News and analysis
April 04, 2013

Number of Charities and Foundations Rose Slightly in 2012

A total of 1,721 new groups attained nonprofit status in 2012. See an infographic on the growth of the nonprofit sector since 1991.

The number of charities and foundations registered with the Internal Revenue Service increased by just 1,761 organizations in 2012, reaching a total of nearly 1.1 million.

The tiny increase comes one year after the number of charities dropped by more than 200,000. ­mostly because more than 272,000 organizations lost their tax-exempt status after failing to file their informational tax returns. The IRS was required to purge those groups under a 2006 federal law whose effects were first felt in 2011. As a result, the number of charities remains below the nearly 1.3 million organizations that had tax-exempt status in 2010.

The latest figures also show a continued slowing in the number of charities created in the United States.

In 2012, 51,748 groups applied to the IRS for charity status, down 6.4 percent from 2011 and nearly 40 percent from 2007, when 85,771 groups applied.

The slowdown follows nearly two decades of rapid growth. Even after the IRS eliminated inactive charities in 2011, the number of groups classified under Section 501(c)(3) has more than doubled since 1991, when the IRS counted a total of 516,554 groups.

Of the organizations that sought charity status in 2012, 87 percent, or 45,029, were approved and fewer than 1 percent, 123, were denied. The remaining 6,596 applications were taken out of consideration because they were incomplete or withdrawn by the organizations, the IRS said. The IRS also reported a rise in the number of returns filed electronically by tax-exempt organizations. More than 683,000 groups filed their returns electronically in 2012, a 12.4 percent increase from the 607,738 such returns filed in 2011.

Send an e-mail to Sarah Frostenson.