Nonprofit Institutions
Description
Institutions in this industry include grantmaking foundations, giving services, advocacy groups, civic clubs, and social organizations. Major institutions include AARP, the American Cancer Society, the Nature Conservancy, and the Pew Charitable Trusts (all based in the US), as well as BRAC (Bangladesh), the International Federation of Red Cross and Red Crescent Societies (Switzerland), and the National Trust and Oxfam (both based in the UK).
Nonprofits worldwide continue to work to address challenges posed by international crises over the past several years, including conflicts displacing millions of refugees. More than 90% of natural disaster-related deaths occurred in developing economies, according to the World Meteorological Organization (WMO).
The US nonprofit institutions industry includes about 65,000 establishments (single-location organizations and units of multi-location organizations) with combined annual revenue of more than $170 billion.
Although technically distinct, the terms "nonprofit," "tax-exempt," and "charitable" are often used interchangeably. Nonprofits are sometimes referred to as "501(c)" entities, after the section of the US Internal Revenue Code that defines their tax status.
Similarly structured groups with different missions are covered in the Membership Organizations industry profile. Some organizations that operate as nonprofit entities, such as colleges and universities, hospitals, and religious organizations, are covered in other industry profiles.
COMPETITIVE LANDSCAPE
Demand is driven by the need to represent special interests or provide social services that are not met by the market or government. Organizations receive nonprofit status because their primary purpose is religious, charitable, scientific, literary, or educational in nature. Their purpose must be to serve the public good versus a private interest.
Nonprofits often depend on efficient operations and their ability to match expenses with fluctuating revenues, the success of which is reliant on superior leadership and staff. Nonprofits compete with other fundraising organizations for donors, and with other personal and professional obligations for volunteers. Organizations benefit from having experience and skills in managing complex fundraising campaigns.
Competitive Advantages:
Superior Leadership -- Nonprofits compete with the private sector when hiring to fill key leadership positions. Barriers to securing talented leaders include work-life balance concerns, insufficient lifelong earning potential, lack of mentorship and training, and overwhelming fundraising responsibilities.
Name Recognition -- Large nonprofits with well-known brands such as the American Cancer Society and the Red Cross have advantages in raising funds due to their name recognition. Advanced marketing and communication campaigns help nonprofits stand out in a crowded market.
Sophisticated Fundraising -- Funding for nonprofits come from a range of sources, include contributions, gifts, and grants; program services; membership dues; and investment income. Organizations with a variety of skills, such as event planning, grant writing, and managing donor relations, have the competitive advantage.
PRODUCTS, OPERATIONS & TECHNOLOGY
Nonprofits can be classified into service categories, including the arts, culture, and humanities; education; environment and wildlife; health; human services; international and foreign affairs; membership benefit; and public benefit.
Giving to religion increased 3.1% in 2023, with about $145 billion contributions, followed by and human services (up 5.8%) at about $88 billion, and education (up 11.1%) at about $87 billion, according to the Giving USA 2024 Annual Report on Philanthropy.
Grantmaking organizations (also called charitable foundations) are special types of nonprofits that give money to other nonprofits. Examples include the Bill & Melinda Gates Foundation and the Ford Foundation. These organizations make grants to recipients selected after soliciting requests for proposals (RFPs).
Funding for nonprofits comes from individuals, foundations, bequests, and corporations. Giving by individuals increased by 1.6% in 2023, according to the Giving USA 2024 Annual Report on Philanthropy. Giving by foundations also increased by 1.7%.
Nonprofits worldwide continue to work to address challenges posed by international crises over the past several years, including conflicts displacing millions of refugees. More than 90% of natural disaster-related deaths occurred in developing economies, according to the World Meteorological Organization (WMO).
The US nonprofit institutions industry includes about 65,000 establishments (single-location organizations and units of multi-location organizations) with combined annual revenue of more than $170 billion.
Although technically distinct, the terms "nonprofit," "tax-exempt," and "charitable" are often used interchangeably. Nonprofits are sometimes referred to as "501(c)" entities, after the section of the US Internal Revenue Code that defines their tax status.
Similarly structured groups with different missions are covered in the Membership Organizations industry profile. Some organizations that operate as nonprofit entities, such as colleges and universities, hospitals, and religious organizations, are covered in other industry profiles.
COMPETITIVE LANDSCAPE
Demand is driven by the need to represent special interests or provide social services that are not met by the market or government. Organizations receive nonprofit status because their primary purpose is religious, charitable, scientific, literary, or educational in nature. Their purpose must be to serve the public good versus a private interest.
Nonprofits often depend on efficient operations and their ability to match expenses with fluctuating revenues, the success of which is reliant on superior leadership and staff. Nonprofits compete with other fundraising organizations for donors, and with other personal and professional obligations for volunteers. Organizations benefit from having experience and skills in managing complex fundraising campaigns.
Competitive Advantages:
Superior Leadership -- Nonprofits compete with the private sector when hiring to fill key leadership positions. Barriers to securing talented leaders include work-life balance concerns, insufficient lifelong earning potential, lack of mentorship and training, and overwhelming fundraising responsibilities.
Name Recognition -- Large nonprofits with well-known brands such as the American Cancer Society and the Red Cross have advantages in raising funds due to their name recognition. Advanced marketing and communication campaigns help nonprofits stand out in a crowded market.
Sophisticated Fundraising -- Funding for nonprofits come from a range of sources, include contributions, gifts, and grants; program services; membership dues; and investment income. Organizations with a variety of skills, such as event planning, grant writing, and managing donor relations, have the competitive advantage.
PRODUCTS, OPERATIONS & TECHNOLOGY
Nonprofits can be classified into service categories, including the arts, culture, and humanities; education; environment and wildlife; health; human services; international and foreign affairs; membership benefit; and public benefit.
Giving to religion increased 3.1% in 2023, with about $145 billion contributions, followed by and human services (up 5.8%) at about $88 billion, and education (up 11.1%) at about $87 billion, according to the Giving USA 2024 Annual Report on Philanthropy.
Grantmaking organizations (also called charitable foundations) are special types of nonprofits that give money to other nonprofits. Examples include the Bill & Melinda Gates Foundation and the Ford Foundation. These organizations make grants to recipients selected after soliciting requests for proposals (RFPs).
Funding for nonprofits comes from individuals, foundations, bequests, and corporations. Giving by individuals increased by 1.6% in 2023, according to the Giving USA 2024 Annual Report on Philanthropy. Giving by foundations also increased by 1.7%.
Table of Contents
- Industry Overview
- Quarterly Industry Update
- Business Challenges
- Business Trends
- Industry Opportunities
- Call Preparation Questions
- Financial Information
- Industry Forecast
- Web Links and Acronyms
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