Why the social sector is vital to healthy, thriving communities
Get the facts on public charities, which make up a majority of NGOs—a broad umbrella term that was the subject of a recent White House memo—and what they do, who works at them, and how they’re funded.
The dizzying flow of executive orders, memos, and legislation that impact the social sector has led to confusion and anxiety for nonprofits across the country. As a nonpartisan data organization created to encourage nonprofit and philanthropic transparency, we want to cut through the noise and ground the conversation in facts.
On February 7, the White House issued a memo calling for a review of “all funding that agencies provide to NGOs.” The intent is to cut funding to nonprofits “engaged in actions that actively undermine the security, prosperity, and safety of the American people” and align funding decisions “with the interests of the United States and with the goals and priorities of [the current] Administration, as expressed in executive actions.”
The memo is both vague, in that it does not define what actions it’s speaking to, and far reaching, in that it could be applied in multiple, unpredictable ways. It appears to be an extension of recent attempts to curb federal funding to—and the work of—the social sector, including the USAID stop-work order. While federal judges have temporarily blocked a funding freeze, agencies continue to withhold funding. As the situation continues to evolve, here are some facts and figures that shed light on the sector’s work and potential impacts if the services they provide were to cease.
What are NGOs, nonprofits, and public charities?
The memo referenced Nongovernmental Organizations (NGOs)—this umbrella term refers to organizations or corporations that operate independently of government and do not operate to make a profit (although used more commonly for organizations operating outside the U.S.). In using the term “NGOs,” the memo could encompass a wide variety of organizations, including all U.S. nonprofits.
Within the category of NGOs, nonprofits are organizations that qualify for tax-exempt status under the U.S. Internal Revenue Code. This includes IRS subsections 501(c)(1) through 501(c)(29), as well as unregistered churches and private and public foundations. Within these, public charities are 501(c)(3) nonprofits (excluding private foundations). Public charities represent 1.5 million of the 1.9 million U.S. nonprofits. Public charities primarily deliver programs to advance social well-being and by law may not engage in partisan political activities. Because of their nonpartisan nature and focus on the public good, public charities are among the most trusted organizations in the U.S.
What work do public charities do?
The most frequent activities and services among U.S. public charities are related to religion and human services, followed by education.
Human services groups focus on meeting basic human needs and promoting well-being through direct assistance, support programs, and social services. They often serve vulnerable populations including low-income individuals and families (with services like food banks and housing assistance), children and youth (foster care, child abuse prevention), seniors (meal delivery, adult day care), people with disabilities (disabled veterans, vocational training), and people experiencing homelessness (shelters, transitional housing).
While relatively few public charities focus solely on religion, 24% of nonprofits included it as one of their core activities or services. Public charities also include a wide range of educational organizations (afterschool programs, universities), arts and culture organizations (museums, theater groups), and health organizations (clinics, nonprofit hospitals). Many well-known sports and recreation organizations such as the YMCA and the Special Olympics are public charities; as are organizations we rely on for public safety, such as local fire stations, Crime Stoppers, and the National Association for Search and Rescue.
Who works at public charities?
According to the U.S. Bureau of Labor Statistics, public charities that file Forms 990 accounted for around 12.8 million jobs, nearly 10% of the non-government labor force. Among nonprofit workers, 66% work in a job related to health care and/or social assistance.
Of course, many of those who work with public charities do so without pay. According to AmeriCorps’ latest figures, around 75.7 million Americans formally volunteer through local nonprofits and community-based organizations.
How are public charities funded?
Public charities typically rely on multiple funding streams to support operations and programs. At the highest level, they’re supported by three types of revenue—government grants, contributions, and earned income. Looking at the sector holistically, about 74% of cash flow comes from earned income (membership dues, product sales, ticket sales, consulting fees, etc.). Another 15% comes from contributions from various kinds of donors, while 11% comes from government grants (which, as we noted last week, totals about $303 billion annually).
While diverse in mission and programs, U.S. public charities all have two key things in common: They are, by law, nonpartisan, and they exist to work toward the public good. Rooting conversations about our sector in facts and objective data has never been more important amid increasing scrutiny and polarization. Candid will continue to share these insights to help illuminate why the social sector, and our collective work, is vital to supporting healthy, thriving communities.
