By Dr. Liz Shay, Senior Grants Development Consultant
Nonprofit organizations have been an integral part of society for centuries, but the modern sector largely took shape after the Tax Reform Act of 1969. Today, there are more than 1.8 million active nonprofits, spanning a wide range of categories, including:
- 501(c)(3) charitable organizations, foundations, and religious entities
- Social welfare organizations and civic leagues (classified as 501(c)(4) entities)
- Chambers of commerce, trade associations, and other business leagues (classified as 501(c)(6) entities)
- Social clubs (classified as 501(c)(7) entities)
- Political organizations (tax-exempt under section 527)
All nonprofit organizations must file Form 990 annually with the Internal Revenue Service (IRS). While the data is about a year behind, these forms become public record and, along with the IRS 990 Business Master File, offer valuable insight into nonprofit activities, finances, and trends.
Exploring the characteristics of nonprofits can help us better understand the kind of work happening across the United States. Of the 1.8 million organizations, about 50,000 are public charities that make grants either to individuals or organizations, and even more are private charities that may make grants as well. Knowing a nonprofit’s 990 data may help your own organization establish partnerships that may increase your impact and expand your work.
Overview of Active U.S. Nonprofits
Most active nonprofits in the United States are 501(c)(3) public charities and include those roughly 50,000 grantmakers already mentioned and a wide variety of nonprofit organizations working directly in their communities, including religious entities. The grantmakers in this section are required to fill out a Schedule I with their Form 990, allowing you to see their grantmaking activities in a clear and consistent manner. Using this information can help you better align with a foundation’s priorities in your grantseeking efforts.
Approximately 10% of that 1.8 million are 501(c)(3) private foundations, many of which do grantmaking, although their Form 990s can sometimes be more difficult to read. And the final large category is 501(c)(x) Other Nonprofits, at about 18% of all active nonprofit organizations. These entities are unlikely to be grantmakers, with occasional exceptions, but may do work that is well-aligned to your organization, making way for potential impactful partnerships.
Figure 1: Total active nonprofit organizations by tax-exempt category type.
Age of Organizations
The IRS 990 Business Master File contains chronological information about nonprofit organizations, collected for almost 40 years. Almost 15% of active nonprofits have been around since before 1990, showing a long history of work. Due to the rise of the internet and the ability for organizations to not only work more efficiently but also receive online donations, the largest group of active nonprofit organizations was formed in the 2010s. We also saw over 350,000 nonprofit organizations formed during the current decade, many in response to the COVID-19 pandemic.
Although the age of a nonprofit organization does not necessarily reflect its work, organizations that have existed for longer typically have more stable activities. This stability can allow you to make better predictions about upcoming grantmaker priorities, as well as have a better sense of an organization’s work when looking for programmatic partnerships. Newer organizations are often more responsive to current trends or concerns, so they may be good partners if you are working on emerging topics for your community.
Figure 2: Total active nonprofit organizations by decade formed.
Financial Size
Nonprofit organizations report their end-of-year assets as part of their Form 990, providing keen insight into an organization’s size. Almost three-quarters of organizations, the vast majority of which are not grantmakers, have less than $100,000 in assets, often reflecting their desire to utilize their resources to impact their communities as quickly as possible. The next most common size is between $100,000 and $500,000. This category includes a mixture of grantmakers and other nonprofit organizations.
As shown in the chart {BELOW, TO THE LEFT, TO THE RIGHT} , nonprofit organizations come in many different sizes. Many of the largest nonprofit organizations reflect grantmaking organizations because they use the income of their investments to make grants for future years, with larger assets allowing for more grants. However, these largest organizations are often also the most likely to be publicly visible, and therefore have more competitive grant programs. Knowing the size of an organization’s end-of-year assets, along with other details from their Form 990, can help when your organization explores potential funders, especially if there isn’t a lot of public information and you plan to reach out with a Letter of Intent.
Figure 3: Total active nonprofit organizations by end-of-year assets size.
U.S. Nonprofit Organization Activities
Nonprofit organizations classify themselves using the National Taxonomy of Exempt Entities (NTEE), which groups organizations by their mission and their services. These NTEE codes include multiple divisions, which get progressively more specific. We aren’t going into quite that level of detail for this article, however, exploring some of the high-level categories can give us an understanding of priorities for active nonprofits across the country.
Industry Groups
The first division is an organization’s industry group, where one of eleven categories is selected. Human Services is the largest industry group, making up slightly over a quarter of all active nonprofits, and includes everything from crime prevention organizations to housing supports to youth development agencies. Other large industry groups include Public, Social Benefit (including civil rights organizations, advocacy groups, and public policy entities), Religion Related (predominantly places of worship, although also including advocacy and outreach), and Education (K-12 schools, early childhood education, extended learning time organizations, etc.).
If you are part of a nonprofit organization, it’s helpful to know what your NTEE code is. It is very possible that your services may cross multiple categories, although the NTEE code is decided by your primary function. When looking for grantmakers or partners that align with your mission, start by exploring others in your industry group. You should also consider adjacent industry group. For example, if you are an education entity, you may find alignment with a nonprofit whose mission supports human services.
Some industry groups are easier to fund than others, so if your organization has multiple programmatic areas, explore alignment with industry groups that have a greater number of active organizations.
Figure 4: Total U.S. nonprofit organizations by industry group.
Major Groups
To better understand the variety of priorities within these industry groups, let’s look a little deeper into the second NTEE division, the major group division, which captures the broad scope of work that a nonprofit organization is dedicated to.
The first industry group we will explore in this division is Human Services (Figure 5), which is the most popular classification of active nonprofit organizations. The broadest option, just listed as Human Services, encompasses many focus areas and is the largest major group chosen for this industry group. Other popular major groups include Recreation & Sport and Youth Development.
Figure 5: Total Human Services nonprofit organizations by major group.
We’ll also take a look at the Healthcare industry group (Figure 6). Of note, this category does not include hospitals (they are their own industry group), however, almost half of these organizations concentrate on general Healthcare topics, either on their own or through partnerships, and a quarter is focused on Mental Health and Crisis Intervention.
Figure 6: Total Healthcare nonprofit organizations by major group.
Knowing the major group a nonprofit belongs to can help you narrow your search for the right partner or funder. If an organization lists several focus areas, this classification can also reveal which priorities matter most to them.
Organization Type
The final NTEE code that we are exploring today is organization type, used to define the type of support an organization is providing to its communities. There are eight options within this category and the vast majority (almost 90%) of U.S. nonprofit organizations are classified in this code as Regular Nonprofits, meaning they are focused on their own activities. That’s followed by groups that provide Monetary Support, or grant makers, either to multiple organizations or a single organization. Single-organization-focused nonprofits are mainly focused on fundraising for a related entity, such as a school, library, or government, while multiple-organization-focused nonprofits are typically looking to support like-minded nonprofit entities, either through competitive grant processes or by board selection.
This organization type, Monetary Support – Multiple Organizations, is the most relevant for grantseeking. Within this type, look for the intersection of relevant industry group, major group, and this organization type to have the best chance of finding nonprofit grantmakers interested in supporting your organization and consider the other organization types for opportunities to develop partnerships to expand your organization’s impact.
Figure 7: Total U.S. nonprofit organizations based on NTEE organization type.
U.S. Nonprofit Prevalence by State
The final way we will explore the active nonprofit organizations in the U.S. in this article is through their locations. Every state has many active nonprofits; even the state with the fewest organizations (Wyoming) has over 5000 entities. California has the most active nonprofit organizations by far, with almost 200,000 in total, which makes sense considering it also has a large population. It is important to note that this information is about all nonprofit organizations, not just grantmakers, and it doesn’t take any grantmaking activities outside of their own communities into account.
As can be seen (Figure 8), there are likely to be active organizations beyond just your own within your community. Explore the area around you to understand the work being done by nonprofit organizations in your area. Consider their alignment with your own organization’s work, either for potential grantmaking or for partnerships. If you are already familiar with your immediate community, explore slightly further into other parts of your state or region.
Figure 8: Total active U.S. nonprofit organizations by state.
Because population varies so much between states, the differences in total numbers of active nonprofit organizations only give us part of the picture. When we take population into account, another pattern emerges. The most active nonprofit states, on a per capita basis, are Montana and Vermont, with Wyoming and Iowa close behind. Utah pops out as the least active state compared to their population, with Kentucky and Arizona having similar patterns.
Some states, either through legislation or culture, are more receptive to nonprofit work. Since many nonprofit organizations are focused on their local communities, states with a lot of active nonprofits per capita (Figure 9) may reflect more opportunities, relative to other states. Doing work in these most-active states may give you more potential partners, either through grantseeking or through programmatic collaboration.
Figure 9: Number of active U.S. nonprofit organizations per capita in each state.
Looking only at the approximately 50,000 organizations that classify themselves under the Monetary Support – Multiple Organizations NTEE organization type, we can explore a large percentage of the grantmakers. We can see that Montana, Wyoming, and Delaware host a high number of active grantmakers relative to their populations and Mississippi has a relatively low number of grantmakers, compared to its population.
If your organization works in a state with a lot of active grantmakers, you may have a better opportunity to find these types of monetary partnerships when grantseeking, but regardless of your location, every state has active grantmakers, even Alaska, with only 100 active organizations. Identifying these organizations can be a great place to start.
Figure 10: Total active multiple-organization grantmakers per capita in each state.
The U.S. has a plethora of active nonprofit organizations serving their communities and their Form 990s can provide a sense of the types of activities that they are doing, as well as the type of support that they provide. There is so much variation across these organizations, so there is sure to be a good fit for partnerships. Whether you are grantseeking or searching for a partner for your programmatic work, consider the data available and find a best-fit opportunity.