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Philanthropy 1992–2022: Budgets Swelled and Certain Nonprofit Types Flourished

Part 2 of 4 // by Michael Moody
Philanthropy 1992–2022: Budgets Swelled and Certain Nonprofit Types Flourished
Front cover of "Philanthropy 1992–2022: What difference can 30 years make?" report by Michael Moody, Ph.D.
The Center for Philanthropy and Nonprofit Leadership — now called the Dorothy A. Johnson Center for Philanthropy — was founded at Grand Valley State University in 1992. It seems fitting, then, on the occasion of our 30th anniversary, to look back at what things looked like at the beginning — as well as at the remarkable transformation and growth of the field since then.

This blog is the second in a series of four that not only reminds us what things looked like in 1992, but also reveals how the practices of giving, the makeup and number of institutions, and the intensity and breadth of research and teaching about philanthropy have all expanded and changed in dramatic ways. For instance, megadonors have become much more mega, the lines between the sectors have blurred more than anyone expected, and most institutions for research about this field — and most university degree programs — have been established in the past three decades. Still, many other aspects of the field and its institutions have endured — and not always for the better.

Let’s explore what a difference 30 years can make in philanthropy.

While the number of charities grew steadily, their financial footprint ballooned.

Coming into 1992, scholars had already been tracking the expanding number of nonprofits in the U.S. Research especially focused on the national organizations created during the “advocacy explosion” of the 1970s (Berry & Wilcox, 2018), which some believed had come to overshadow traditional, usually smaller associations at the local level. The landscape of 501(c)(3) public charities — like private foundations — had also become notably top-heavy, with the largest charities commanding a disproportionate share of resources.

This growth in numbers certainly continued apace after 1992. Table 2 shows the total number of public charities and private foundations in 1995 and 2020, according to the most reliable IRS data. In other words, there were nearly two-and-a-half times more nonprofits in 2020 than there were 25 years prior. (Note that these figures only track 501(c)(3)s, not other categories of tax-exempt 501(c)s.)
 

Table 2: Increase in Number of 501(c)(3) Organizations from 1995 to 2020 

 
But more dramatic is the growth in the fiscal resources of that expanding group of organizations. We have already discussed the incredible increase in the financial footprint of private foundations, which far outpaced GDP growth. But public charities also saw tremendous expansion in their resources in the last three decades. Table 3 shows the increase in total assets and income of all public charities from 1995–2020 and the increase among just the top 100 largest public charities.
 

Table 3: Increase in Income and Assets of 501(c)(3) Public Charities from 1995 to 2020

 
When we consider that U.S. GDP grew around 180% from 1995 to 2020, we can see just how significant this financial expansion among public charities was — more than double the growth rate of the overall economy, and much more than that for nonprofit assets. This means that not only are there a lot more nonprofits than there were 30 years ago, but these nonprofits, on the whole, have much bigger balance sheets.

“It is staggering to think that a mere 100 of the nearly 1.3 million public charities in the U.S. today earn 30% of income in the sector and hold 22.1% of total assets.”

The finances of the 100 largest charities grew even more dramatically, furthering the trend toward greater and greater concentration of income and assets among the biggest nonprofits. It is staggering to think that a mere 100 of the nearly 1.3 million public charities in the U.S. today earn 30% of income in the sector and hold 22.1% of total assets.

Philanthropy-serving organizations proliferated.

One area of significant growth among nonprofits that is particularly important for those in our sector has been the number of what used to be called infrastructure organizations — or what are now more commonly called philanthropy-serving organizations (PSOs). While many such organizations, like Independent Sector or the Council on Foundations, were well-established and influential actors in 1992, these support and membership groups have proliferated since then.

We now have dozens and dozens of regional associations of grantmakers, national affinity groups, capacity-building organizations, and other support organizations and membership associations — even associations of those associations. The United Philanthropy Forum, a network of regional and national PSOs, now has over 90 members. This explosion in such organizations also means there are more conferences, published resources, peer networks, etc., in our field now compared to 30 years ago.

Major initiatives to create community foundations had ripple effects.

The first community foundation was created in Cleveland in 1914. Nearly 80 years later, community foundations got a major boost in the early 1990s, especially in Michigan and Indiana. Starting in 1988, the Council of Michigan Foundations began working on a pilot program with the W.K. Kellogg Foundation to provide challenge grants to seed community foundations in more communities around the state. One requirement of this funding was the establishment of a youth advisory council (YAC) in any community foundation created with the seed funding.

In 1991, after the success of the pilot, the Michigan Community Foundation Youth Program was created and led to a huge increase in the number and vitality of community foundations — with YACs — across the state. At the same time, in 1990, in Indiana, the Lilly Endowment established the Giving Indiana Funds for Tomorrow (GIFT) initiative, which led in subsequent years to the establishment of community foundations in all 92 counties in the state.

These and other national organizing efforts among community foundations have greatly increased their total number and have had other ripple effects in communities across the country, but especially in the Midwest. Many young people involved in YACs, for instance, have gone on to become philanthropic professionals themselves. And community foundations are often key collaborators with other local funders in joint efforts such as collective impact initiatives.

In recent years, the orientation of many community foundations has also shifted, from acting more as philanthropic banks aimed primarily at serving donors, to embracing their role as community leaders and voices. The community foundation model has also become increasingly popular around the world.

Read Part 3

 

Download the full report

Michael Moody, Ph.D.
Michael Moody, Ph.D.
Frey Foundation Chair for Family Philanthropy (2010–2023)
Michael Moody joined the Johnson Center in 2010 as the inaugural Frey Foundation Chair for Family Philanthropy — the world’s first endowed chair for family philanthropy — and held this position until 2023. In this role, Michael pursued a comprehensive,...
Reference

Berry, J., & Wilcox, C. (2018). The interest group society. Routledge.