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Research

Scope of the Arizona Nonprofit Sector

Glossary and Sources

 

Glossary

  Definition Source
Congregation A generic term that refers to all churches and religious organizations. Religious organizations that are not churches typically include nondenominational ministries, interdenominational and ecumenical organizations, and other entities whose principal purpose is the study or advancement of religion. Churches and religious organizations may be legally organized in a variety of ways under state law, such as unincorporated associations, nonprofit corporations, corporations sole, and charitable trusts. IRS tax guide for Churches and Religious Organizations. Publication
Corporate Grantmaker Corporate grantmakers are those that engage in corporate giving by making charitable investments derived from their business activity. Responsible corporate funders plan their giving strategically to attack root causes of problems that threaten the health of global communities (and therefore the health of the corporations themselves). These social investments can be cash, products, in-kind services, or employee voluntarism. Many companies make charitable contributions through both a company-sponsored foundation and a corporate contributions program. Council on Foundations / Corporate Grantmakers
Community Foundation A community foundation is a tax-exempt, nonprofit, autonomous, publicly supported, nonsectarian philanthropic institution with a long term goal of building permanent, named component funds established by many separate donors to carry out their charitable interests and for the broad-based charitable interest of and for the benefit of residents of a defined geographic area, typically no larger than a state. Council on Foundations / Community Foundations
Grantmaker The term Grantmaker refers to any organization that is engaged in philanthopic activities by making grants to other charitable organizations. The majority of the grantmakers are private foundations, but some public charities also have grantmaking as their main charitable activity. Read more
NTEE Codes (National Taxonomy of Exempt Entities) The National Taxonomy of Exempt Entities (NTEE) system is used by the IRS and NCCS to classify nonprofit organizations. It is also used by the Foundation Center to classify both grants and grant recipients (typically nonprofits or governments). NCCS and the IRS use the NTEE-CC system, described below, while the Foundation Center uses a slightly different version with more codes, as well as "population/beneficiary" codes to indicate the type of population served and "auspice" codes to indicate religious or governmental affiliation. NCCS
Private Foundation Foundations that derive most of their funding from a single source which can be a family, an individual, or a corporation. According to the IRS: "Every organization that qualifies for tax exemption as an organization described in section 501(c)(3) is a private foundation unless it falls into one of the categories specifically excluded from the definition of that term (referred to in section 509(a))", in which case it will be eligible to be treated as a public charity. IRS / Private Foundations
Private Operating Foundation A private operating foundation is any private foundation that spends at least 85 percent of its adjusted net income or its minimum investment return, whichever is less, directly for the active conduct of its exempt activities (the income test). In addition, the foundation must meet one of the following tests: the assets test, the endowment test, or the support test. IRS / Private Operating Foundations
Private Grantmaking Foundation Also known as Private Non-Operating Foundation or Independent Foundation. According to the IRS, "a private foundation that is neither a private operating foundation nor an exempt operating foundation is sometimes referred to as a grant-making foundation or a private non-operating foundation." IRS / Private Grant-making Foundations
Public Charity

Generally, organizations that are classified as public charities are those that:

  • Are churches, hospitals, qualified medical research organizations affiliated with hospitals, schools, colleges and universities,
  • Have an active program of fundraising and receive contributions from many sources, including the general public, governmental agencies, corporations, private foundations or other public charities,
  • Receive income from the conduct of activities in furtherance of the organization’s exempt purposes, or
  • Actively function in a supporting relationship to one or more existing public charities.
IRS / Public Charities
Public Foundation A public charity whose primary purpose is grantmaking to multiple individuals or organizations and whose sources of support are predominantly private rather than governmental. Different from a community foundation, the public foundations' focus is not a geographic area but instead on a population group (such as ethnic or racial group or gender) or a common affinity - religious, cultural or philosophical. There is however a significant gray area in this definition. For this reason this report presents both Community and Public Foundations combined in one single category. United Philanthropy Forum
Supporting Organization or Single Organization Support Supporting organizations are charities that carry out their exempt purposes by supporting other exempt organizations, usually other public charities. The classification is important because it is one means by which a charity can avoid classification as a private foundation, a status that is subject to a much more restrictive regulatory regime. The key feature of a supporting organization is a strong relationship with an organization it supports. The strong relationship enables the supported organization to oversee the operations of the supporting organization. Therefore, the supporting organization is classified as a public charity, even though it may be funded by a small number of persons in a manner similar to a private foundation. IRS / Supporting Organization

 

Sources

Internal Revenue Service

The Internal Revenue Service (IRS) makes a number of files available through its Charities and nonprofits page. These files provide information about organizations that hold tax-exempt status from the IRS.

The most recent information about tax-exempt organizations in Arizona is found in the Exempt Organizations Business Master File Extract (EO BMF).

Additional financial data about these organizations is found in Form 990, 990ez, and 990pf data found here. Three year of this data is downloaded and the most recent data for each Arizona organization is linked via the organization’s Employer Identification Number (EIN).

Organizations that have had their tax-exempt status revoked are identified through the Automatic Revocation of Exemption List, which is found on the Tax Exempt Organization Search Bulk Data Downloads page.

Composite information about charitable giving by Arizona taxpayers who itemize their deductions can be found on the SOI tax stats - Historic Table 2 page.

GuideStar Some organizations that were missing NTEE classification information in the IRS data were given the NTEE codes found at https://www.guidestar.org/.
IPUMS USA

IPUMS USA is a product of Steven Ruggles, et al, at the University of Minnesota. This service compiles Public Use Microdata Sample from the American Community Survey (ACS) conducted by the United States Census Bureau and makes it downloadable in a form that is amenable to analysis with SPSS statistical software. Rather than the pre-formatted tables often associated with the census, microdata is analogous to seeing the complete survey form as completed by each respondent. This allows detailed views of the workforce across many factors, e.g. younger females with college education working in nonprofit healthcare organizations. However, there are several trade-offs that are required with this data. To protect the confidentiality of respondents and maintain statistical integrity, microdata is not released for geographies with fewer than 100,000 population. Because of this restriction, several of the smaller counties in Arizona are combined so that their total population exceeds the minimum amount. Additionally, we use Census data collected over a five-year time span. The loss of the point-in-time specificity provided by one-year estimates is offset by the increased accuracy of results when looking at small segments of the workforce.   In a limited number of cases were longitudinal analysis required, 1-year samples were used.

Participation in the nonprofit workforce was determined by respondent’s answer to question 42: “Which one of the following best describes this person’s employment last week or the most recent employment in the past 5 years?” Those who chose, “Non-profit organization (including tax-exempt and charitable organizations),” were assigned to the nonprofit sector. The healthcare, postsecondary education, and religion subsectors were determined by the industry the respondent works in. Nonprofit employees with NAICS codes of 6211-6239 were designated as nonprofit healthcare. Those with NAICS codes of 7860-7880 were coded as nonprofit education, and those with NAICS code 9160 as nonprofit religious. Self-employed, government, and employees of for-profit organizations were grouped together as ‘for-profit.’

 

Methodology

Nonprofit Report

The Nonprofit Report uses two major sources, the NCCS IRS business master files and NCCS Core Files. The total number of active nonprofits is drawn from the IRS master files and financial information is drawn from the Core Files.

Not all nonprofits are required to file a form 990 disclosing their financial information. After 2010, organizations with over $50,000 in gross receipts were required to file the 990 or 990-EZ, and private foundations were required to file the 990-PF. Religious congregations are not required to file a 990 of any kind.

Data for the Nonprofit Report section is gathered as follows:

  • Number of Public Charities vs. Number of Private Foundations: First data source is NCCS Business Master Files filtered by subsection code 03 - Charitable Organizations. Private foundations are identified as the ones that file a form 990PF during the period included in the research. All other 501(c)(3) organizations are assumed to be public charities.
  • Number of Charities by Type of 990 form filed: the number of organizations that filed a form 990PF is obtained from NCCS CorePF file. Organizations that filed a form 990N is obtained from the IRS 990N filers and cross referenced with Business Master Files total organizations. The number of organizations that filed a form 990 or 990EZ is obtained from the NCCS CorePC file.

The list of top public charities has been adjusted to reflect the Arizona based top charities: the Association of Universities for Research in Astronomy and Creative Testing Solutions filed their 990 in Arizona and had higher revenue than Hospice of the Valley and Muscular Dystrophy Association; however the first mentioned organization is not headquartered in Arizona and Creative Testing Solutions is a recently incorporated and newly funded research organization, therefore they were removed from the top list of charities. They are however included in the totals throughout the report and their detailed information is available in the Interactive Charts.

Grantmaking Report The grantmakers report was developed by the ASU Lodestar Center. Using NCCS and the Foundation Center as initial sources of information, the final list of active grantmakers in Arizona has been defined by the ASU Lodestar Center following the definition of a Grantmaker.
Economic Contribution

The Economic Contribution of Nonprofits presents several different analysis: contribution to GDP, growth of the nonprofit sector, the variation in sources of revenue used by nonprofits, and employment in the nonprofit sector. Each of these sections use different sources of data:

  • Arizona Nonprofits Contribution to GDP: Gross Domestic Product information was obtained from the Bureau of Economic Analysis. Reports from the BEA presents the GDP information in two sectors: Private and Government. The Nonprofit sector is assumed to be included in the Private sector of such report. In order to estimate the GDP contribution of nonprofit organizations alone, and separate such amount from the Private sector reported by the BEA, the following calculation was performed: Using NCCS, the total amount of nonprofit expenses is gathered. Assuming that at least 66 percent of such expenses go to employee compensation (following national estimates), a dollar amount for a rough estimate of nonprofits contribution to GDP is estimated. It is a assumed that nonprofit organizations contribute to the State's Gross Domestic Product mainly through compensation to their workers. Data for other contribution such as rental value of assets owned, operating surplus, capital consumption and others is not avaialbe. The final amount, 66 percent of nonprofit expenses, is substracted from the BEA information about Private Industries contribution to GDP and presented separately.
  • Growth of the Nonprofit Sector: Historical data sourced from NCCS is used for this study. Circa years are used to represent total amounts per year. A limitation of this study is the fact that "circa files" from NCCS include the latest 990 form available at the time that data was extracted in a given year, forms that may not necessarily reflect the year being reported. Another option to generate this report would be to use the "fiscal year files" from NCCS, the ones guarantee that only the 990 form corresponding to a specific year is included. However in this latter case the limitation is that not all nonprofit organizations necessarily file every single year, in which case a significant amount of nonprofits may be missing from the report. For such reason we have decided to use the "NCCS circa files", instead of the "fiscal year files", as it is assumed to be a better estimation of the complete nonprofit sector in a given year.
  • Employment: Nonprofit employment data is obtained from the American Community Survey. The following reports have been extracted and presented accordingly:
    • B24060 OCCUPATION BY CLASS OF WORKER FOR THE CIVILIAN EMPLOYED POPULATION 16 YEARS AND OVER Universe: Civilian employed population 16 years and over - 2010 American Community Survey 1-Year Estimates: Shows managerial, service or technician positions by county by class of worker.
    • B24070 INDUSTRY BY CLASS OF WORKER FOR THE CIVILIAN EMPLOYED POPULATION 16 YEARS AND OVER Universe: Civilian employed population 16 years and over - 2010 American Community Survey 1-Year Estimates: Shows industry type.
    • S2408 CLASS OF WORKER BY SEX AND MEDIAN EARNINGS IN THE PAST 12 MONTHS (IN 2010 INFLATION-ADJUSTED DOLLARS) FOR THE CIVILIAN EMPLOYED POPULATION 16 YEARS AND OVER 2010 American Community Survey 1-Year Estimates: Shows median salaries for male and female.
Compensation Report This report, compiled every three years by the ASU Lodestar Center for Philanthropy and Nonprofit Innovation, provides valuable compensation data across 50+ nonprofit job positions, as well as findings on employee retirement, insurance, paid time off, and other benefits. This Scope update utilizes the 2019 edition.