Introduction to nonprofits

# Introduction to the nonprofit sector

**January 11, 2022**

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# Plan for today

.box-1.medium.sp-after-half[What are nonprofits?]

.box-5.medium.sp-after-half[Why do we have a class just for nonprofits?]

.box-3.medium.sp-after-half[What are we doing this semester?]

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# What are nonprofits?

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# What are nonprofits?

.box-inv-1.medium[**Corporations**]

.box-inv-1.medium[with **Special Tax Status**]

.box-inv-1.medium[providing a **Public Good**]

???

We will discuss these three things

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# They are ***not***…

.box-inv-1.medium[Prohibited from making a profit]

.box-inv-1.medium[Free from paying all taxes]

???

1. Nonprofits can operate at a profit, but they are not allowed to distribute the profit to shareholders.

2. Major misconception. Every nonprofit has to pay some sort of tax every year.

3. Other than for claims of fraud or, in few cases, contract, donors cannot sue nonprofits for mishandling, misusing, or wasting donated funds. Only the state attorney general can do that.

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.box-inv-1.small[Legal entity]

.box-inv-1.small[Board managed]

.box-inv-1.small[No owners]

.box-inv-1.small[Organized under state law]
]

.box-inv-1.small[30+ categories of IRS tax exemption]

.box-inv-1.small[Different taxes apply differently (income, sales, property, employment, etc.)]
]

.box-inv-1.small[Health]

.box-inv-1.small[Arts]

.box-inv-1.small[Education]

.box-inv-1.small[Social service]

.box-inv-1.small[Civic]

.box-inv-1.small[Research]

.box-inv-1.small[Religious]
]

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# Find a nonprofit

Make a list of a few organizations you think are nonprofits

Look up a few to see if they are. What do they do? What public goods do they provide?

Hints: Look for things like "501(c)(3)", "tax exempt", or links to give donations

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# Find a nonprofit

Make a list of a few organizations you think are nonprofits

Look up a few to see if they are. What do they do? What public goods do they provide?

Hints: Look for things like "501(c)(3)", "tax exempt", or links to give donations

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.box-1.huge[Pop quiz!]

???

Source: NCCS, October 2015.

Also via the inimitable Aaron Miller.

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.medium.center[

In 2016, how many nonprofit organizations were registered with the IRS?

- 65,252
- 589,587
- 1,571,056

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.medium.center[

In 2016, how many nonprofit organizations were registered with the IRS?

- 65,252
- 589,587
- .color-7[**1,571,056**]

]

.box-1.small[That's one nonprofit for every 214 Americans!]

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.medium.center[

How many of these filed a 990 tax return with the IRS?

- 65,252
- 589,587
- 1,571,056

]

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.medium.center[

How many of these filed a 990 tax return with the IRS?

- 65,252
- .color-7[**589,587**]
- 1,571,056

]

.box-1.small[Not all nonprofits need to do this!]

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.medium.center[

What percent of the US gross domestic product is attributed to nonprofits?

- 2.7%
- 5.3%
- 16.1%

]

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.medium.center[

What percent of the US gross domestic product is attributed to nonprofits?

- 2.7%
- .color-7[**5.3%**]
- 16.1%

]

???

About $905 billion.

Public Charities (1.1 million) collectively managed over $3 trillion in assets.

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.medium.center[

Which of these is the largest source of revenue for nonprofits?

- Private contributions and donations
- Earned income
- Government grants

]

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.medium.center[

Which of these is the largest source of revenue for nonprofits?

- Private contributions and donations
- .color-7[**Earned income**]
- Government grants

]

.box-1.small[72% from earned income!]

???

Fees from government sources (primarily Medicare and Medicaid) alone account for 24.5% of nonprofit revenue.

Private giving only accounts for 13% of nonprofit revenue.

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# Why do we have a class just for nonprofits?

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.box-5.medium.sp-after[Why not just learn about businesses or governments?]

.box-5.medium[What makes nonprofits unique?]

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.box-5.medium.sp-after[Why not just learn about business management?]

.box-5.medium[What makes nonprofit management unique?]

???

mission v. profit, public trust, varied funding, fundraising, measuring performance, legal context, volunteers, governance, multiple programs & constituencies

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# What are we doing this semester?

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# Who am I?

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# Who am I?

.pull-middle-3[
<figure>
 <img src="img/01/duke.png" alt="Sanford School of Public Policy at Duke" title="Sanford School of Public Policy at Duke" width="100%">
</figure>
]

.pull-right-3[
<figure>
 <img src="img/01/lhi.jpg" alt="Lifting Hands International" title="Lifting Hands International" width="100%">
</figure>
]

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# Superheroes

.center[
<figure>
 <img src="img/01/thor.jpg" alt="Thor from Thor: Ragnarok" title="Thor from Thor: Ragnarok" width="80%">
</figure>
]

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# Class goals

.box-inv-3.less-medium[Discover a deeper appreciation for the nonprofit sector]

.box-inv-3.less-medium[Identify the core purposes of a nonprofit]

.box-inv-3.less-medium[Understand what makes nonprofits unique]

.box-inv-3.less-medium[Create a hypothetical nonprofit!]

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# Class readings

.pull-left.center[

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.pull-right.small[
Gary M. Grobman, *An Introduction to the Nonprofit Sector: A Practical Approach for the Twenty-First Century*, .color-1[6th edition]