US Nonprofit Sector
Industry Profile Report
Dive Deep into the industry with a 25+ page industry report (pdf format) including the following chapters
Industry Overview Current Conditions, Industry Structure, How Firms Operate, Industry Trends, Credit Underwriting & Risks, and Industry Forecast.
Call Preparation Call Prep Questions, Industry Terms, and Weblinks.
Financial Insights Working Capital, Capital Financing, Business Valuation, and Financial Benchmarks.
Industry Profile Excerpts
Industry Overview
The 1,812,815 organizations registered with the IRS as tax exempt under section 501 c of the IRS code include public charities, private and community foundations, advocacy and social welfare groups, business associations, social and recreation clubs, labor unions, and fraternal societies. Other tax exempt entities under other IRS rules include religious organizations and political organizations.
Reliance on Donations
Many nonprofits rely heavily on private contributions from individuals, corporations, and philanthropic organizations.
Retaining Staff and Volunteers
Nonprofit organizations can be highly dependent on volunteers for many staff positions and for carrying out their work.
Industry size & Structure
The nonprofit sector is comprised of 1.8 million organizations that employ 12.5 million workers and generate $3.7 trillion in annual revenue, according to Candid.
- Data from Candid on the nonprofit sector are based on organizations registered with the IRS as tax exempt under the 501(c) section of the IRS Code and includes both organizations with employees and those without employees.
- Nonprofits are not a separate sector as classified by the Census Bureau. The following industry categories are predominantly composed of nonprofit organizations: individual and family services; community food, housing, and relief services; vocational rehabilitation services; child day care services; museums, historical sites, and similar institutions; religious organizations; grantmaking and giving services; social advocacy organizations; civic and social organizations; and business, professional, labor, political, and similar organizations.
- The predominantly nonprofit industry categories reported by the Census Bureau represent 5.9% of the nation's Gross Domestic Product (GDP) and employ 4.8% of the country's workers.
- The sector is highly fragmented, according to Census Bureau data. The 50 largest social assistance firms account for 13% of the subsector’s revenue. The 50 largest religious, grantmaking, civic, professional, and similar organizations represent 18% of that subsector’s revenue. Within the museums, historical sites, and similar institutions subsector, the 50 largest firms account for 35% of its revenue.
- The nonprofit sector includes employer firms and owner-operated establishments with no employees. The owners of nonemployer firms typically perform the work or use volunteer or contract labor.
Industry Forecast
US Nonprofit Sector Industry Growth
Recent Developments
Nov 14, 2024 - Sector Shows Strong Growth
- The number of nonprofit organizations has increased 36% since 2000, according to Philanthropy Roundtable. Employment in the 501(c)(3) sector increased 30% from 2002 through 2022. Most of the growth in nonprofits during this time was in human services and public benefit organizations. This suggests that most of the increase in the number of organizations in recent decades is in response to increased demand for social services, according to Philanthropy Roundtable.
- The median compensation for nonprofit CEOs was about $132,000 in 2022, according to nonprofit information service Candid. The figure has increased over the last five years from about $119,000 but has remained relatively flat compared to inflation over the same time. CEO compensation varies considerably by nonprofit subsector and geographical location. Organizations focused on science and technology research and on health services offer the highest median executive compensation, with figures surpassing $180,000. Arts, animal-related, and religious organizations are far behind, with median executive compensation in these sectors falling below $100,000. Geography is another key determinant of compensation, with organizations in the Northeast offering the highest median salaries ($143,000) compared to lower figures in the Midwest ($114,000) and South ($120,000).
- Nearly all (99%) of nonprofit leaders are either “completely” or “cautiously” optimistic about their financial viability, according to the State of Associations, an inaugural study from accounting and consulting firm Wipfli. Five in six reported being in a better financial situation today than they were five years ago. Nearly eight in 10 (77%) said their financial viability is equal to or better where it was a year ago. Among the largest organizations (those with annual revenue in excess of $500 million) that positivity level jumped to 84%. Regardless of size, 89% believe their financial resources are effectively managed, and 85% have long-term financial sustainability plans in place.
- Nonprofit industry revenue is forecast to increase at a 4.45% compounded annual rate from 2024 to 2028, comparable to the growth of the overall economy, according to Inforum and the Interindustry Economic Research Fund, Inc. Personal income, an indicator of charitable giving rates, increased 4.48% year over year and 0.21% month over month in June, according to the Bureau of Economic Analysis. Nonprofits generate revenue through membership dues, subscriptions, fees for services, sales of branded products, advertising, grants, contracts, donations, fundraising, and investments. Cash flow can be seasonal with greater giving in the fourth quarter and more membership renewals in the first quarter. Social assistance revenue and revenue at museums, zoos, and parks increased slightly during the first quarter of 2024 compared to the prior quarter, according to the US Census Bureau.
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