight
  16. 16. Thank You! 818 S. Hawthorne Avenue Sioux Falls, South Dakota 57104-4537 (605) 336-0244 or (888) 4-SUMPTION www.sumptionandwyland.com

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