Orange County. Nonprofit Sector. Pulse Report. Sponsored by: Produced by: 2015 Orange County Nonprofit Sector Pulse Report 3

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1 2015 Orange County Nonprofit Sector Pulse Report Sponsored by: Produced by: 2015 Orange County Nonprofit Sector Pulse Report 3

2 About OneOC Our Mission OneOC s mission simply stated is accelerating nonprofit success. We provide support and solutions to over 670 nonprofit organizations and community initiatives each year. We also engage local companies and their employees as partners in volunteering and giving programs to build a stronger, more vibrant Orange County. OneOC is the largest member of the 250 volunteer action centers affiliated with Points of Lights Institute, enabling local participation in national service campaigns and connection to a larger movement of change. As a full-service, nonprofit resource center with extensive integrated services under one umbrella, our programs help Orange County nonprofits and companies advance their mission effectiveness, business efficiency, and strategy execution. Our Services Volunteer Services Connecting nonprofits with volunteers is what we ve done for over 55 years. It s what we do, what we are, how we live. We connect young and old, diverse cultures and religions, and people of all economic levels to build a stronger, more vibrant Orange County. Training Services We train hundreds of organizations, their staff and volunteers in our seminars, webinars and training sessions every year. Orange County s nonprofits count on OneOC to increase their knowledge and improve their skills with quality, affordable educational experiences. Consulting Services OneOC helps nonprofits develop their capabilities, enhance their know-how and conserve their resources to wring more results out of every dollar. The OneOC team can consult with you on everything from governance and leadership to mission, vision and strategic planning, from program delivery and measuring impact to strategic relationships and resource development, and from internal operations to management evaluation. Fiscal Sponsorship Services We can provide all the financial, human resources and other core functions nonprofits desperately need, but often lack. But don t make the mistake of thinking we just provide these services only to small start-ups. Our full suite of business services are also in demand among mid-size and larger community projects, too. Center for Business & Community Partnerships OneOC launched the Center for Business and Community Partnerships on February 3, 2015 with a mission to provide smart, easy and impactful solutions for companies to engage in the community, bringing to local nonprofits new giving and volunteering resources. The impact will be measured by the number of new companies engaged (with a special target emphasis on mid-size companies), increased number of volunteers, and number of new company donor advised funds and contributed dollars Orange County Nonprofit Sector Pulse Report

3 Introduction This is the inaugural publication of the OC Nonprofit Sector Pulse Report that OneOC will periodically produce throughout the year to inform other nonprofits and our community stakeholders on the state of the local nonprofit sector, including its current critical issues, successes and challenges, trends, new directions, and more. This Report tells us a lot about Orange County s nonprofit sector: Orange County has thousands of nonprofits. The sector generates billions of dollars of annual revenue. The vast majority of funds are used on program services. Larger nonprofits are less dependent on donations. Public charities are a major source of local jobs and wages. Funds are tight for many nonprofits. Volunteers power small and large organizations. This Pulse Report pulled out Orange County information from the aggregated statewide report, Causes Count: The Economic Power of California s Nonprofit Sector, produced in 2014 by CalNonprofits. The source data from the Internal Revenue Service, California Employment Department, and US Bureau of Census, utilized by CalNonprofits to generate our report, is the most recent, relevant, and comprehensive data available, specifically on Orange County s nonprofits. Most people in Orange County recognize that nonprofits do a lot of good in our communities and touch their lives on a daily basis. But, I suspect that many readers will be surprised by the size, scope, and economic impact of our nonprofit sector. My personal hope is that community and nonprofit leaders, donors and foundations, companies and government agencies, who read the report, will use the data to inform their strategic thinking about ways to create greater social impact and new community partnerships. The production of this inaugural edition of OneOC s OC Nonprofit Sector Pulse Report would not have been possible without our partnership with CalNonprofits, the sponsorship of Wells Fargo, and the collaborative work of Laura Deitrick and Jon Durnford at the University San Diego s Caster Family Center for Nonprofit and Philanthropic Research, and Victoria Torres, OneOC s Training Director. I look forward to our future editions of the OC Nonprofit Sector Pulse Report. It will join OneOC s other valuable tools and reports, including the Orange County Nonprofit Salary Survey; Board Connection Handbook; Guide to Start a Nonprofit Organization, and Annual Holiday Directory. Daniel McQuaid OneOC President & CEO 2015 Orange County Nonprofit Sector Pulse Report 3

4 Acknowledgments OneOC would like to thank the following sponsors and partners involved in making the production of this report possible: Produced by OneOC Wells Fargo for their generous donation and continued support of OneOC throughout the years. CalNonprofits for helping to pave the way, by providing California nonprofit sector data in their Causes Count Report, Thanks to their efforts in making the data accessible, OneOC was fortunate to capture Orange County related data for comparison. The University of San Diego, Caster Family Center for Nonprofit and Philanthropic Research, for their research and diligence in extracting and providing the data. In Partnership with Kenny the Printer for their generous inkind contribution and making this report available in print. Printed Through the Generosity of Orange County Nonprofit Sector Pulse Report

5 Table of Contents Orange County Nonprofits 6 Local, State and National Comparison 8 Employment Financial Data 9 10 Revenue Sources Breakdown by Expenses Surplus Margins 15 Deficit Margins 16 Volunteer Data 17 Data Sources Orange County Nonprofit Sector Pulse Report 5

6 Orange County Nonprofits How many nonprofits are there in Orange County? 70% 501c(3) Public Charity 501c(3) 10% Private Founda ons 20% There are 8,291 organizations registered as 501(c) corporations, including non-charity nonprofits such as condominium associations, labor unions, chambers of commerce and professional associations. Of that, 5,764 (70%) nonprofits are active public charities that filed Form 990, 990-EZ, and 990-N with the Internal Revenue Service (IRS) in This does not include an approximate 2,878 nonprofit churches that are generally exempt from IRS nonprofit application and annual reporting All Other 501c Classifica ons requirements, and therefore were not included this report. Of the 70% of public charities, there were 3,398 nonprofits that filed an IRS Form 990 or 990-EZ, both of which require financial data to be documented. Therefore, all organizational data in this report are derived from those forms. There are 2,366 OC public charities that report annual revenue less than 50,000, and are not required to provide financial data to the IRS. Thus these N-filers are not included in any financial analysis presented in this report. Orange County 501(c)(3) filers by subsector and type of IRS Form Filed SUBSECTOR Form EZ 990-N All filers Arts, culture, and humanities Higher Education Education, other ,383 Environment Hospitals Health, other Human Services ,838 International Mutual, Public and Societal Benefit SOURCE: CalNonprofits (Circa 2012) + TOTAL 1,661 1,737 2,366 5,764 2,366 Charities annual revenue less than 50,000 <50K 3,398 Nonprofits filed IRS Form 990 & 990EZ >50K Orange County Nonprofit Sector Pulse Report

7 Orange County Nonprofits by Organizational Size 2,000 3,398 TOTAL OC NONPROFITS 3,398 Total 501 (C)(3) 9.7B Total Revenue 1,600 1,806 Arts, culture, humanities % 2% 7% Higher Education 20.5% 6% 1, % OC Nonprofits earn less than 500K Education, other % 1% <100, , , , , ,000-1M 296 1M-5M 144 5M+ Environment + Hospitals Health, other %.5% 39% % 27% + Hospitals and health-related nonprofits comprised 10.5% Total OC Nonprofits SOURCE: CalNonprofits (Circa 2012) 66% Total OC Nonprofit Revenue Human Services International Mutual, Public, Societal Benefit 1,191 35% 14% 136 4% 1% % 3% 2015 Orange County Nonprofit Sector Pulse Report 7

8 Local, State and National Comparison Annual Change in Total Revenue and Number of Nonprofits * 2008 Orange County California United States Public Chari es Revenue Public Chari es Revenue Public Chari es Revenue 6% 5% 3% 4% 2% -4% 3% 23% 33% -4% * The 2009 Orange County revenue increase is attributed to 14 organizations, which account for 1.66 billion in total revenue, that were located outside of the county in 2008, and relocated inside of the county in Note: Calculations in the chart above are based on the 3,398 nonprofits that provided financial data when they filed IRS form 990 and 990-EZ Source: CalNonprofits (Circa 2012) 5% 4% 4% 2% 0% 12% 7% 5% 5% 1% 2% 3% 4% -1% 3% 5% 5% 8% -3% 3% California Nonprofits and Regional Comparisons Bay Area Far North Sac Metro Sierras 72,478 California nonprofits filed with the IRS 25,239 of those nonprofits reported having paid employees 8% of those nonprofits are headquarted in Orange County 5% of CA nonprofit revenue is generated from the Orange County sector; behind San Diego (7%), Los Angeles (21%) and Bay Area (53%) San Joaquin Central Coast Los Angeles Orange Inland Empire San Diego Orange County represents 8% of nonprofits headquarted in California Note: For more regional comparison data go to Causes Count Report: SOURCE: CalNonprofits (Circa 2012) Orange County Nonprofit Sector Pulse Report

9 Employment Growth Orange County Nonprofit Employment % Total Wages Organization Type # of Employers % of Total Nonprofit Employers # of Jobs % of Total Jobs Total Wages % of Total Wages Arts, culture, and humanities 92 7% 2,037 3% 71,464,826 2% Education % 21,971 35% 1,310,162,365 40% Environment 35 3% 412 1% 16,215,254 0% Health % 23,615 37% 1,472,106,688 44% Human Services % 12,935 20% 346,831,006 10% International 23 2% % 3,044,239 0% Mutual and Public Benefit 105 8% % 43,961,353 1% Religious % 1,574 2% 47,142,740 1% TOTAL 1, % 63, % 3,310,928, % SOURCE: Labor Market Information Division, California Employment Department, Year Job and Wage Growth, 2009 to 2013 Organization Type % Change in # of Organizations % Change in # of Jobs % Change in Total Wages Arts, culture, and humanities 27% 17% 33% Education 9% 9% 20% Environment 25% 39% 52% Health 31% 16% 27% Human Services 18% 52% 46% International 9% 19% 11% Public Benefit 45% 42% 46% Religious 35% 30% 33% TOTAL 23% 20% 26% 26% Increase in Total Wages in the last 5 years. SOURCE: Labor Market Information Division, California Employment Department, 2013 Industry Employment by Sector Professional and Business Services 262,821 Trade, Transportation and Utilities 252,644 Leisure and Hospitality 187,340 Manufacturing 156,986 Financial Activities 112,356 Construction 76,505 Nonprofit Sector 63,522 Other Services 40,570 Nonprofits rank as the 7 th largest industry in OC by employment. SOURCE: Labor Market Information Division, California Employment Department, Orange County Nonprofit Sector Pulse Report 9

10 Financial Data Number of Nonprofits and Total Revenue and Assets, By Organizational Type Organization Type Total OC Count % of Total Total OC Revenue % of Total Total OC Assets % of Total OC Average Revenue OC Mean Assets Arts, culture, and humanities % % % 75,995 39,097 Higher Education % % 2, % 2,188,473 4,055,975 Education, other % % 1, % 67,854 42,777 Environment % % % 94,331 45,225 Hospitals % 3, % 7, % 402,696, ,988,759 Health, other % 2, % 4, % 129,555 82,203 Human Services 1, % 1, % 2, % 121,036 54,583 International % % % 104,742 42,974 Mutual, Public and Societal Benefit % % % 82,930 91,909 TOTAL 3, % 9, % 19, % 91,221 52,276 Sources of Revenue 1.1% Other income 0.4% Special events 18.7% 40.8% 46% Contribu ons * Government Grants 1.5% 0.7% Individuals, Corpora ons, and Founda ons Investment income Sales of assets 13.2% Other ** 77.5% of nonprofit revenue is generated from program fees. 77.5% Program fees * Contributions include government grants and individual, corporate and foundation gifts, according to IRS Form 990 ** Other includes federated campaigns, membership contributions, fundraising event contributions, and related organizations. SOURCE: CalNonprofits (Circa 2012) Orange County Nonprofit Sector Pulse Report

11 Percent of Total Revenue Hospitals and health-related nonprofits comprised 10.5% of all nonprofit organizations in OC, same as California overall, yet accounted for 66% of the sector s total revenue and 61% of its assets. 10.5% 66% of revenue 61% of assets 54% All Other OC Nonprofits Higher Educa on 7% 39% Hospitals Sources of Revenue Excluding Hospitals and Higher Education 0.8% 1.2% Other income Special events 30.9% 44.5% Government Grants Contribu ons Individuals, Corpora on 45% and Founda ons 10.5% Other * ** The percentage of revenue coming from program fees dropped when Hospitals and Higher Education are excluded from the analysis, reflecting a greater reliance on charitable contributions for other nonprofits. 65.2% Program Fees 0.3% 1.5% Investment income Sales of assets 2015 Orange County Nonprofit Sector Pulse Report 11

12 Revenue Sources by Organizational Type Arts, culture, and humani es 14% 4% 2% Higher Educa on Educa on, other Environment 3%1%1% Hospitals 10.5% 2% Health, other Human services Interna onal Mutual, Public and Societal Benefit 1% 2% 46% 3% 48% 1% 79% 2%1% 41% 50% 3% 3% 58% 3% 10% 23% 1% 5% 1% 94% 0.1%0.4% 87% 0.8% 0.2% 1% 2% 51% 45% 0.3% 0.2% 1.5% 77% 21% 0.3% 2% 0.7% 70% 3% 24% Contribu ons* Investment Income Sales of Assets Program Fees Special Events Other Income Revenue Source Type Arts, culture, and humanities Higher Education Education, other Environment Hospitals Health, other Human Services International Mutual, Public and Societal Benefit Contributions* Investment Income Sale of Assets Program Revenue , , Special Events Other Income Total , , , *Contributions include government grants and individual, corporate and foundation gifts, federated campaigns, membership contributions, fundraising event contributions, and related organizations, according to IRS Form 990. SOURCE: CalNonprofits (Circa 2012) Orange County Nonprofit Sector Pulse Report

13 84% >10M of revenue sources for organizations above 10M, come from program fees. 50% <10M of revenue sources for organizations below 10M, come from contributions. Orange County Revenue Sources by Size of Organization >10M 1M-10M 1.4%0.6% 13% 250,000-1M 48% 53% 2%1% 2% 0.5% 1.5% 0.5% 84% 46% 40% 0.1% 0.9% 1% 2% 2.5% 2% 50, ,000 56% 30% 9% 3% <50,000 56% 3% 20% 17% 4% Contribu ons* Investment Income Sales of Assets Program Fees Special Events Other Income Revenue Source Type above 10M 1M to 10M 250,000 to 1M 50,000 to 250,000 50,000 and below Contributions* 1,051,134, ,107, ,762, ,805,969 17,657,026 Investment Income 119,753,123 18,076,178 4,786,577 2,836, ,722 Sale of Assets 58,584,452 9,691,758 1,626,897 1,180,430-88,357 Program Revenue 6,862,824, ,810, ,884,418 54,955,295 6,530,029 Special Events 1,298,609 10,925,532 7,421,959 16,625,671 5,227,822 Other Income 80,097,566 16,302,000 5,522,928 5,024,224 1,195,482 *Contributions include government grants and individual, corporate and foundation gifts, federated campaigns, membership contributions, fundraising event contributions, and related organizations, according to IRS Form 990. SOURCE: CalNonprofits (Circa 2012) 2015 Orange County Nonprofit Sector Pulse Report 13

14 Breakdown by Expenses Types of Expenses by Organizational Type* 84% of nonprofit expenditures go to program delivery. Arts, culture, and humani es Higher Educa on Educa on, other Environment Hospitals Health, other Human services Interna onal Mutual, Public and Societal Benefit 79.8% 81.4% 82.8% 81.9% 82.9% 85.5% 89.3% 90.2% 88.1% 6.9% 2.5% 2.1% 2.9% 0.3% 1.1% 1.8% 1.5% 3.7% 13.3% 16.1% 15.1% 15.2% 16.8% 13.4% 8.9% 8.3% 8.2% Program service Fundraising Management and general Nonprofit Organizational Type Program service expenses Fundraising expenses Management and general expenses Arts, culture, and humanities 172,424,653 15,028,729 28,551, ,004,724 Higher Education 505,153,410 15,511, ,019, ,684,865 Education, other 452,023,307 11,411,705 82,896, ,331,260 Environment 31,682,036 1,104,295 5,874,767 38,661,098 Hospitals 3,022,383,612 10,325, ,932,191 3,646,641,381 Health, other 1,971,317,545 24,964, ,166,096 2,305,448,363 Human Services 1,118,724,607 23,074, ,603,924 1,253,402,839 International 77,008,507 1,275,560 7,084,986 85,369,053 Mutual, Public and Societal Benefit* 196,769,167 8,239,614 18,375, ,384,057 Total All Public Charities 7,547,486, ,936,015 1,277,504,781 8,935,927,640 *Data set includes 501(c)(3) public charity organizations that filed IRS Forms 990 and 990-EZ SOURCE: CalNonprofits (circa 2012) Total Orange County Nonprofit Sector Pulse Report

15 Percent Surplus Margins (Year End Net Revenue Over Expenses) In order to analyze and asses the financial stability of the nonprofit sector, this section presents longitudinal data from 2004 to 2012 regarding two indicators of financial health: surplus operating margins and deficit spending. Surplus Margins declined in the beginning of 2007, coinciding with the Great Recession, reaching the lowest point in In 2012, Orange County s nonprofit sector had a surplus margin of 4.43%. Average Surplus Margin* by Organizational Type Average total Arts, culture, and humani es Higher Educa on Educa on, other Environment Hospitals Health, other Human Services Interna onal Mutual, public and social benefit Average Surplus Margin* by Organization Arts, Mutual, culture, public and Higher Education, Health, Human and social Year humanities Education other Environment Hospitals other Services International benefit Total % % 2.35% 22.97% 9.71% 9.32% 6.09% 2.16% 22.74% 15.78% 9.16% % 13.84% 1.46% 9% 3.45% 3.41% 5.15% 18.71% 5.3% 4.43% * Calculating a surplus margin (equivalent to profit margin) is accomplished by dividing the end of the year surplus (or deficit) by total revenue. A margin of less than zero indicates that expenses exceed revenues, and a margin of greater than zero indicates that revenues exceed expenses. Note: Data set includes 501(c)(3) public charity organizations that filed IRS Forms 990 and 990-EZ SOURCE: CalNonprofits (circa 2012) 2015 Orange County Nonprofit Sector Pulse Report 15

16 Percent Deficit Spending Percent of Nonprofits with a Year End Net Deficit of 5% or more of Total Revenue by Organization Type On average, 30% of OC nonprofits ended the year in a financial deficit of five percent or more. 40 Nonprofit Sector Average Arts, culture, and humani es Higher Educa on Educa on, other Environment Hospitals Health, other Human Services Interna onal Mutual, public and social benefit Year Arts, culture, and humanities Higher education Education, other Environment Hospitals Health, other Human services International Mutual, public and social benefit Total % % 17.6% 26.1% 26% 0% 28.9% 25% 23.9% 27.5% 26% % 15% 30.5% 32.4% 18.2% 34.1% 29% 25.4% 32.3% 30.2% Note: Data set includes 501(c)(3) public charity organizations that filed Forms 990 and 990-EZ. SOURCE: CalNonprofits (circa 2012) Orange County Nonprofit Sector Pulse Report

17 Orange County Volunteer Data Value per Volunteer hour * 28.5 MILLION Hours of Volunteer service** Volunteers are an integral part of the nonprofit sector in Orange County, and contribute to the nonprofit workforce at all levels. They serve as board members, staff, leaders, administrators, and providers of direct service. 2,000 1,500 1, Average Number of Volunteers and Employees Reported on the IRS Form 990 by Total Revenue Size AVG. # of Volunteers AVG. # of Employees 497 2, MILLION Unpaid labor** <50,000 50, , ,000-1M SOURCE: CalNonprofits (circa 2012) 1M-10M 10M+ 31,194 Estimated # of Volunteer Director positions on OC Nonprofit Boards. 25% of Orange County residents volunteered in 2013.*** * Independent Sector s average value of volunteer time in California, ** These data are derived from the US Bureau of Census Current Population Survey (2014) and include the Volunteer Supplement and the Civic Supplement. Value of volunteer time was estimated using the Independent Sector s rate in California. *** Corporation for National and Community Service, Volunteering and Civic Life in America, Orange County Nonprofit Sector Pulse Report 17

18 Data Sources The majority of the data presented in this report were derived from a unique data set compiled for Causes Count: The Economic Power of California s Nonprofit Sector, a study commissioned by CalNonprofits. Data specific to Orange County nonprofits were extracted from the Causes Count report and other sources as follows: Detailed analysis of IRS Forms 990 This report was based on a uniquely comprehensive digitized dataset developed specifically for this study of the nearly 72,500 California 501(c)(3) public charities filing IRS Forms 990, 990-EZ, and 990-N in California and processed by the IRS as of December 2013, representing the latest fiscal year information available. The database compiled more than 250 Form 990 data elements, allowing for unique research into paid employees, volunteers, general operations, and governance. Much of the data are not available through public archives. The Urban Institute s National Center for Charitable Statistics (NCCS) This study also relies on the following NCCS datasets: IRS Business Master Files, NCCS Core Public Charity Files, 2013 Revenue Transaction File, and IRS 990-N archives. Subsector classifications used in this report are based on groupings of NCCS National Taxonomy of Exempt Entities (NTEE) codes. Until the 2008 introduction of the new Form 990-N, there was virtually no information available about nonprofits with less than 25,000 in annual revenue. This study is one of the first to utilize this newly available data. The California Employment Development Department The California EDD supplied the nonprofit labor and wage data, as well as information about the diversity of California industries. CalNonprofits The California Association of Nonprofits (CalNonprofits) is a statewide policy alliance of nearly 10,000 organizations, representing and promoting California s growing nonprofit sector. To view a copy of the statewide report, Causes Count: The Economic Power of California s Nonprofit Sector, produced in 2014, go to: For more information, or to download the Report, please go to our website, If you have questions regarding the data in this Report, please contact Victoria Torres, OneOC Training Director, or training@oneoc.org. Citing the report: OneOC Pulse Report, Orange County Nonprofit Sector Pulse Report

19 All in a year s work... In 2014, OneOC helped build a stronger, more vibrant Orange County by serving more than 675 nonprofits through our volunteer, training, consulting and business services. Volunteer Services Connected 31,683 individual, family, and corporate volunteers in service, delivering 1,090,999 hours to nonprofits valued at 29 million to our communities. Training Services 94 training, leadership workshops and seminars provided, 10 certificated programs and 24 customized trainings to 2,687 nonprofit board members, executives, staff, and volunteers to accelerate nonprofit success. 315 participants were provided 18,000 in scholarships. Center for Business & Community Partnerships Developed smart, easy and impactful solutions for companies to build and grow their employee giving and volunteer programs. Piloted services with 5 companies during 2014 to ensure a successful launch of the Center in early Consulting Services 26 companies and nonprofits advanced their strategies and capabilities (39 projects) through a pool of 11 affiliated experts for greater community impact. Fiscal Sponsorship Services 42 community projects and emerging nonprofits utilized OneOC s financial, human resources and back office functions, allowing them to operate with the support services their staff and volunteers need to be more effective and efficient in carrying out their missions.

20 2012 IRS Form 990 Data 5,764 Total number of 501c3 public charities that filed IRS Form 990, 990-EZ, and 990-N in ,878 Nonprofits with annual revenue less than 50,000 were not required to report financial information on IRS Form 990-N 3,398 Nonprofits with annual revenue more than 50,000 reported financial information on IRS Form 990 and 990-EZ 9.7 billion total annual revenue with 19.7 billion in assets 81% reported annual revenue less than 500, % hospital s and health related nonprofits accounted for 66% of the total annual revenue 77.5% percent of revenue generated from program fees (65% if hospitals and higher education are excluded) 84% of revenue for organizations with revenue more than 10M comes from fees 50% of revenue for organizations with revenue less than 10M comes from contributions 84% of nonprofit expenditures are related to program delivery, 1% to fundraising, and 15% to management and general expenses. 4.43% the average year-end revenue over expenses (surplus margin) 30.2% of nonprofits reported a net deficit of 5% or more 2013 Employment Data 63,522 Nonprofit jobs 7th largest employment sector 3,310,928,471 in total wages 26% increase in total wages in last 5 years 72% of nonprofit jobs are in health and education and generate 84% of the total revenue training@oneoc.org Orange County Nonprofit Sector Pulse Report