Why is the Nonprofit Sector Growing At Such Fast Rates? - Fora Financial
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Why is the Nonprofit Sector Growing At Such Fast Rates?
March 02, 2020
Why is the Nonprofit Sector Growing At Such Fast Rates?

Why is the Nonprofit Sector Growing At Such Fast Rates?

Nonprofits are created to serve the public. Unlike for-profit organizations, they don’t earn profits for their owners and shareholders. Instead, they spend the money they raise to support their mission and pay their employees. They may feed the homeless, help find a cure for cancer, or provide care to underprivileged seniors.

According to the National Center for Charitable Statistics, there are more than 1.5 million nonprofits registered in the U.S. Believe it or not, this figure keeps increasing at an exponential rate. So what’s caused the growth of the nonprofit sector in the past decade? We’ll further explore the answer to this question below.

Why The Nonprofit Sector Has Grown In The Past 10 Years

While nonprofits have always been popular, they’ve grown significantly over the past 10 years. Compared to the for-profit sector, which has only grown by about 2 percent to 3 percent, the non-profit sector has gone up by 20 percent. A report by PNP Staffing Group discovered that in addition to this drastic growth, many employees are leaving the for-profit world to work at nonprofits. 

There are more staff increases and employee transfers today than ever before. Americans are supporting causes they believe in and dedicate their careers to them. This is exciting, as nonprofits used to have a bad reputation for offering lower salaries and demanding more work than for-profit organizations.  

You may be surprised to learn that nonprofits are the third largest employer in the country. They employ 11.9 million people and are right behind retail trade, which gives 15.7 million work and manufacturing, which hires 12.3 million. Nonprofits in health-related fields such as hospitals, clinics, and home services account for more than half of the nonprofit workers. 

Nonprofit Workforce As Compared to For-Profit Workforce

For-profit organizations strive to maximize profits for the benefit of their owners and shareholders. On the contrary, nonprofits raise money to provide for the needs of society. Rather than boosting revenue while reducing expenses, they work to ensure revenue exceeds costs. 

The revenue a nonprofit corporation earns will never be distributed to the owners. Instead, it’ll go back to the organization’s benefit to support its mission and initiatives. In addition, unlike for-profits, nonprofits are exempt from paying taxes on their net income. The government provides them with this perk because they invest their time, resources, and funds into making the world a better place. 

What Has Caused This Growth?

There are numerous reasons the nonprofit sector has grown, including:

  • Increased Awareness

People are more aware of nonprofit organizations today than they were in the past. Social media, increased marketing efforts, and easier access to public information has allowed people to be highly exposed to nonprofits. In the past, many people had no knowledge of the different types of nonprofits that existed and didn’t support them as a result. Now, almost everyone can name one or two nonprofits they believe in.

  • Corporate Partnerships

It’s quite common for corporations to partner with nonprofits. Some do it because they strongly believe in a cause or mission and want to give back to the community. Others go this route to help promote their business and benefit them financially. No matter their reasoning for partnership, corporations almost always give nonprofits the resources they need to grow. 

  • Greater Demand for Supporting Others

Recently, people have made helping others a top priority. They enjoy volunteering and making charitable contributions. It’s a way for them to contribute to society and spend their discretionary resources wisely. 

Greater Demand for Supporting Others

  • Advanced Technology

Technology has made it easier for nonprofits to operate on a daily basis. It allows employees to work remotely, offers databases for keeping track of donors and funds raised, and platforms to promote its efforts. These tools weren’t available in the past and made nonprofit management far more difficult. 

  • Knowledgeable Employees

More and more people are attending educational institutions to learn about working in the nonprofit sector. There are degree programs in nonprofit management that instill a great deal of knowledge in current and future nonprofit employees. 10 years ago many of these programs didn’t even exist. 

Nonprofit Success Stories

There are countless nonprofit organizations out there. While some nonprofits may be similar, no two are exactly alike. Each organization has its own unique mission and values. The way they raise money and help others differs.

For example, one cancer nonprofit may host charitable events throughout the year while another cold calls and speaks at hospitals to gain support. Here’s a close look at some of today’s most successful nonprofits. 

Little Pink Houses of Hope

Little Pink Houses of Hope is dedicated to cancer patients and their families. The organization offers free, week long retreats that give them the chance to “reconnect, rejuvenate, and celebrate life in a new way.”

Started in 2009 by Jeanine Patten-Coble, a breast cancer survivor, Little Pink Houses of Hope is the ideal way for cancer patients to take their minds of the disease and live life to the fullest. The organization holds 16 retreats throughout the country and has offered them to more than 600 families. 

Each family enjoys their own luxury vacation home filled with their favorite foods. They also are paired with a volunteer who helps them with childcare, cooking, and everything in between. The week’s itinerary consists of a variety of exciting activities like boat rides, water park visits, and date nights. 

It’s truly a time for families who have been affected by cancer to hit the pause button on surgeries and treatments. The goal is for them to reconnect and strengthen their dynamic as a family. Little Pink Houses of Hope hopes to expand significantly in the coming years. 

March of Dimes

March of Dimes helps improve the health of mothers and babies. Through research, advocacy, and education, the organization gives every baby “the best possible start.”

It began over 80 years ago as the National Foundation for Infantile Paralysis in honor of President Franklin D. Roosevelt’s personal struggle with polio. Today, March of Dimes strives to educate healthcare professionals as well as the public on best practices, provides comfort to families in NICUs, and advocates for both moms and babies. 

The organization hosts an event called March for Babies, which is known as the first charitable walking event in the United States. Since 1970, it’s raised money to fund research to prevent birth defects, premature births, and infant mortality. Walks are held every year throughout the country and encourage individuals and corporations to donate money to the cause. To date, the organization has raised $2 billion dollars.

In addition to March for Babies, the organization hosts a Prematurity Awareness Month, which aims to spread the impact of premature births on babies and families. Their website also includes a variety of useful tools and information for families going through challenges with their babies. 

charity: water

Founded in 2006, charity: water works to provide clean drinking water to people in developing nations. The organization has funded 44,000 water projects in 28 countries and raised $370 million as of 2019. According to charity: water, access to clean water is the key to education, income, and health, especially for women and children.

To make a difference in the clean water crisis, the organization partners with local experts and community members. This may be a piped system, BioSand Filter, or system for harvesting water. They also design sanitation and hygiene training, and create a local Water Committee to ensure water continues to flow. 

Charity: water encourages the public to volunteer at events throughout New York City and raise money on their own. It’s succeeded with its clean water efforts in countries such as Nepal, Uganda, Malawi, Rwanda, and Kenya, just to name a few. To date, it has given over 8 million people across the world access to clean water. This is significant as 263 million people have to spend more than 30 minutes per trip collecting water away from home and 159 million who drink untreated water from lakes and streams. 

charity: water

The Make-A-Wish Foundation

The Make-A-Wish Foundation is a non-profit that fulfills wishes for young children facing critical illnesses. Its mission is to provide families with hope in difficult times through experiences that can change their child’s life forever. It also strives to help children feel stronger, happier, and more willing to battle their illnesses. Many healthcare professionals state that a Make a Wish experience improves patients’ physical and emotional well beings. 

While the organization is headquartered in Phoenix, it serves 50 countries on five continents. Through its generous donors and hundreds of thousands of volunteers, The Make-A-Wish Foundation has granted almost 480,000 wishes. Volunteers work as wish granters, translators and interpreters, office staff, and event planners to make dreams come true. 

The organization was founded in 1980 and inspired by a 7-year old boy named Christopher James Greicius who was battling leukemia and hoped to become a police officer. The Phoenix community helped make his wish come true and has transformed millions of lives ever since. 

Through The Make-A-Wish Foundation, a 5-year old girl with a blood disorder was able to meet a real live unicorn, a 9-year old boy with lymphoma saw snow for the first time, and a 3-year old who underwent a heart transplant became a firefighter.

Nonprofit Growth Continues

If you’d like to start a nonprofit, now is the perfect time to do so. With so many resources at your disposal, your chances of success are sky-high. Just make sure you perform some competitive research, choose a mission you’re passionate about, and hire the right personnel. Best of luck! 

At Fora Financial, we offer nonprofit business loans and strive to help their owners succeed. Sign up for our today for more small business tips. 

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Frequently Asked Questions

How does a nonprofit differ from a for profit?

For-profit organizations wish to maximize profits so their owners and stakeholders can benefit. Nonprofits, on the other hand, raise money to support society. They make sure that their revenue is higher than expenses. 

How much has the nonprofit sector grown in the last 10 years?

Compared to the for-profit sector, which has grown by about 2 percent to 3 percent, the non-profit sector has skyrocketed by 20 percent.

What are the first steps to start a nonprofit?

If you’re wondering how to start a nonprofit, you should know there are six main steps including:

  1. Select a nonprofit mission and name.
  2. Incorporate it.
  3. Apply for an IRS and state tax exemption. 
  4. Write bylaws.
  5. Appoint directors.
  6. Obtain necessary permits and licenses.

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