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How Have Organizations That Depend on Government Grants Fared?


The two major sources of funding for most public charities are contributions and program services revenue.  One important source of contributions for some public charities is government grants.  In light of the so-called Great Recession, I thought it would be interesting to look at how, if at all, revenue streams had changed for organizations that depended on government grants before the recession.

I looked at organizations that had filed a Form 990 for both 2003 and 2013 that had government grants in 2003 that accounted for at least 20 percent of total revenue (the 20 percent threshold is admittedly arbitrary – I just wanted to ensure that these organizations would miss the government grants if they were decreased or disappeared altogether).  The chart below shows the results for the 26,791 organizations I found that fit this criteria:

Revenue Sources, 2003-2013 (In Billions)

           
 

2003

2013

 

 

$

%

$

%

% Increase in $, 2003-2013

Government Grants

$74.3

63%

$94.4

48%

27%

Total Contributions (excluding Govt Grants)

$14.8

12%

$29.3

15%

98%

Program Service Revenue

$24.7

21%

$58.7

30%

138%

Other Revenue

$4.9

4%

$12.9

7%

163%

Total Revenue

$118.7

100%

$195.3

100%

65%

 

Taken together, these organizations fared pretty well.  The 65% increase in total revenue represents an annualized revenue increase of 5.1%, while annualized inflation over the period was about 2.4%.  On a dollar basis, program service revenue drove most of the increase in total revenue, while government grant revenue grew at the same rate as inflation on an annualized basis and accounted for a significantly smaller percentage of total funding in 2013 compared to 2003.

Of course, this is for all of the organizations combined.  There were definitely winners and losers.  Of the 26,791 organizations, 7,622 (28%) had a decrease in total revenue from 2003 to 2013; another 5,019 (19%) grew revenue at less than the rate of inflation.  Government grant funding was a major driver here, with 72% of these slow-growth or negative-growth organizations showing an overall loss in government grants.  On the other hand, of the 14,150 organizations that grew revenue at a rate faster than inflation, 70% saw a dollar increase in the amount of government grants.

None of this explains why some organizations were winners and others were losers.  Next time I will share my attempts to try to figure that out.

chuck-mclean.jpg

Chuck McLean is responsible for conducting research for GuideStar and customers interested in nonprofit sector data. He also works to identify new data sources and ways to present data effectively to GuideStar users. Chuck produces the annual GuideStar Compensation Report, which analyzes the salary and benefits of thousands of nonprofits throughout the country. He has 15 years of experience as a teacher and researcher in various institutions of higher education. Chuck serves on the advisory committee of the National Center for Charitable Statistics and is a member of the Panel of Nonprofit Sector Representatives for the Commission on Accountability and Policy for Religious Organizations. A graduate of Christopher Newport University, Chuck also received an M.S. degree in mathematics from the College of William and Mary.

Topics: Grants
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