The sheer size of the non-profit sector in the United States may surprise many. It includes everything from universities (Harvard, Stanford and Yale are all non-profit corporations), think tanks, churches and schools to environmental clubs, human rights groups, workers' unions and charity foundations. How NPOs structure their revenue distinguishes them from the for-profit sector. The telling feature is their bottom line: NPOs do not sell goods to maximize profit for individual shareholders (a contractual stipulation most corporations are bound to). Instead, organizations in the non-profit sector survive on contributions from their members and payment for services rendered. Most unions, for instance, charge dues, whereas churches rely heavily on tithing.
Tax Exempt Status
The Internal Revenue Code section 501(c) grants tax exemption to the following organizations: charitable, religious, scientific, literary, social welfare, agricultural, social, fraternal, veterans, political, labor and miscellaneous others (see Resources).
Qualifications
To qualify for exemption in the case of charity, the IRS stipulates two strict measures: earnings accrued by the organization cannot go to any private shareholder, and political campaigning (or lobbying) is restricted. Otherwise, all contributions to the organization are tax deductible (see Resources).
Non-Profit Numbers
In 2005, the IRS processed 226,246 returns for organizations that filed for 501 (c)(3) exemption -- namely, religious, educational, charitable, scientific and literary. Revenue for these NPOs totaled $1,250,077,533. Program services, however, consumed nearly a billion of this, while those organizations under $100,000 lost money on average (see Resources).
Expenses
As these numbers indicate, the functional expenses of most NPOs goes to management, services, fundraising and payments to affiliates. Not surprisingly, the organizations that show the highest profitability started the year with the most assets, a large proportion of it generated by investments in securities and ownership of land and equipment (see Resources).
Foundations
Like most NPOs, foundations are self-governing entities distinct from the profit sector and founded to serve some charitable or philanthropic purpose. They differ in being non-member based and organized around some distinct asset or deed of trust donated to serve a public good. For example, the Rockefeller Foundation, which is a grant-based, philanthropic organization originally founded in 1913 by John D. Rockefeller on the sum of $50 million, has given more than $14 billion to sponsor charitable projects worldwide (see Resources).
Foundation Numbers
In 2006, foundationcenter.org estimated that the United States had over 72,477 foundations. In 2007 alone, over 150,000 grants were issued, totaling some $21,649,909. In terms of assets, the Bill & Melinda Gates Foundation, J. Paul Getty Trust, and The Ford Foundation make up the largest grantmaking foundations in the United States (see References).
Top Recipients
Of the top 10 recipients of grant dollars in 2007, Duke, Harvard, Stanford, UC Berkeley and the University of Washington topped the list for major universities. Aeras Global TB Vaccine Foundation ranked first overall; the Alliance for a Green Revolution in Africa ranked second. The World Health Organization and the Rotary Foundation were also substantial recipients.
