|
...the previous year and 52 percent over the past decade. They reported nearly $1.2 trillion in revenue, 70 percent of which came from program services. The statistics in this article exclude private foundations and most organizations with receipts totaling less than $25,000, as well as most churches and certain other types of religious organizations.
Social welfare organizations exempt under IRC section 501(c)(4) filed 25,276 Forms 990 and 990-EZ for 2004. (1) Assets reported by these organizations totaled $82.0 billion. As with nonprofit charities, the majority of the $61.8 billion in revenue reported by social welfare organizations came from program services.
The statistics for charities and other tax-exempt organizations reported in this article are based on data compiled from Form 990, Return of Organization Exempt from Income Tax, and Form 990-EZ, the short form version of this information return. The latter form may be completed by smaller organizations, those with end-of-year assets of less than $250,000 and gross receipts of $25,000 to $100,000. Only condensed income statements and balance sheets are required from filers of the short form, which accounted for 22 percent of the returns filed by organizations exempt under Code sections 501(c)(3) and (4) for Tax Year 2004. (2)
Charitable Organizations Tax-Exempt Under Internal Revenue Code Section 501(c)(3)
In order to qualify for tax-exempt status, an organization must show that its purpose serves the public good, as opposed to a private interest. The activities of nonprofit organizations are limited in that they must further one or more of the purposes for which they were granted tax-exempt status. Organizations that are exempt under Code section 501(c)(3) are those whose purposes are religious, charitable, scientific, literary, or educational. In practice, these categories cover a broad range of activities.
Examples of the varied exempt purposes of these charitable organizations include nonprofit hospitals, educational institutions, youth organizations, community fundraising campaigns, public charities, local housing organizations, historical societies, and environmental preservation groups. These organizations may not allow net earnings to inure to the benefit of a shareholder or individual. Activity attempting to influence legislation cannot be a substantial part of an organization's activities, and the organization may not intervene in a political campaign on behalf of, or in opposition to, any candidate. (3) Generally, a donor's contribution to one of these organizations is tax-deductible.
Of the 918,119 active nonprofit charitable organizations recognized by the Internal Revenue Service (IRS) under Code section 501(c)(3), 276,199 filed Form 990 or 990-EZ returns for accounting periods that began in Calendar Year 2004.4 Those not required to file included churches and certain other religious organizations, as well as organizations with annual gross receipts totaling less than $25,000.5 Nonprofit private foundations, which are also tax-exempt under Code section 501(c)(3), are required to file separately on Form 990-PF, Return of Private Foundation. (6)
Financial Growth and Characteristics of Nonprofit Charitable Organizations
Figure A presents selected historical data for nonprofit charitable organizations over a 10-year period. With two notable exceptions, the data, which are inflation-adjusted, show steady growth between Tax Years 1995 and 2004 for nearly every financial category presented.7 Between Tax Year 1997 and 1998, all of the major financial items (assets, liabilities, revenue, and expenses) decreased in real terms. The decrease can be attributed to two very large, related organizations that filed returns for 1997, but not for 1998. The Teachers Insurance Annuity Association and the College Retirement Equities Fund (collectively known as TIAA-CREF) are pension organizations that lost their tax exemption as a result of provisions of the Taxpayer Relief Act of 1997. (8) The second notable exception to the 10-year growth trend was for investment income. This category, which includes interest from savings and temporary cash investments, dividends and interest from securities, and other income from investments, proved to be somewhat volatile over the 10-year period, with real net decrease of nearly 25 percent between 1995 and 2004.
Although 65 percent of the returns filed by section 501(c)(3) organizations for 2004 were filed by small organizations, those with assets of less than $500,000, these organizations held only 1 percent of the total assets and reported less than 4 percent of total revenue (Figure B). In comparison, large organizations, those with assets of $10 million or more, represented just 6 percent of the returns filed, but accounted for 90 percent of the total asset holdings and 83 percent of the total revenue reported.
The nonprofit charitable organizations in this study reported total revenue of nearly $1.2 trillion for 2004. Program service revenue, totaling $801.2 billion, was the major source of revenue for these organizations. This revenue comprises the fees collected by organizations in support of their tax-exempt purposes and includes such income as tuition and fees at educational institutions, hospital patient charges (including Medicare and Medicaid payments), and admission fees collected by museums or community performing arts groups, and YMCA/YWCA.
Figure C illustrates the types of revenue reported by organizations of different sizes. Large organizations received nearly three-fourths of their total revenue from program service revenue, while small organizations received over half of their revenue from contributions, gifts, and grants.
On Form 990 (but not on Form 990-EZ), expenses for nonprofit charitable organizations are grouped into four major categories: program services, fundraising, management and general, and payments to affiliates. Program service expenses are those associated with activities that further an organization's exempt purpose; fundraising expenses are those incurred in soliciting contributions, gifts, and grants; and management and general expenses include those administrative and overhead costs that are not specifically related to program services or fundraising activities.
The three categories above are grouped by such specific functional expense items as grants and allocations, salaries and wages, professional fees, and supplies. (See Table 2 at the end of this article.) The fourth major category, payments to affiliates, which includes distributions to organizations closely related to the reporting organizations, such as dues paid by local chapters to State and national agencies, is not grouped by specific functional expenses. Program ervice expenses accounted for the vast majority (86 percent) of total expenses reported by filers of Form 990; management and general expenses totaled 12 percent; and fundraising expenses and payments to affiliates, combined, accounted for less than 2 percent.
Compensation
Figure D shows compensation data reported by nonprofit charitable organizations on Form 990. Salaries, wages, and benefits are presented for executives, such as officers, directors, trustees, and key employees, as well as other employees. (Data from Form 990-EZ are not included in this section because that return does not distinguish between types of compensation or types of employee.) For Tax Year 2004, nonprofit charities reported $440.0 billion in compensation and benefits on Form 990. The majority of this, 81 percent, was in the form of other employee salaries and wages. Salaries of executives, such as officers, directors, trustees, and key employees, totalled $14.1 billion. In addition to salaries and wages, Form 990 filers reported $68.6 billion in benefits paid to their employees and executives. Examples of these benefits include contributions to pension, health, and insurance welfare plans; payments to deferred compensation and severance plans; fringe benefits; and expense account reimbursements.
Compensation and benefits represented a significant portion of the total expenses reported by non-charitable organizations on Form 990, nearly 42 percent. When viewed by size of organization and type of employee, certain patterns emerge. For small organizations, those reporting assets less than $500,000, other employee salaries, wages, and benefits represent slightly more than 32 percent of total expenses for Tax Year 2004; large organizations with assets of at least $50 million reported 40 percent of their expenses in the form of employee salaries, wages, and benefits. For executives, this compensation pattern is reversed. Salaries and benefits paid to executives, such as officers, directors, trustees, and key employees, accounted for nearly 8 percent of total expenses at small organizations, but less than 1 percent at large organizations.
[FIGURE C OMITTED]
Filers of Form 990 (but not Form 990-EZ) are required to report the total number of employees on the organization's payroll as of March 12. Nonprofit charitable organizations that provided this information on their returns reported 9.9 million paid employees and executives on that date in 2004.9 On another part of the form, filers are required to list all paid and unpaid executives. Nonprofit charitable organizations...
NOTE: All illustrations and photos
have been removed from this article.
More articles from Statistics of Income. SOI Bulletin
Corporate foreign tax credit, 2003., September 22, 2007
Table 1. U.S. corporation returns with a foreign tax credit, 2003: tot..., September 22, 2007
Table 2. U.S. corporation income tax returns with a foreign tax credit..., September 22, 2007
Table 3. U.S. corporation income tax returns with a foreign tax credit..., September 22, 2007
Celebrating ninety years of SOI: selected corporate data, 1916-2004., September 22, 2007
Looking for additional articles?
Search our database of over 3 million articles.
Looking for more in-depth information on this industry?
Search our complete database of Industry & Market reports by text, subject, publication
name or publication date.
About Goliath
Whether you're looking for sales prospects, competitive information, company
analysis or best practices in managing your organization,
Goliath can help you meet your business needs.
Our extensive business information databases empower business
professionals with both the breadth and depth of credible,
authoritative information they need to support their business
goals. Whether it be strategic planning, sales prospecting,
company research or defining management best practices -
Goliath is your leading source for accurate information.
|
