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
May 19, 2024 - Moderate Revenue Growth Expected
- 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. 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 increased slightly during the fourth quarter of 2023 while revenue at museums, zoos, and parks increased significantly, according to the US Census Bureau. Personal income, an indicator of charitable giving rates, increased slightly during the first quarter of 2024, according to the US Bureau of Economic Analysis.
- The nonprofit sector continues to see greater educational attainment levels among its workforce than “any other sector,” according to the Health of the US Nonprofit Sector Annual Review by Independent Sector. Nearly two-thirds of nonprofit employees over the age of 25 hold a bachelor’s degree or higher. The report also states that 20% of nonprofit employees “struggle paycheck-to-paycheck,” based on the ALICE (Asset Limited, Income Constrained, Employed) threshold of financial survival. This means that those employees “lived in households that could not afford the basics of housing, child care, food, transportation, health care, a smart phone plan, or taxes”
- Inflationary pressures and staffing issues top the list of concerns for nonprofit leaders surveyed for the 2024 State of the Nonprofit Sector Report. Budget cuts and workforce shortages affect the effectiveness of programs and limit outreach to supporters and mission partners. About 68% of nonprofits plan to cut services within the next two years.
- About 59% of large humanitarian organizations believe that their cybersecurity practices are underfunded while 65% consider them inadequately managed, according to the 2023 State of Humanitarian and Development Cybersecurity Report by Nethope. Most organizations reported a significant increase in risks to their cybersecurity over the past year. Only 35% have a cybersecurity specialist in charge, and half say that they lack the skills to use sophisticated tools like endpoint detection and response tools to detect and remedy breaches.
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