Addresses US, South Dakota, and Sioux Falls area statistics involving nonprofits and their role in employment and the economy. Regulatory influences and public perception of nonprofits is also addressed. Presented to the "Leadership Sioux Falls" group of the Sioux Falls Area Chamber of Commerce in April, 2013. This presentation has been made to many audiences in the past ten years, regularly updated. Designed to give nonprofit professionals, volunteer board members, and community leaders perspective on the importance and reach of the nonprofit sector. Preparation for leaders to consider nonprofit board service in the larger context of economic development, employment, and governance duty.

1. The Nonprofit Sector
Leadership Sioux Falls 27
April 4, 2013

2. Topics We Will Cover
• Statistics on Nonprofits and Philanthropy
– US
– South Dakota
– Local
• Trends:
– Governance
– Accountability
– Public Perception
– Regulation

3. The Statistics are Difficult to
Substantiate
• Nonprofit sector very diverse, with few large
players
• Government does not allocate resources to data
collection on nonprofits on par with other
economic sectors
• Employment data is kept by states; some states
limit how data can be used
• New reliance on NAICS system is a problem –
no distinct category for nonprofits
The Nonprofit Almanac 2008,
Urban Institute

4. Numbers Change, but
Proportions Don’t
• Gifts & bequests – 87% in 1970, 83% in 2000
• Giving as percentage of GDP constant at
about 2% over past 30 years
• Individual giving as percentage of annual
income constant at about 2% over past 30
years
• Corporate giving as percentage of revenue
constant at 1.2%
Nonprofit Nation, Michael O’Neill

5. Nonprofits in the US
Total 501(c) organizations - 1,616,053
Total 501(c)3 organizations - 1,081,891
Total 501(c)6 organizations - 69,198
Nonprofits comprise about 8.5% of GDP
Nonprofits comprise about 11% of employment
Source: IRS 2012 Data Book; Independent Sector

7. Nonprofit Market is Vast
• 75% of US nonprofits have revenue under
$1 million
• Largest nonprofits’ revenues only 1.5% of
annual giving
• Only ¼ of 501(c)3s file a Form 990/990-EZ

8. Nonprofits in South Dakota
8,950 Organizations
$8.25 Billion in Income*
$15.85 Billion in Assets
*2011 SD State GDP=$40.117 Billion
Source: TaxExemptWorld.com, US Bureau of Economic Analysis

9. Nonprofits in Sioux Falls
Sioux Falls Development Foundation
(2012 Community Profile)
Major Employers (500+ employees)
Type Number Employees Percentage
For-Profit 16 20,231 45.77%
Nonprofit 7 17,156 38.81%
Government 5 6,288 14.23%
Other 1 524 1.18%
TOTAL 29 44,199 100.0%

10. Source: 2012 Giving USA

11. 2011 Giving by Recipient Type
Recipient Type $ (billions)
Religion 95.88
Education 38.87
Foundations 25.83
Human Services 35.39
Public-Society Benefit 21.37
Health 24.75
International 22.68
Arts, Culture, Humanities 13.12
Environment & Animals 7.81
Foundation Grants to Individuals 3.75
Unallocated 8.97
TOTAL $298.42 billion
Source: 2012 Giving USA

12. Volunteering in the US
• In 2011, the number of volunteers reached its highest
level in five years, as 64.3 million Americans volunteered
through an organization, an increase of 1.5 million from
2010.
• Americans volunteered a total of almost 8 billion hours,
an estimated economic value of roughly $171 billion.
• A majority of Americans assisted their neighbors in some
way and more than a third actively participated in a civic,
religious, or school group.
• Americans overwhelmingly volunteered in schools or
with other youth organizations, working to advance the
lives of young people.
Source: www.volunteeringinamerica.gov

13. Where the money comes from and where
it goes doesn’t change much over time
75% of gifts are made Religion and education
by individuals – 1.4%- are top causes
1.6% of GDP International causes are
Corporate gifts tied to usually at bottom*
net revenues (usually Corporate giving tied to
1.2% of pretax profits) HQ and operations
locations

14. Nonprofits in the News
(usually for the wrong reasons!)
• United Way of America – William Aramony
• September 11 charity
• American Red Cross – 9/11, etc.
• Jerry Sandusky/Penn State/The Second Mile
• “Pennies for Charity” and state AGs
• Katrina
• Nonprofit hospitals
• University endowments
• Local “Scandal du jour”

15. Regulatory Trends and
Influences
• IRS “Intermediate Sanctions”
• Sarbanes-Oxley (SOX) – perception, not real
• Senate Finance Committee
• House Joint Tax Committee (hospitals)
• Panel on the Nonprofit Sector
• IRS Governance Best Practices (now included in
2008 Form 990 questions)
• IRS Inquiry Letters (hospitals, universities, other
“non-charity” nonprofits)

16. Conclusions
• Nonprofit sector is big and influential
• Nonprofit sector is very splintered
• Perception of eroding confidence in charity
• Trends toward more public scrutiny
• “Where was the board?”
• IRS changing role – reluctantly - from pure
financial regulation to broader governance
oversight

17. Thank You!
818 S. Hawthorne Avenue
Sioux Falls, South Dakota 57104-4537
(605) 336-0244 or (888) 4-SUMPTION
www.sumptionandwyland.com