Nonprofit Institutions
Buy This Industry Report
Get more in-depth industry information with a First Research industry report containing business challenges, trends, executive insight, call prep questions, and so much more!
Get Information Now
Rest assured, your information will not be shared with anyone else (see our privacy policy for details).
Industry Overview
About 200,000 nonprofit organizations in the US have significant business activity, with combined annual revenue of $600 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 Internal Revenue Code that defines their tax status. The IRS recognizes over 740,000 charities, and adds 30,000 new ones each year.
Competitive Landscape
Organizations receive nonprofit status because their primary purpose is charitable, educational or civic in nature. The success of nonprofits often depends on efficient operations, to be able to match expenses with a changeable level of revenue. Large nonprofits are advantaged in fundraising due to better name recognition. Small nonprofits can be successful if they serve a dedicated membership or have a dependable source of revenue.
Products, Operations & Technology
The largest segment of the industry is concerned with healthcare, including 45,000 hospitals, clinics, and nursing facilities, with $450 billion of annual revenue. Nonprofit hospitals operate very much like for-profit businesses, but are exempt from most taxes because of their affiliation with a charitable institution, usually a church. Other types of nonprofit organizations include religious groups; private schools and colleges; performing arts organizations (Boston Symphony, Lincoln Center); museums; social service groups (YMCA, Salvation Army, Goodwill Industries); professional organizations (National Association of Women Judges); business associations (The Conference Board); labor unions; political associations; social advocacy groups; and grantmaking organizations.
Grantmaking organizations (also called charitable foundations) are special types of nonprofits that give money to other nonprofits. About 12,000 of these organizations, with annual revenue of $50 billion (largely from investments), actively seek to give money away through grants by soliciting Requests for Proposals (RFPs) from potential recipients. Examples are the Ford Foundation and the Howard Hughes Medical Institute. Foundations have over $300 billion in assets. The largest 100 foundations account for 40 percent of all assets and 30 percent of all grants.
The specific operations of nonprofits are defined by the types of programs they run, but these typically are labor-intensive. Staff may include both paid workers and volunteers.