Revenues at nonprofits rose 2.7 percent in 2014, the fastest rate of growth since the recession, according to a new analysis of organizations’ tax filings. When adjusted for inflation, the median growth that year was lower, just topping 1 percent.
The increase is “slow but steady” but still hasn’t matched the pace seen in the years before the 2008-9 economic slowdown, according to Thomas Pollak, director of the National Center for Charitable Statistics at the Urban Institute, which conducted the study released today.
The center based its findings on an examination of 305,000 Form 990 and Form 990-EZ informational tax filings. That’s about 80 percent of active organizations.
During the past decade, revenues declined just once, in 2009, when nonprofits saw their support fall by a percentage point. In the years before the economic meltdown, according to the center’s analysis, median revenue growth peaked in 2007 at 5 percent.
Winners and Losers
The examination of gross receipts found that in 2014 there were more “winners” and fewer “losers” among nonprofits than any year since the recession.
On the “winners” end of the scale, 37 percent of nonprofits experienced double-digit revenue growth. On the other end, revenues declined by at least 10 percent at about a quarter of nonprofits, the lowest share since 2009, when roughly one-third experienced a similar fall-off. Revenue didn’t budge at all at nearly 13 percent of nonprofits.
Big increases in revenue were most prevalent at environmental and animal-welfare organizations and groups that specialize in foreign affairs and international projects. More than four in 10 of those groups experienced gains of at least 10 percent.
But one-third or more of groups in those two categories — for reporting purposes, the center groups green and animal organizations together — also had decreases in revenue of at least 10 percent.
The reason for the split has to do with revenue sources, Mr. Pollak said. Environmental and international nonprofits rely on public support for a large share of their budgets. As a result, their gross receipts can swing dramatically from year to year. Nonprofits that rely more on earned revenue, such as hospitals that receive payments for services, generally have a more steady income stream.
Stable Outlook
Charting revenue across all charities only provides a limited snapshot of nonprofit finances, Mr. Pollak cautioned.
“It doesn’t tell you if organizations are managing a decline in revenue by reducing their expenses, or if they are potentially running a big deficit,” he said.
There is some indication that revenue growth for nonprofits could continue apace. After a year of strong growth for nonprofit hospitals in 2014, Moody’s, the credit rating agency, upgraded that sector’s credit outlook from “negative” to stable for the first time since the recession. And a study by consulting firm Marts & Lundy and Indiana University’s Lilly Family School of Philanthropy projected continued gains in charitable giving in 2015 and 2016.
But Mr. Pollak noted that losses on Wall Street last year could still stymie a return to prerecession growth.
