2022 NPT 100: Half Of A Good Year: Pandemic’s Impact Seen on the Bottom Line

(November 2022) Timing is everything is life. It appears from data compiled for the new edition of the NPT 100 that is also true of pandemics. 

The 2022 NPT 100 covers the fiscal year t hat ended in 2021. For calendar year organizations, that means a federal Form 990 is due to the Internal Revenue Service (IRS) by May 15. The paperwork for more nonprofits seems to be filed on the November 15 extension in recent years, making it difficult to collect timely data by presstime for the November edition of The NonProfit Times. Also making data collection more difficult lately has been the lag in Forms 990 from the IRS.

Due to the pandemic, the split year files June 30 or Dec. 31 really made a difference this time as things started opening back up. Those with the later filing period showed better results, at least on paper, explained Daniel Romano, partner & NFP Tax Practice Leader at Grant Thornton LLP which has worked with The NonProfit Times to analyze the data from several hundred organizations.

Total revenue among the largest 100 nonprofits in the 35th annual NPT 100 topped $101.2 billion, up significantly from last year’s aggregate of just less than $80 billion. Several billion-dollar organizations returned to The NPT 100, and billion-dollar organizations accounted for 29 of the top 100 spots. That pushed the overall total higher while all categories of revenue were up:

• Public support accounted for $54.8 billion
• Government support, $13.5 billion
• Investment income, $5.07 billion
• Program service, $23.8 billion
• Other revenue, $3.5 billion

Program expenses increased 8% for the listed organization, much less than revenue hikes, said Romano, a result of operations being shut down during the pandemic. He expects that expenses will be correspondingly higher next year. He expects back to the office will drive expenses higher, along with the costs of finding and keeping personnel.

Reductions in staff and remote workers decreased overhead,” said Romano. Also, capital expenses have not yet hit many balance sheets yet.

The NPT 100 researchers aim to avoid double counting but there is some overlap among organizations. For example, the highest compensated independent contractor (Part VII, Section B of the Form 990) for Leukemia & Lymphoma Society in Rye Brook, New York (No. 45) was the Patient Advocate Foundation (No. 86) in Hampton, Virginia, at $7.8 million.

Donor-advised funds are not included in the NPT100 because they are pass-through entities for all intents and purposes. Also, the largest are run by major investments houses, although those firms have set up nonprofit entities to accept and disburse donations from the accounts.

Five organizations in The NPT 100 are ranked by their FYE 2020 Form 990 because FYE 2021 is not available until later this year:

• ASPCA
• Boys Town
• Children’s Hospital Boston
• Habitat For Humanity
• LISC
• New York Presbyterian Fund

In some cases, leaders at nonprofits with numerous affiliates submit surveys of financial data, which often is an amalgamation of fiscal years. Mental Health America (No. 54), for example, included several current year Form 990s but the majority of affiliates in its totals are for 2020.

There also are organizations where leaders decline to participate in the survey or provide any recent financial data. 

For those nonprofits, The NonProfit Times partnered with CauseIQ to help compile Form 990 data for the national office and affiliates: Big Brothers Big Sisters, Boy Scouts, Planned Parenthood, and Ronald McDonald House Charities. Those totals include tax data across fiscal years ranging from 2018 to 2020, which is inconsistent with previous years’ reports. For that reason, the net change in net assets category is not likely accurate and thus, not applicable (N/A) in the accompanying chart.

If ever there needed to be a justification for multiple revenue sources, the Salvation Army (No. 4, $4.4 billion) has made that argument during its past two years.

“Those two fiscal years were the first and second largest in our history when you look at just first quarter income [which includes the Alexandria, Virginia.-based organization’s Oct.1-Dec. 31 holiday season efforts],” National Community Relations and Development Secretary Dale Bannon said.

The increased support came at a time when the need for the Salvation Army’s services increased dramatically. COVID upended operations, creating a boom in under- and unemployment, restricting — and in some cases shuttering — the organization’s retail operations and creating the need for increased floor space in its shelters to reduce COVID infection rates. Demands from increasingly severe natural disasters and other contingencies also took their toll on the Salvation Army’s humanitarian works capacities.

The organization’s fortunes were boosted by the stock market. Investments skyrocketed from $559 million during fiscal year 2021 to $2.11 billion. That growth increased the role investments played in the Salvation Army’s total revenue picture from 14% to 36.3%. Government funding, which included boosts from the federal Emergency Rental Assistance Program, jumped from $459 million to $589.7 million, but because of the boom in investment income dipped from 11% to 10.2% of total revenue makeup.

In contrast, public support, the organization’s most significant source of funding, slipped from $2.37 billion to $2.34 billion. The dip came as the pandemic forced a drop in the number of Salvation Army thrift stores operating, from 1,116 to 987 between 2020 and 2022. As Bannon noted, the closings were due to consolidating local efforts or expense reductions.

Labor shortages also forced closures, whether due to coronavirus cautions or other circumstances. The stores that were open to the public limited the number of shoppers within them as part of social distancing practices.

On the plus side, operational stores received a substantial boost in material contributed as consumers who were sheltering in space cleaned out closets. When they opened, they did so with substantially more desirable inventory. “We’re on an upward climb for our thrift store traffic and for our in-kind to the thrift stores,” Bannon said.

Labor shortages had an impact on the Salvation Army’s public support beyond its stores. Its signature Red Kettle Campaign has faced headwinds as volunteers have been harder to find, and even paid bell ringers haven’t filled all of the staffing needs. Consumers have been carrying less currency, making spontaneous contributions more difficult. And pedestrian traffic in foot-traffic-heavy retail areas has waned as consumers increased their use of online delivery services.

Salvation Army’s leadership continues to adjust to these adverse conditions. The Red Kettle Campaign now includes mobile-assisted donation capabilities for non-cash-carrying altruists. And its approach toward public contributions has broadened considerably, as has its overall ask strategy.

“We’ve historically focused the majority of our public awareness campaigns at the Christmas season – our quarter one, October to December,” Bannon said. “We are now realizing we have to move more evergreen with our campaign. Need knows no season, and nor does generosity.”

The organization is encouraging donors to “love beyond the holidays,” whether by giving donations year-round or making sustainer gifts. “It’s amazing how $25 a month can be the difference between a family staying in its home or falling under the poverty line,” Bannon said. “We’re excited about that campaign. It’s definitely more evergreen than just at Christmastime.”

Some of the biggest revenue increases at organizations within The NPT 100 were related to corporate philanthropy. Step Up For Students (SUFS) in Jacksonville, Florida, saw revenue soar by some 60% compared to the previous year, from $620 million to $988 million. “There’s this enormous demand right now,” President Doug Tuthill said, noting that SUFS serves 300,000 children. If it was a school district, it’d be the sixth largest in the country, he added.

Tuthill credited the revenue spike to a strong economy in the Sunshine State. “Florida opened earlier than most states” during the pandemic, with the result being “a lot of economic activity,” he said, with companies doing really well, and people moving into the state. “There’s a lot of demand for our program and a very strong economy in Florida. Those are the two primary” reasons for the growth, he said.

Companies can remit a portion, up to 100% in most cases, of various state taxes to SUFS, such as alcoholic beverage excise tax, business rent/commercial lease tax, corporate income tax, direct pay sales and use tax, and insurance premium tax, and oil and/or gas production tax.

A dollar-for-dollar corporate tax credit generated about $700 million for the charity last year, according to Tuthill. Another $85 million came through a tax redirection, in which people can redirect up to $105 of sales tax to the scholarship program. Direct state funding generates about $500 million, which Tuthill expects to grow more in the next fiscal year. He estimated SUFS is likely to continue its growth in FYE 2022 toward $1.5 billion.

SUFS provides K-12 scholarship and post-secondary scholarships for special needs students. “Most of it is kids going to non-district schools or homeschooling,” Tuthill said, which has seen huge growth in Florida. There’s also a new reading supplemental program that serves some 58,000 students in district schools.

SUFS serves 300,000 students and is growing dramatically. There have been lots of investments in technology to scale up fast, according to Tuthill, including investing heavily in artificial intelligence (AI). The software provides SUFS with a probability of eligibility, examining census data, individual data, and a variety of sources. Almost 360,000 applications start in the SUFS system. “We would need a staff of thousands looking at various databases and past experience; that software looks at data and gives us a probability whether a student is eligible or not,” Tuthill said.

Good360 in Alexandria, Virginia added more corporate donors who gave for the first time and grew existing partnerships, in some cases, quite substantially, according to Shari Rudoph, chief development officer and chief marketing officer.

“Both of these dynamics arise from companies seeing the value in a partnership with Good360 since we not only help solve imminent business challenges (what to do with some of the product they have on hand), but we also help other companies deliver on their ESG (Environmental Social Governance) goals, both in terms of social impact objectives (getting goods where they can do the most good) and sustainability goals (keeping usable goods out of landfills or otherwise going to waste),” she said. “A growing commitment to ESG programming is one of the biggest macro forces driving our growth.”

Good360 saw companies leverage the donation channel to help “manage some of the ups and downs we’ve seen in the supply chain over the past couple of years as well,” Rudolph said. “We provide a strong alternative to liquidation channels which can cause brand dilution and other brand integrity issues for donor companies.”

Environmental organizations as a group saw revenue climb, led by World Wildlife Fund (WWF), up from $286 million to $408 million, and newcomer Environmental Defense Fund (EDF) jumping from $230 million to $362 million. Wildlife Conservation Society (WCS) slotted into the last quarter of The NPT 100, as usual, with $281 million, up slightly from $255 million. Ducks Unlimited returned after a one-year hiatus, rebounding from $194 million the previous year to a recent high of $338 million.

Food banks and related organizations also climbed The NPT 100. Feeding America topped $4 billion, remaining in the top 10 again, and several other food organizations made their debut in The NPT 100, including Second Harvest of Silicon Valley, with $322 million, and the Food Bank of Central and Eastern North Carolina, which nearly doubled revenue from $169 million to $310 million, and Greater Chicago Food Depository (GCFD), which just missed the cut in last year’s NPT 100, thanks to an influx of government support ($150 million, up from $75 million).

Museums and arts organizations powered through a tough year, with some still having pandemic months on the books, when facilities either were closed or severely limited in hours and attendance. Still, those that remained in The NPT 100 banked on their large endowments and healthy returns from the stock market in 2021.

The Metropolitan Museum of Art in New York City saw revenue rise despite public support falling from $234 million to $168 million. The museum more than made up for that 28% decline with a 150% increase in investment income, up from $138 million to $340 million. Total assets grew from $3.6 billion to $5.5 billion.

Likewise, Shriners Hospital is often among the largest endowments within The NPT 100 and often reports some of the biggest returns on investment income. The charity reported nearly $1 billion, up from $295 million the previous year, driving much of the overall revenue growth. Public support was up only slightly, from $438 million to $480 million as overall revenue jumped from $896 million to $1.6 billion. Total assets grew by about $1 billion, from $10.8 billion to $11.8 billion.

The No. 100 organization this year is another that hasn’t made an appearance in years. Youth Villages, headquartered in Memphis, Tennessee, reported total revenue of $278 million — a significant increase in what it takes to crack into the NPT 100, which in recent years has typically been closer to $200 million. What’s behind such a big jump for the No. 100 organization? There could be a number of reasons.

MacKenzie’s Millions

With donations of closer to $13 billion to hundreds of nonprofits during the past few years, MacKenzie Scott has had an outsized influence on the charitable sector, and that includes The NPT 100.

Scott helped several NPT 100 organizations cross onto the list for the first time in years, donating millions through her Lost Horse, LLC. Chicago-based Easterseals often had fallen short of the 10% threshold in recent years. In December 2020, the national office of Easterseals and 22 of its affiliates announced an “unrestricted transformational gift” from Scott.

LISC (Local Initiatives Support Corp.) is typically among the organizations just on the outside of The NPT 100 but Scott’s largesse pushed them into the club this year. The New York-based national office received a $40-million gift, the largest from an individual in its 40-year history.

Covenant House also returned to The NPT 100 for the first time in almost 20 years. Hospitals tend to fall short of the 10% threshold when program revenue accounts for much of the revenue but this year Children’s Hospital Boston made the cut for the first time.

The Michael J. Fox Foundation has been growing steadily for years, knocking on the door of The NPT 100 in recent years. A commitment from Google co-founder Sergey Brin’s family foundation and a key recent partnership helped to catapult the New York City-based foundation into the top 100, from $202 million in revenue to $353 million.

In 2019, the foundation was selected as an implementation partner for Aligning Science Across Parkinson’s (ASAP), an initiative that fosters collaboration and resources to better understand underlying causes and complementary to existing funding, overseen by the Coalition for Aligning Science. To date, that component has committed millions of dollars over many years, according to CEO and Co-Founder Deborah W. Brooks.

The foundation has funded more than $1.5 billion in research since its inception in 2020. “This is really an accelerated growth but we’re been growing all along,” Brooks said. The overall revenue forecast for 2022 remains above $300 million but is still “a little bit of a moving target.”

The median gift at the Fox Foundation is still about $50, according to Brooks, who said the foundation is seeing increased support broadly. There were 116 donors who gave six figures in 2019, which was up to 123 last year and expected to exceed that number in 2022 while seven-figure gifts increased from 13 in 2019 to 17 in 2021.

“We really have a broad base,” Brooks said. In 2021, there were almost 125,000 donors to the foundation, an increase of about 20% compared to 2019. “A big part of what we’re trying to do is build an engageable audience. We know that some of those people will be donors and aim to engage people who are touched by Parkinson’s,” she said.

“For us, we’re interested in the whole gamut, engaging with as many people as we can,” Brooks said, whether that’s around key calls to action, policy activism or partnering in research, and potentially on a path to getting them better care.

“In challenging or lean times, people who are closest to you and who you’ve successfully engaged over a long run are most likely to stay aligned with your mission,” she said. “So holding your closest constituents dear and supporting them during tricky times has a real benefit for long-term value; that could be programmatic investments in that community.”

The foundation launched the Parkinson’s Buddy Network, an online platform to address concerns about patients and families being isolated during COVID. Brooks said they started thinking about it in April 2020, launched by year’s end and began piloting it in 2021. Now it has more than 10,000 users. “You do what’s right for your constituents, meet them where they are, and focus on the long-term value of relationships and connections you’re building,” she said.