Revenues and Expenditures of Non-Profit Institutions 2004 Survey

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1 8 April 8 6/8 Revenues and Expenditures of Non-Profit Institutions Survey In, Non-Profit Institutions (NPIs) comprised 6.9 percent of Israel's gross domestic product, compared with 6. percent in 99. The three primary sources of financing of NPIs are government allocations (5 percent of revenues), sale of services to the government and to the private sector (8 percent), and donations from private persons, businesses, and from abroad (9 percent). Sales as a percentage of NPI revenues are highest in the welfare branch (5 percent), and in culture, sport, and recreation ( percent). Labor costs constitute the dominant share of expenditures of NPIs in the educational and research branch (7 percent) and in welfare (59 percent). In other areas, labor costs range from -9 percent, except for philanthropy and volunteer work, in which labor costs are especially low, constituting 8 percent of expenditures. In, NPIs employed 65 thousand persons, representing 7.5 percent of all paid employees in the economy (not including foreign workers and employees of the Palestinian Authority), compared to.5 percent in 99. Hours worked in NPIs in, were equivalent to 6 thousand full-time employee jobs, of which 88 percent were work by paid employees and percent by volunteers. Written by Nava Brenner and Osnat Hazan For explanations and clarifications regarding this release, contact the Press Communications Unit at Tel , -65

2 NPIs' Share of the Israeli Economy (Table ) In, the gross domestic product (GDP) of the NPI sector, which is actually the sector s added value to the economy, stood at NIS 7,99 million. The GDP of the NPI sector grew faster than the GDP of the entire economy, its percentage of gross domestic product rising from 6. percent in 99 to 6.9 percent in. Consumption expenditure of the NPI sector (labor costs, purchases, and depreciation of fixed assets) amounted to NIS 75,5 million in. This figure constituted 6.6 percent of total private and public consumption expenditure in, compared to.5 percent in 99. In, NPIs employed 65 thousand paid personnel, which constituted 7.5 percent of persons employed in the economy (not including foreign workers and employees of the Palestinian Authority), compared to.5 percent in 99. These are the results of a recently concluded survey covering all NPIs in Israel. In accordance with the System of National Accounts definition, the survey included NPIs defined as legal or social entities that were established for the purpose of producing goods and/or supplying services. The consideration for these goods and services cannot be the source of revenue, profit, or financial gain for the entities that established, finance, or control them. (SNA, 99) Table. NPIs' Share in Israel's economy NPIs* Total economy NPI sector s share of the total economy Gross domestic product (in NIS millions) 7,99 55,5 6.9% 99 8, 6,5 6.% Consumption of NPIs** as share of total private and public consumption (in NIS millions) 75,5 5,9 6.6% 99 5,,98.5% Number of paid employees (in thousands) 65,85 7.5% 99 5,8.5% * excluding voluntarism ** expenditures excluding grants and transfers Revenues and Expenditures of Non-Profit Institutions Survey

3 In accordance with this definition, the survey included 9,89 NPIs that were registered in. From these, a sample of,89 NPIs was extracted. The survey is based on analysis of the statements of revenues and expenditures filed by the income tax authorities with respect to their activity in. Of the registered NPIs, some percent were found to be inactive. The survey was conducted in cooperation with the Israel Center for Third Sector Research, at the Ben Gurion University of the Negev, and with funding from the Joseph and Harvey Maiersdorf Foundation, from Baltimore, Maryland. The NPIs were divided, in accord with the international classification developed at the Johns Hopkins University (ICNPO), into branches of activity:. culture, sport, and recreation. education and research. health. welfare 5. environment 6. housing and development 7. advocacy and political organizations 8. philanthropy and voluntarism 9. international organizations. religion. professional organizations. Breakdown of NPIs by Size and Branch of Activity (Table ) In, there were 8,9 active NPIs. Of these, 7 percent are small organizations, 6 percent are medium in size, and percent are large. The distinction by size of the organizations is based on the amount of wages the organization reported to the tax authorities. Among all the activities, education and research, culture sport and recreation, and religion account for the greatest number of organizations. However, most of the large organizations engage in education and research (7 percent of the large organizations), in culture, sport, and recreation ( percent), and in welfare (8 percent). Revenues and Expenditures of Non-Profit Institutions Survey

4 Table. Breakdown of Active NPIs by Size and Branch of Activity No. of NPIs By percentage Total Small Medium Large Total 8,9 7 6 % % % %,5 5, , Breakdown of Revenues by Source of Financing and Branch of Activity (Table, Diagram ) Total revenues of the NPI sector in amounted to NIS 8,8 million. The various branches of activity differ substantially with respect to revenue: most of the revenue was recorded in health ( percent), education and research (8 percent), and welfare ( percent). The remaining seventeen percent were divided among the other eight activities, ranging from culture, sport and recreation (6 percent) to international organizations (. percent). The three primary sources of financing are government allocations (5 percent of revenues), sale of services to the government and to the private sector (8 percent), donations by private persons, businesses, and from abroad (9 percent). Most of the government allocations to NPIs are for health (55 percent of government allocations), and education and research ( percent). Each of the other nine branches of activity receive less than five percent of their revenues from government allocations. In health, education and research, and environment, government allocations amounted to more than 6 percent of revenues, whereas government allocations accounted for less than percent of revenues in philanthropy and voluntarism, advocacy and political organizations, and international organizations. Revenues and Expenditures of Non-Profit Institutions Survey

5 Table. Revenue of NPIs by Source of Financing and Branch of Activity (in NIS millions) Total Government allocations* Sale of services Donations private persons & businesses* Property income NIS millions 99 5,58 7,966 5,88, ,,975,87 5,5,6 Percent Percent Total *including capital transfers Revenues and Expenditures of Non-Profit Institutions Survey 5

6 Diagram. Revenues of NPIs by Source of Financing and Branch of activity % % % 6% 8% % Government allocations Sale of services Donations Property income Sales as a percentage of revenues are highest in welfare (5 percent) and culture, sport, and recreation (8 percent). A percentage of less than percent is found in advocacy and political organizations, housing and development, and philanthropy and voluntarism. Most of the donations from private persons, businesses, and from abroad are in the areas of education and research (7 percent of the donations), philanthropy and voluntarism (8 percent), and welfare ( percent). The activities primarily supported by donations are advocacy and political organizations (86 percent of revenues), philanthropy and voluntarism (79 percent), international organizations, housing and development, professional organizations, and religion, with each receiving more than 5 percent of their revenues from donations. In the other areas of activity, donations did not amount to more than percent of revenues, the lowest being in health, where donations constituted only percent of revenues. Breakdown of Expenditures by Type and Branch of Activity (Table, Diagram ) Total expenditures of NPIs in amounted to NIS 78. billion, compared with NIS 5. billion in 99. As with the division of revenues among the various branches of activity, the highest expenditures were recorded in health (5 percent), education and research (7 percent), and welfare ( percent). The remaining sixteen percent were divided among the other eight branches, ranging from culture, sport, and recreation (6 percent) to international organizations (. percent). Revenues and Expenditures of Non-Profit Institutions Survey 6

7 The principal expenditures of NPIs are current purchases (8 percent of expenditures) and labor costs (6 percent). The other expenditures are for current transfers, depreciation, and financing cost. The various branches of activity differ in the distinction of their outlays: current purchases are highest in environment (75 percent of expenditures), health (67 percent), and professional organizations (6 percent). They are lowest in education and research (9 percent). In the other branches, current purchases range from 7 percent to 5 percent of expenditures. Labor costs constitute the dominant share of NPIs' expenditures in the branches of education and research (7 percent of expenditures) and welfare (59 percent). In the other branches of activity, labor costs range from percent to 9 percent, except in philanthropy and voluntarism, in which labor costs are especially low, amounting to 8 percent of expenditures. Philanthropy is unique in its expense structure, with its low labor costs and especially large amount of transfers, constituting percent, compared to less than percent of expenditures in the other branches of activity. Table. Expenditures of NPIs by Type and Branch of Activity (in NIS millions) Total Labor costs Current purchases Depreciation Transfers* Financial cost NIS millions 99 5, 7,88 7, 8, ,97 5,6 7,58,7,79 7 Percent Percent Total *including capital transfers Revenues and Expenditures of Non-Profit Institutions Survey 7

8 Diagram. Expenditures of NPIs by Type and Branch of Activity % % % % % 5% 6% 7% 8% 9% % Labor costs Current parchases Depreciation Transfers Financial cost Breakdown of Expenditures of NPIs by Sector and Branch of Activity NPIs are customarily classified into four primary sectors: households small NPIs that employ less than two persons; private NPIs that serve households NPIs whose policy is set by individual persons; public NPIs - NPIs whose policy is set by the government; and Market NPIs NPIs that sell most of their services for substantial prices from an economic perspective (in effect, this sector includes only general hospitals). In practice, in most instances, it is not known whether the ownership is in governmental or private hands, therefore, classification as a private NPI or a public NPI depends on financing a private NPI is one in which the government finances less than one-half of its activity, whereas a public NPI receives more than half of its financing from the government. With respect to the breakdown of the total expenditures of NPIs, 6 percent of expenditures are made by public NPIs, 8 percent by private NPIs, 8 percent by market NPIs, and less than one percent by households. Expenditures by branches of activity of private NPIs differ from that of public NPIs. In the latter, most of the expenditures are concentrated in health (5 percent of expenditures) and education and research ( percent), whereas in private NPIs, most of the expenditures are in welfare ( percent) and philanthropy and voluntarism (6 percent). Revenues and Expenditures of Non-Profit Institutions Survey 8

9 Labor and Voluntarism (Table 5) Hours worked in NPIs in, were equivalent to 6 thousand full-time employee jobs, of which 88 percent were work by paid employees and percent by volunteers. Most paid employees are in education and research ( percent), while most of the volunteer slots are in welfare (9 percent). Table 5. Number of Paid Employees and Volunteers by Branch of Activity Equivalent of full-time employment Total Full-time paid employee Volunteers in terms of full-time employment Total 6,5 % 68,5 88% 8,9 % % %,9 5,86 6%,57 %,5 7,76 % 6,5 7% 6,7 56,867 % 6,865 8% 67,9 56,8 %,65 9%,75 78 % 96 % 5,8 5,8 % % 5,957,67 %, %,9,997 5% % 97 8 % 65 %,89 7,7 %,78 7%,9, % 87 % The total compensation for the labor and value of the voluntarism in NPIs amounted to NIS.7 billion. Of this sum, 9 percent was payment of salaries, and only seven percent were imputed volunteer labor. Revenues and Expenditures of Non-Profit Institutions Survey 9

10 Table 6. Compensation for Paid Employees and Value of Volunteer Labor in NPIs by Branch of Activity In NIS millions Total %,9,96, 5, Compensation to paid employees, 9% %,98 6%,5 % 9,75 %,98 5% 7 % 69 % 5 % 6 % % 6 % 58 % Imputed volunteer labor,55 7% % 6 % 8 7% 95 % 798 % 55 % % 6 % 9 % 7 % 57 6% % Revenues and Expenditures of Non-Profit Institutions Survey