your goals and your nonprofit mission. Planning is something that you should pay attention to every day.
The nonprofit sector is larger than many people realize. Here are some figures from the National Center for Charitable Statistics, based on IRS data, and the Independent Sector, regarding 501(c)(3) public charities in the United States:
• Nearly 1.2 million organizations were registered as public charities with the IRS in 2015.
• Assets held by these groups in 2013 totaled more than $3 trillion.
• The number of public charities increased by nearly 23 percent between 2008 and 2015.
• Nearly 30 percent of public charities that reported to the IRS in 2012 had annual expenses of less than $100,000.
Being Inspired and Inspiring Volunteers
The nonprofit sector is exciting. It encourages individuals with ideas about solving social problems or enhancing arts, culture, the environment, or education to act on those ideas. It creates a viable place within our society and economy for worthy activities that have little chance of commercial success. We think that it combines the best of the business world with the best of government social-service programs, bringing together the creativity, zeal, and problem solving from the business side with the call to public service from the government side.
We also find volunteerism inspiring. Everyone has heard stories of tightly knit communities where neighbors gather to rebuild a barn. That spirit of pitching in to help is the best part of living in a community in which people share values and ideas.
Many people these days live in diverse communities with neighbors who come from a wide variety of places and cultures. The nonprofit sector provides institutions and opportunities where everyone can come together to work toward the common good. Volunteerism gives everyone the chance to pitch in to rebuild “the barn.”
Applying the term voluntary sector to nonprofit organizations came about for a good reason. The Urban Institute estimates that in the United States, 62.8 million people volunteered at least once in 2014.
When you’re working in a nonprofit, you’ll likely be supervising volunteers – and they’ll likely supervise you. What we mean is that (with very few exceptions) nonprofit boards of directors serve as unpaid volunteers. And if you’re the executive director, your supervisors are the trustees or board members of the organization. At the same time, you likely depend on volunteers to carry out some or all the activities of the organization. You may serve as a volunteer yourself.
We prefer to think of nonprofits as organized group activities. You need to depend on others to reach your goals, and they need to depend on you. We talk about boards of directors in Chapter 6 and working with volunteers in Chapter 9. If your nonprofit employs paid staff or hopes to someday, Chapter 10 provides some guidance in hiring and managing employees.
Finding the Resources to Do the Job
One distinctive feature of the nonprofit sector is its dependency on contributions. We devote many pages of this book – most of Part 3 – to advice about getting contributions through fundraising.
Gifts from individuals of money, goods, services, time, and property make up the largest portion of that voluntary support. This portion is also the oldest of the voluntary traditions in the United States and goes back to colonial times. Since the late 19th century, private philanthropic foundations have emerged as another source of support, and more recently – particularly after World War II – the federal government and corporations have become important income sources. Earned income through fees for service, ticket sales, and tuition charges also is an important revenue source for many nonprofits; in fact, in 2013 nearly three-quarters of the revenues for public charities was earned.
Seeing where the contributions come from
Among private, nongovernmental sources of support, gifts from living individuals – as opposed to bequests from people who have died – have always represented the largest portion of total giving, but philanthropic giving by foundations and corporations has been growing. Table 1-1 gives estimates of the sources of private contributions in 2014. The best fundraising strategy for most organizations is to take a balanced approach that includes individual giving as well as grants and corporate contributions.
TABLE 1-1 Sources of Private Contributions, 2014
Source: Giving USA: The Annual Report on Philanthropy for the Year 2014 (2015). Chicago: Giving USA Foundation.
Fundraising for fun and profit
Nearly every nonprofit organization depends on generous donors for the cash it needs to pay its bills and provide its services. Even if you have income from ticket sales, admission charges, or contracted services, you’ll find that raising additional money is necessary to keep your organization alive and thriving.
You can see from Table 1-1 that individual giving is the largest single source of contributed income to nonprofit organizations. But you can’t just sit waiting by the mailbox for the donations to begin arriving. Two basic rules of fundraising are that people need to be asked for donations and thanked after giving one. Chapter 14 focuses on raising money from individuals, Chapter 15 covers raising money with special events, and Chapter 18 discusses campaign fundraising, which is used when you need to raise extra money for your building or your endowment.
Grants from foundations and corporations make up a smaller percentage of giving to nonprofits, but their support can be invaluable for startup project costs, equipment, technical support, and sometimes general operating costs. Keep in mind that the figures given in Table 1-1 don’t apply equally to every nonprofit. Some organizations get most of their income from foundation grants; others get very little.
