Much less than the 1.5 million registered as tax-exempt…
A recent article from the Philanthropy News Digest challenges popular beliefs about the size of the charitable sector in the United States.
Organizations such as Blackbaud have offered the figure of roughly 1.5 million tax-exempt nonprofit organizations in the United States, giving the impression that there are very many charitable organizations out there. But the number of charitable organizations, those actually definable as “private initiatives, for public good, engaged in public fundraising for tax-deductible donations,” is closer to 370,000. If we add private foundations, that number reaches about 465,000.
The reason for the discrepancy is that there is a wide variety of organizations that can register with the IRS as a tax-exempt nonprofit, since they are in the “public interest,” but that are not charities (and therefore do not qualify for tax-deductible donations). Some examples include “condo associations, real estate trusts, trade associations, social clubs, cemeteries, teacher retirement funds, and so on.” These sorts of organizations, though they are not “charitable” or “philanthropic,” make up the majority of the 1.5 million organizations in the nonprofit sector.
Philanthropy News Digest came to its lower number of charitable organizations by pointing out that 295,000 form 990’s were filed in 2015 (through data from the National Center for Charitable Statistics, taking its cue from this Chronicle of Philanthropy article). Only charitable organizations are required to fill out 990’s, and if only 295,000 organizations did so, then the number of charities is much lower than 1.5 million. The author then got to work on the National Center for Charitable Statistics’s “TableWizard” tool to come to a number of charities and private foundations markedly lower than the common 1.5 million figure.
If they are right, the findings point to the need to actively maintain a distinction between the terms “nonprofit,” and “charity” or “philanthropy,” even though the words are often used more or less interchangeably. The vast majority of tax-exempt organizations are not charitable or philanthropic.
Even with these lower figures, the United States boasts a charitable organization for every 860 citizens and a private foundation for every 4,000. This is the evidence of a rather strong charitable sector.