Cheap Mini Dress

(Originally published in The NonProfit Times, March 1, 2010. Used with permission.)

President Barack Obama on January 22 signed into law a provision allowing charitable gifts made for Haiti relief during February and most of January 2010 to be deducted on 2009 federal tax returns. This noble sentiment would work a lot better if deductions were allowed for all giving made to qualified charities by April 15.

A 14-week window isn’t just an accounting trick. It would very likely increase charitable giving, get Congress out of the game of picking charities, and cost almost nothing if it doesn’t spur more giving.

The Haiti provision was not the first time taxpayers were allowed to apply deductions retroactively to the previous calendar year. Charitable contributions made early in 2005 for Indian Ocean tsunami victims were deductible in 2004. With that precedent matched, Congress can be expected to follow suit with ever-greater frequency in coming years. So let’s get it right from here on out.

All charitable deductions should be treated just like contributions to Individual Retirement Accounts (IRA) — allowable up until April 15 or the filing of one’s tax return. The incentive to give would be increased substantially. As pointed out by my colleague Howard Gleckman, resident fellow at the Urban Institute and editor of the Tax Policy Center’s blog, TaxVox, the option to deduct in one year or another doesn’t affect the value of the deduction that much, especially if the taxpayer adjusts withholding or estimated tax payments.

What does change is knowledge of the exact amount of tax saving that can be generated. Households can only guess during 2009, for instance, the tax incentive for gifts made that year. When they file their tax returns in 2010, they know the exact value.

Perhaps most important, people pay a lot of attention to potential tax savings when they are filing their returns. Behavioral economists and other social scientists who study motivation understand how choices are presented hugely influences how choices are made. Advertising execs and marketers say that the time to advertise a sale is when they’ve got the customers’ attention. Stores stage advertising blitzes on big shopping days.

Let’s apply that logic to a permanent offering of charitable giving until April 15. Tax preparers would ask taxpayers if they wanted to give to some favorite charity and would show the exact tax saving involved. Tax preparers, human and electronic, could easily add this question: “Would you like to see how much tax you?d save by giving additional gifts to charity? If so, specify amount here ________.”

Contrast that approach with last-minute and occasional actions to benefit Haiti, victims of the tsunami or whatever comes along next. By the time Congress got around to acting, many people (fortunately) had already responded. Tax preparers could barely be brought on board to help “advertise” the additional option. In the case of Haiti, many people will not go to their tax preparers until after the February window is closed.

At the same time, an across-the-board allowance for all charities avoids a major problem that arises when Congress picks particular causes. People are induced simply to switch charities rather than increase overall giving.

Extended donation deadlines call for a better reporting system. A permanent rule again would help us get it right. Record-keeping rules similar to those for IRAs would enable both the individual and the Internal Revenue Service (IRS) to be sure that a contribution made early in the year doesn’t get deducted on both last year’s and this year’s return.

IRS Form 1099 reporting could gradually be required, beginning with gifts of $250 or more, for charities that want to accept contributions retroactive to the previous calendar year. By starting with charities that want to be on the receiving end of April 15 giving, these administrative approaches would significantly reduce compliance problems for other giving.

For those who believe that government dollars should follow actual performance, part of the beauty of April 15 allowances is that if they don’t increase giving, the U.S. Department of the Treasury is out very little or nothing at all. There is a slight timing difference as to when the deduction is taken, but an improved reporting system could more than offset that cost. In contrast, many of today’s tax and spending provisions subsidize actions taxpayers would take anyway and yield low benefits relative to costs.

It makes sense to start allowing charitable deductions up until April 15 sooner rather than later. Recovery from a deep recession puts the needs of individuals — not to mention the charities that serve them — at their highest level.

We’re already moving down the road toward allowing charitable deductions made during the filing season to be claimed for the previous tax year. Therefore, let’s proceed in the cleanest and most efficient fashion, deter Congress from picking favorite causes, and keep our eyes on the prize of increasing charitable giving.

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

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This compilation of state profiles from the 2010 National Survey of Nonprofit-Government Contracting and Grants, provides national and state-by-state snapshots of human service organizations that have contracts and grants with local, state and federal governments. The individual state profiles are designed to document the extent of nonprofit-government contracting, processes and problems. They also examine the impact of the recession on these organizations and the cutbacks they have made to keep their programs operating. States are also ranked according to number of grants, types of issues, and actions taken by human service nonprofits to address the challenges they face.

The text below is an excerpt from the complete document. Read the full report in PDF format.

Governments contract with human service nonprofit organizations to deliver pivotal services to individuals, families, and communities. The U.S. economic recession has depleted many nonprofit budgets while increasing the demand for their services. Many state governments—which are large providers of government contracts and grants—are in a fiscal crisis. As a result, many nonprofits were forced to freeze or reduce salaries, draw on reserves, or scale back their operations. Each state is faced with unique financial challenges and employs different policies and procedures which are affecting the nonprofit-government contracting relationships in various ways. This report provides state by state data on government contracts and grants with human service nonprofits, problems encountered, and the effect of the recession.

Government contracting problems are widespread at the federal, state, and local levels. Key problems facing nonprofits were identified in this study and include late payments, changes to contracts, complexity of application and reporting requirements, and insufficient payments. Whether these were large or small problems, well over half of all nonprofits experience problems with their contracts and grants.

Nationwide, nearly 33,0003 human service providers had almost 200,000 government contracts and grants in 2009. Government contracting is more widespread in Arizona, where human service nonprofits averaged six contracts each, than in South Carolina, where nonprofits averaged three contracts each.

The types and sizes of government contracts are as varied as the organizations that receive them. Nationwide, 54 percent of human service nonprofits have government contracts and grants that require matching or sharing of costs. The number ranges from 82 percent of nonprofits in New Hampshire to 37 percent of organizations in Arizona. In addition, many contracts and grants limit the amount of money that can be used for program or organizational administrative costs. In Utah, 78 percent of organizations report limits on program administrative-overhead costs. In North Dakota, only 29 percent report such limits.

Human service nonprofits have been hit hard by the recession. Revenues from major sources such as government and donations have declined, and about 42 percent of human service nonprofits faced a budget deficit in 2009. Half of all organizations froze or reduced employee salaries, and almost 40 percent drew on reserves or reduced staff size. There were notable differences by state; 66 percent of nonprofits in Connecticut froze or reduced salaries but only 24 percent in Arkansas took this action. In Indiana, 62 percent of organizations drew on reserves but just 22 percent did in South Dakota.

This study also identifies key problems with government contracts and grants. The problems include insufficient payments to cover the cost of services provided, complexity of and time required to apply for and report on outcomes of contracts and grants, changes made by governments to existing contracts and grants, and late payments. The results varied significantly by state with some states reporting fewer problems than others. For example, 84 percent of organizations in Rhode Island had problems with payments not covering the full cost of contracted services, compared to just 37 percent of Montana nonprofits. Eighty-three percent of organizations in Illinois reported that late payments were a problem, but only 11 percent of organizations in South Dakota report that late payments were a problem.

The policies, procedures, and budget situations of each state are affecting the nonprofitgovernment contracting relationships in different ways. This report provides state-by-state data on the government contracting experience in all 50 states and the District of Columbia as well as an overview of the nation. It also includes state rankings for contract limitations, the effects of the recession, and problems experienced by nonprofits with government contracts and grants.

End of excerpt. The full report is available in PDF format.)

Publications on Human Service Nonprofit-Government Contracting

Human Service Nonprofits and Government Collaboration: Findings from the 2010 National Survey of Nonprofit Government Contracting and Grants

Contracts and Grants between Human Service Nonprofits and Governments

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

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This brief highlights trends in the number and finances of 501(c)(3) public charities as well as key findings on private charitable contributions and volunteering, two vital resources to the nonprofit sector. It includes the most recent data available.

Over 1.5 million nonprofits were registered with the Internal Revenue Service (IRS) in 2008. The largest single category? 501(c)(3) public charities?included over 950,000 organizations and accounted for three-fourths of nonprofit revenue and sixtenths of nonprofit assets. In 2009, total private giving was $303.8 billion, down 3.6 percent from the revised estimate for 2008. In 2009, 26.8 percent of U.S. adults said they volunteered through an organization. Volunteers contributed a total of 15 billion hours during the year, worth $279 billion at average wages.

Read the full report in PDF format.

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Usage, posting and reprint of materials on the UI web site:

Most publications may be downloaded free of charge from the web site in PDF format. This information may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required.

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This policy brief summarizes the findings of a larger report on racial-ethnic diversity in California’s nonprofit sector (see www.urban.org/url.cfm?ID=411977). It documents the extent to which California’s nonprofit boards, staff, and executive leadership are racially and ethnically diverse, and analyzes diversity by an organization’s size, type, funding patterns, and geographic location within the state. The brief examines how California nonprofits with diverse leadership have been affected by the current economic downturn, and presents three models for measuring diversity using different definitions of organizational diversity.

The text below is an excerpt from the complete document. Read the full brief in PDF format.

Racial and ethnic minorities are fast becoming a larger share of the U.S. population, and California is on the forefront of this change. Already, “minorities” account for the majority of California’s population. Non-Hispanic whites are the largest racialethnic group in the state, but one in three Californians is Latino, one in eight is Asian American, and one in sixteen is African American. About 1 percent is Native American or Pacific Islander. And while California as a whole is diverse, there is enormous variation in the patterns of racial-ethnic diversity among the state’s regions. Some regions, such as the North Coast and Sacramento, have a majority non-Hispanic white population, while in the Los Angeles area, two-thirds of the residents are people of color. To learn whether California’s nonprofit organizations reflect this demographic change, the Urban Institute’s Center on Nonprofits and Philanthropy conducted a statewide, representative survey on the diversity of nonprofit boards, executive directors, and staff in California’s nonprofit sector. The survey addressed five questions:

What proportion of California’s nonprofits can be categorized as “diverse”? In addressing this question, the report compares three different models for defining diverse organizations (see box).1What percentage of board members, executive directors, and staff in the sector are people of color, and what percentage are members of specific racial-ethnic communities?How does the number and proportion of diverse organizations vary by the size of the organization, field of activity, or location in the state?Is there a gender difference in the leadership of organizations led by people of color?What effects, if any, is the current economy having on nonprofit organizations in terms of demand for services and funding, and are the effects correlated with the racial or ethnic diversity of organizational leadership?

The study provides valuable baseline information on how racially and ethnically diverse California’s sector is in terms of leadership and staffing. However, it does not address questions pertaining to such issues as the relationship between diversity and quality of service, why some organizations are more diverse than others, or how diversity can be promoted in the sector.

(End of excerpt. The entire brief with citations is available in PDF format.)

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Usage, posting and reprint of materials on the UI web site:

Most publications may be downloaded free of charge from the web site in PDF format. This information may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required.

Copyright of the written materials contained within the Urban Institute website is owned or controlled by the Urban Institute. Posting UI research papers on other websites is permitted subject to prior approval from the Urban Institute—contact paffairs@urban.org.

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Contact:Stu Kantor, (202) 261-5283, skantor@ui.urban.org (Urban Institute)
Maggie Morth, (212) 807-2415, mor@foundationcenter.org (Foundation Center)
Suzanne E. Coffman, (757) 229-4631, ext. 27, scoffman@guidestar.org (GuideStar)

WASHINGTON, D.C., February 7, 2008—Foundation type, size, staffing patterns, and operating activities are the key factors that consistently drive foundation expense and compensation patterns, according to a new report issued jointly by the Urban Institute, the Foundation Center, and GuideStar. Moreover, even under changing or volatile economic conditions, the administrative expense and compensation patterns of U.S. foundations are consistent and predictable, the new report shows.

The report, What Drives Foundation Expenses and Compensation? Results of a Three-Year Study, presents final results from the first large-scale, long-term study of independent, corporate, and community foundations’ expenses and compensation. It is based on information from 2001 through 2003, the latest years for which data were available when the study began.

The study looks at characteristics and activities of the 10,000 largest grantmaking foundations and documents how differences in these factors affect foundations’ spending patterns. It focuses specifically on charitable administrative expenses, those expenses that relate exclusively to programs and count toward the federal government’s 5 percent minimum payout requirement for private foundations. The new report confirms and extends findings from an initial report published in 2006, Foundation Expenses and Compensation: How Operating Characteristics Influence Spending.

The latest study fills a long-standing data gap by providing information and analyses about foundation administrative expenses, compensation levels of executive staff and board members, and the factors that determine both types of expenditures. Its ultimate goal is to inform foundation practice, public policy debates, government oversight, and sector self-regulation.
“With current assets of roughly $600 billion dollars and annual grants surpassing $40 billion, the nation’s foundations are essential engines of civil progress,” said Elizabeth Boris, the study’s coauthor and director of the Urban Institute’s Center on Nonprofits and Philanthropy. “Understanding the factors that propel their expenses and being able to compare foundations with similar characteristics is a huge step forward for foundation managers, trustees, and policymakers. The study’s detailed data and findings show how expense ratios vary and reveal in stark terms the wisdom of avoiding one-size-fits-all thinking about foundation expenses.”

The report points to the need for improvements to IRS Forms 990 and 990-PF, the main sources of data for the study. “The forms don’t allow for adequate reporting of new types of foundation expenses, such as technology, communications, and evaluation, or non-grantmaking activities, in-kind gifts, and donated labor, which makes it difficult to fully assess foundations’ administrative costs and to provide a complete picture to stakeholders and the public,” said coauthor Loren Renz, senior researcher for special projects at the Foundation Center.

The tax forms also fail to distinguish board members who serve as paid staff from those who are involved mainly in governance, leading to confusion over foundation compensation patterns. “For the first time, the field has a multiyear picture of compensation patterns for foundation executives and for the small proportion of non-staff board members who are compensated,” said Chuck McLean, GuideStar’s vice president for research and quality. “One of the main contributions of the new report is to separate staff members from board members.”

Key findings include the following:

—Foundations differ greatly in their structures, resources, and operating characteristics and these differences significantly affect their expense levels. Even among foundations of the same type, differences in assets, giving levels, work styles, geographic reach, and program type vary dramatically and account for wide variations in expense and compensation patterns.

—Employment of staff is the single most important factor affecting expense levels, followed by staff size and level of program activities. Of the 10,000 foundations studied, only 2,938 have paid staff. The minority with staff incur significantly higher charitable administrative expense-to-qualifying distribution ratios than those without staff, and expense ratios increase along with staff size. Engaging in complex activities, such as direct charitable activities, international grantmaking, and program-related investments, also tends to increase cost ratios.

—Foundation scale influences cost ratios. Foundations with more resources tend to employ more staff, engage in complex activities, and pay their chief executives more. At the same time, the largest foundations also enjoy some economies of scale, so they can achieve lower cost ratios for certain activities.

—Most foundations do not compensate board members; those that do are most often staffed and independent. Of the 10,000 foundations, 2,571 compensated individual non-staff board members. Corporate and community foundations rarely compensate board members. Larger independent foundations, especially those with more complex program activities, tend to provide higher levels of compensation to board members than smaller or mid-sized foundations.

—There is relatively little year-to-year change in the factors that drive expense ratios and in how foundations allocate their charitable administrative expenses. While some annual fluctuations occur, the underlying patterns remain consistent. This finding holds for all foundation types.

—The status of the economy and the stock market affect assets and giving levels, which in turn affect the charitable administrative expense portion of qualifying distributions. Independent foundations are particularly sensitive to economic trends because their mandated charitable distribution levels (payout) are based on their net assets. In general, sharp declines in the stock market reduce foundation assets and giving. Foundations may be slower to adjust their program-related expenses. Institutional infrastructure—especially staff size and multiyear program commitments—cannot be easily changed as assets fluctuate from year to year.

GuideStar provided financial, expense, and compensation data from IRS Forms 990 and 990-PF. The Foundation Center provided financial data and information on operating characteristics gathered from foundation reports and an annual survey. The Urban Institute obtained missing data and created the study dataset. The Foundation Center and the Urban Institute analyzed the data and wrote the report.

This research was made possible through major grants from the Charles Stewart Mott Foundation and the Ford Foundation and through additional support from the California HealthCare Foundation, the W.K. Kellogg Foundation, and the Rockefeller Foundation.

What Drives Foundation Expenses and Compensation? Results of a Three-Year Study is available for free download at the web sites of the Foundation Center (http://www.foundationcenter.org/media/news/pr_0802.html),
the Urban Institute, and
GuideStar (http://www.guidestar.org/news/features/foundation_expenses.pdf).

The Foundation Center strengthens the nonprofit sector by advancing knowledge about U.S. philanthropy.

The Urban Institute is a nonprofit, nonpartisan research and educational organization that examines the social, economic, and governance challenges facing the nation.

GuideStar offers information about the programs and finances of more than 1.7 million IRS-recognized organizations.

The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance challenges facing the nation.

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Usage, posting and reprint of materials on the UI web site:

Most publications may be downloaded free of charge from the web site in PDF format. This information may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required.

Copyright of the written materials contained within the Urban Institute website is owned or controlled by the Urban Institute. Posting UI research papers on other websites is permitted subject to prior approval from the Urban Institute—contact paffairs@urban.org.

If you are unable to access or print the PDF document please contact us or call the Publications Office at (202) 261-5687.

Contact: Simona Combi, (202) 261-5709, scombi@urban.org (Urban Institute)

WASHINGTON, D.C., May 2, 2008—The nonprofit sector’s role in the economy has expanded by most key measures since 1998. It employs more people, draws in more revenue, and contributes more to the gross domestic product than it did a decade ago.

The Nonprofit Almanac 2008, new from the Urban Institute Press, offers data and facts charting the sector’s recent evolution. The statistics-packed volume can help nonprofit managers, researchers, the press, and the public better understand changes in the sector and its economic role.

The Nonprofit Almanac’s 140 figures and tables detail revenues by type and amount, contributions, employment, expenses, and outlays, as well as other essential facts about nonprofits. Compiled by Kennard T. Wing, Thomas H. Pollak, and Amy Blackwood, the Almanac features charitable giving and volunteering trends, data on wages and employment, revenue tabulations, and other financial information.

The number of nonprofits grew to over 1.4 million organizations from 1.1 million in 1998. In 2006, nonprofits accounted for 5 percent of GDP, 8.1 percent of the economy’s wages, and 9.7 percent of jobs. Health nonprofits continue to dominate the sector, with 45.4 percent of its expenses and 23.9 percent of its assets. Education is the second largest subsector, with 11.8 percent of total expenses and 18.5 percent of total assets.

“As the sector grows in size and financial clout, policymakers and the public need information to understand its diversity, assess its impact, and ensure its accountability. With The Nonprofit Almanac 2008, we unveil a new generation of data that will make this fluid and changing sector more transparent,” says Elizabeth Boris, director of the Urban Institute’s Center on Nonprofits and Philanthropy.

Sector highlights

In 2006, nonprofits contributed $666.1 billion to the U.S. economy.In 2006, nonprofits received $1 trillion in revenue, a 5.7 percent increase over 2005.In 2005, 12.9 million people worked for nonprofits, up from 11.1 million in 1998.In 2006, wages and salaries totaled $489.4 billion, compared with $318.9 billion in 1998 (not adjusted for inflation).

Giving (not adjusted for inflation)

Private giving (individuals, foundations, and corporations) reached $295 billion in 2006, more than double 1996’s $139 billion.Individuals donated $222.9 billion in 2006, compared with $107.6 billion in 1996; personal bequests added another $22.9 billion in 2006, up from $12 billion in 1996.Foundations gave $36.5 billion in 2005, a 197 percent increase from 10 years earlier.Corporations, including corporate foundations, donated $12.7 billion in 2006, up 69 percent from 10 years earlier.

Volunteering

61.2 million people said they volunteered in 2005.About 12.9 billion hours were volunteered in 2006, the equivalent of 7.6 million full-time employees.In 2006, the estimated wage value of volunteer time was $215.6 billion—quivalent to 43.3 percent of all nonprofit wages.

Kennard T. Wing is a consultant and nonprofit researcher. Thomas H. Pollak is director of the National Center for Charitable Statistics, a program of the Urban Institute’s Center on Nonprofits and Philanthropy. Amy Blackwood is a consultant with the National Center for Charitable Statistics.

The Nonprofit Almanac 2008, by Kennard T. Wing, Thomas H. Pollak, and Amy Blackwood, with a foreword by Elizabeth T. Boris, is available from the Urban Institute Press (paper, 8.5″ x 11″, 270 pages, ISBN 978-0-87766-736-0, $39.50). Order online at http://www.uipress.org, call 410-516-6956, or dial 1-800-537-5487 toll-free.

The Urban Institute is a nonprofit, nonpartisan policy research and educational organization that examines the social, economic, and governance challenges facing the nation.

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Usage, posting and reprint of materials on the UI web site:

Most publications may be downloaded free of charge from the web site in PDF format. This information may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required.

Copyright of the written materials contained within the Urban Institute website is owned or controlled by the Urban Institute. Posting UI research papers on other websites is permitted subject to prior approval from the Urban Institute—contact paffairs@urban.org.

If you are unable to access or print the PDF document please contact us or call the Publications Office at (202) 261-5687.

This report explores the results of the 2010 National Survey of Nonprofit-Government Contracting and Grants, a study of human service organizations designed to document the extent of nonprofit-government contracting, processes and problems. It also examines the impact of the recession on these organizations and the cutbacks they have made to keep their programs operating. While contracting problems are not new, many are exacerbated by the deep recession that has reduced government budgets and private contributions. Nearly 33,000 human service nonprofits have government contracts and grants, and 9,000 organizations with expenditures over 100,000 were surveyed for this study.

The text below is an excerpt from the complete document. Read the full report in PDF format.

The recession crippled the budgets of many nonprofits just as demand for their services rose. On top of shrinking revenue from donations and fees, many organizations struggled with ongoing payment problems from one of their biggest funders—government agencies. As a result, many were forced to cut services and staff or close program sites, hurting the communities they serve. While pain from the recession may have been unavoidable, better government management of contracts and grants can at least avoid adding to nonprofits’ financial stress.

Governments rely heavily on nonprofits to deliver a range of critical services, from homeless shelters to child care to job training, but little is known about the size and scale of these relationships—or how effective they are. This report offers a comprehensive look at the scope of government contracts and grants with human service nonprofits in the United States and documents the problems that arise. We also assess how these nonprofits were affected by the recession, how they responded to shrinking revenues, and how flaws in government contracting practices intensified their budget woes.

While donations and fees are crucial to human service nonprofits, many organizations rely heavily on revenues from government contracts and grants to expand their reach. Recent anecdotal press reports, regional studies, and small surveys describe a variety of problems related to government contracting: problems that are not new, but, for many nonprofits, were exacerbated by the recession, forcing them to make severe cutbacks in their staff and operations.

The findings reported here are based on a national study of human service nonprofits. We surveyed a random sample of human service organizations with more than $100,000 in expenses in eight human service program areas (table 1). All estimates are weighted to represent the entire U.S. human service nonprofit sector that had government contracts and grants in 2009. We explore the relationships between nonprofits and government contracting by program area, organization size, and level (federal, state, local) of government contracts. Context is important; policies and practices differ in each of these categories.

This study reveals how important government funding is to nonprofits, as well as how varied and often complex those relationships can be. We hope this information will help nonprofits and government agencies work together to solve the problems documented in this report and more effectively serve their communities.

End of excerpt. The full report is available in PDF format.)

Publications on Human Service Nonprofit-Government Contracting

National Study of Nonprofit-Government Contracting: State Profiles

Contracts and Grants between Human Service Nonprofits and Governments

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Usage, posting and reprint of materials on the UI web site:

Most publications may be downloaded free of charge from the web site in PDF format. This information may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required.

Copyright of the written materials contained within the Urban Institute website is owned or controlled by the Urban Institute. Posting UI research papers on other websites is permitted subject to prior approval from the Urban Institute—contact paffairs@urban.org.

If you are unable to access or print the PDF document please contact us or call the Publications Office at (202) 261-5687.

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

The text below is an excerpt from the complete document. Read the full paper in PDF format.

This brief presents key findings from the latest report on the Foundation Expenses and Compensation Project – the first large-scale, long-term, systematic study of independent, corporate, and community foundations’ expenses and compensation patterns and the factors behind them. It documents how differences in type, size, and operating activities of foundations affect their finances and charitable administrative expenses. This brief highlights the key findings of the full report, What Drives Foundation Expenses and Compensation?: Results of a Three-Year Study.

This brief presents key findings from the latest report of the Foundation Expenses and Compensation Project—the first large-scale, long-term, systematic study of independent, corporate, and community foundations’ expense and compensation patterns and the factors behind them. Documenting the varying characteristics of the 10,000 largest U.S. grantmaking foundations, the study finds these differences—including foundation type, size, and operating activities—essential for understanding foundation finances. Not surprisingly, hiring staff and taking on staff-intensive activities raise charitable administrative expenditures relative to charitable distributions, while relying on unpaid board and family members and engaging in less-staff-intensive activities lower them. Most foundation operations, however, are somewhere between these poles.

The study focuses on 2001, 2002, and 2003, the latest years for which data were available when the research was initiated. Despite the economic downturn and the volatility of the stock market during these years, the patterns of foundation expenses and compensation are clear and consistent over time. A longer time frame would have been preferable, of course, but this three-year study is the most robust analysis to date of nonprofit finances, and it confirms and extends the findings based on 2001 data, as reported in Foundation Expenses and Compensation: How Operating Characteristics Influence Spending (2006).

The study’s goals are to inform public policy debates and foundation practices by documenting administrative expenses reported by foundations for their grants and other charitable activities, examining compensation levels of their executive staff and board members, and assessing the factors that drive both types of expenditures. The focus is specifically on charitable administrative expenses, those expenses that relate exclusively to programs and count as qualifying distributions toward the 5 percent payout requirement for private foundations. Expenditures for investment-related activities are not part of this study, except insofar as compensation levels of individual staff and trustees are based on total compensation, and are not broken down by functions.

For years, discussions of appropriate levels of foundation expenses and compensation have been hampered by insufficient empirical data. This study is large and rigorous enough to answer basic questions about existing practices. The hope is that this report will inform government oversight, sector self-regulation, and individual foundation administration. In particular, foundation managers and board members can use the data to compare their expense levels over several years with those of similar foundations.

(End of excerpt. The entire paper is available in PDF format.)

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Usage, posting and reprint of materials on the UI web site:

Most publications may be downloaded free of charge from the web site in PDF format. This information may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required.

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The Nonprofit Fundraising Survey reports on the fundraising results of more than 2,500 nonprofit organizations in 2010. Overall, 35 percent of charities reported an increase in private contributions for the first nine months of 2010 compared to the same period in 2009. Thirty-seven percent reported a decline. The major factors cited for the decline included fewer individuals giving, and smaller amounts for the typical gift. The survey represents a unique collaboration by the Urban Institute’s National Center for Charitable Statistics with GuideStar, Indiana University’s Center on Philanthropy, the Association of Fundraising Professionals, the Foundation Center, and Blackbaud.

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In this ninth annual survey of nonprofit organizations (charities and foundations), respondents answered questions comparing their organizations’ total contributions in the organizations 2010 compared with the same period in 2009. Nearly the same percentage of first nine months of reported that giving was up as those that reported giving was down. Of the about 2,500 responses, 36 percent said giving rose and 37 percent said giving fell, while the other26 percent reported that total giving remained the same.

However, there are some differences across organizations according to charity type and budget size.

Organizations in four of the analyzed subsectors reported an equal percentage of both increases and decreases in contributions. These subsectors include: Arts, Education, Environment/Animals, and Human Services. International organizations were the most likely to report an increase in contributions, reflecting donations made for disaster relief. In the Health, Public‐society Benefit, and Religion subsectors, a larger percentage of organizations reported a decrease in charitable contributions than reported an increase. In these three subsectors, there is at least a five‐point gap between the percentage with a drop and the percentage with an increase in gifts received. The larger the organization’s size based on total annual expenditures, the more likely the organization was to report an increase in charitable receipts in the first nine months of2010, compared with the same period in 2009. Approximately 22 percent of charities used volunteers in positions that were formerly paid positions during the first nine months of2010. This is up from 15 percent a year ago. Most organizations were hopeful about 2011. About 47 percent planned budget increases, 33 percent expected to maintain their current level of expenditures, and only 20 percent anticipated a lower budget for 2011.

End of excerpt. The entire report is available in PDF format.)

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Usage, posting and reprint of materials on the UI web site:

Most publications may be downloaded free of charge from the web site in PDF format. This information may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required.

Copyright of the written materials contained within the Urban Institute website is owned or controlled by the Urban Institute. Posting UI research papers on other websites is permitted subject to prior approval from the Urban Institute—contact paffairs@urban.org.

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There are more than 19,000 nonprofit organizations devoted to supporting public education in the United States. These organizations include booster clubs, parent-teacher groups, public education funds, scholarship funds, high school alumni associations, and others. This report assesses the current status of education support organizations; provides details on the activities, capacities, and resources of public education funds; and compares Public Education Network member organizations with other types of education funds. On the basis of a survey of public education funds and an analysis of the latest data available from the National Center for Charitable Statistics, the report identifies key similarities and differences among the groups.

The text below is an excerpt from the complete document. Read the full report in PDF format.

There were more than 19,000 nonprofit organizations devoted to supporting public education in the United States in 2007. These organizations include booster clubs, parent-teacher groups, public education funds, scholarship funds, high school alumni associations, and others. While most of these organizations are small, together they spent roughly $4.3 billion in support of public education in 2007.

This report assesses the current status of education support organizations in the United States; provides details on the activities, capacities, and resources of public education funds; and compares Public Education Network (PEN) member organizations with other types of education funds. On the basis of a survey of public education funds and an analysis of the latest data available from the National Center for Charitable Statistics, the report identifies key similarities and differences among the groups.

Public education funds are dedicated to assisting public schools and school districts by raising money to support programs for teacher training and support, after-school programs, and school supplies and by promoting community support for public schools. The portrait of public education funds that emerges from these data shows the following key findings:

Between 1997 and 2007, the number of public education funds more than doubled. By 2007, 2,147 funds spent $1.2 billion on activities to support public education.More than 20 million children in the United States are served by public education funds.Public education funds tend to be more numerous in highly populated states such as California, Texas, Illinois, and New Jersey.Compared with other public education funds, PEN members tend to be larger, with more financial and staff resources. In 2007, for example, PEN members averaged $2.4 million in revenues and roughly $2.6 million in expenses, whereas other funds averaged $516,000 and $437,000, respectively. PEN member organizations also have more staff members than other funds, which tend to rely on volunteers.This capacity advantage is important because PEN member organizations focus mainly on populations that need the most assistance. Two out of five PEN members are located in states where 20 percent or more of children live below the poverty line. PEN members are twice as likely as other types of public education funds to assist school districts with majority low-income and minority children.PEN member organizations also differ in other ways. Governing boards of PEN member organizations are more racially/ethnically diverse than other public education funds. These boards also represent a broader range of community stakeholders: business leaders, parents, teachers, school administrators, foundations, and nonprofits.PEN members are more engaged with and accountable to their community constituents than other public education funds. They are more likely to engage in reform efforts that include educating the wider community about important educational issues, and they devote more of their resources to these activities than other types of funds.PEN members frequently interact with public policymakers at all levels of government and are much more likely than other types of funds to interact with state elected officials.Nearly all PEN member organizations collect performance-oriented data to manage their programs and activities, provide feedback to funders, and educate the general public.

Being plugged into their communities and demonstrating accountability to their stakeholders are viewed as indispensable to meeting PEN members’ goals, particularly their shared mandate of reforming the education system by galvanizing community support to improve public education.

(End of excerpt. The full report is available in PDF format.)

The nonpartisan Urban Institute publishes studies, reports, and books on timely topics worthy of public consideration. The views expressed are those of the authors and should not be attributed to the Urban Institute, its trustees, or its funders.

Usage, posting and reprint of materials on the UI web site:

Most publications may be downloaded free of charge from the web site in PDF format. This information may be used and copies made for research, academic, policy or other non-commercial purposes. Proper attribution is required.

Copyright of the written materials contained within the Urban Institute website is owned or controlled by the Urban Institute. Posting UI research papers on other websites is permitted subject to prior approval from the Urban Institute—contact paffairs@urban.org.

If you are unable to access or print the PDF document please contact us or call the Publications Office at (202) 261-5687.