Peruse the Nonprofit Executive Summary

Major Findings
I York City's Nonprofit Universe is Large and Dynamic
II Nonprofits Are Serving Greater Numbers of New Yorkers, as well as many others at State, Regional, National, and International Levels
III New York City Nonprofits Are a Major Economic Force
IV Employment is Large and Diverse
V The Nonprofit Sector Employs Many Women and Minorities
VI New York City's Nonprofits Receive Revenues from a Diverse Set of Sources
VII Revenue Streams Are Changing
VIII Nonprofits Are Finding Creative Ways to make up for Revenue Losses
IX Problems in Staff Recruitment, Retention, and Salaries are Hampering the Growth of a Sector
X The Nonprofit Sector Represents a Good Opportunity for Civic Involvement
XI Nonprofits Are Facing the Challenge of Recruiting and Retaining Board Members and Volunteers
XII Nonprofits are Meeting the Challenge of Competition in Providing Services with For-Profit Firms
XIII Nonprofits Are Facing the Challenge of Finding Affordable Facilities and Office Space at Appropriate Sites
XIV Technology Represents a Challenge to Some Nonprofits, Especially Smaller Nonprofits
New York City has long been recognized as the nation's headquarters for major corporations and for its prominence in the financial, fashion, and entertainment sectors. Yet, New York is also renowned for its nonprofit sector. It is this sector which provides most of our hospital beds, much of our art and music, and many of the special needs which we have come to rely on, like day care, services for the disabled, protection of immigrant rights, and support for the homeless.

New York City's nonprofits include major facilities like the Museum of Natural History, Columbia University, and Memorial Sloan-Kettering Cancer Center, but also small neighborhood arts groups and employment training centers like East Harlem Employment Services and the New York Women's Employment Center, Inc. These institutions are a source of employment and income for New York City residents, but they also add significantly to the services that are made available to local residents at reduced cost through subsidies from charitable contributions and foundation and government grants and contracts. The quality of life in New York City is closely linked to the availability of services provided by nonprofits. These nonprofit services con-tribute to the satisfaction felt by residents of the City and its attractiveness for private investment. The evidence shows also that the financial health and well-being of the non-profit sector provides early clues to the growth or decline of the City's private sector. This report is the result of a two-and-one-half year study conducted between September 1999 and January of 2002 by the New York City Nonprofits Project. The data sources consist of IRS and other financial information and over 3,000 survey responses collected during 2000 and 2001. We employed different survey instruments, each with a unique focus: financial, technology, volunteers, services provided, office/facility space, and employment issues. The goal is to provide a comprehensive picture of the state of nonprofits in New York City and information that will highlight strengths and weaknesses. Our audiences are potential employees, volunteers, community groups, funders and supporters, government, the general public, and, of course, nonprofits themselves.

The events of September 11, 2001, occurred after all the data were collected. We have been able to identify 580 nonprofits within the immediate World Trade Center area. In addition to these organizations that were affected directly, September 11 has impacted the whole nonprofit sector, but in ways which are not yet fully apparent. Nonetheless, because of its import, we have included a chapter in this report on known impacts so far and some possible consequences.

Some of the trends we report, including financial pressures, will be exacerbated due to September 11. Some nonprofits may be forced to stop providing service, altogether. But it is important to keep in mind that a number of economic, political, and societal changes affecting the nonprofit sector were at work before September 11 and are still at work. In other words, the events of September 11 should not be perceived as isolated from ongoing issues. We need to understand base-line conditions prior to 9/11 as well as the immediate implications and the longer-term nature of changes in the nonprofit world.

The nonprofit sector in New York City is comprised of some 27,474 charitable organizations that have annual revenues generally over $5,000 and are registered with the IRS as 501(c)(3)s. New York also has many other organizations like block groups, religious congregations, and other organizations that have not registered with the IRS.

This report focuses especially on 9,078 of the 27,474 registered organizations that are referred to as ìreporting public charities.î They have annual revenues exceeding $25,000 and submit annual financial reports to the IRS on Form 990. These reporting nonprofits are divided into two categories: ìoperating public charitiesî and ìsupporting public charities.î

In fact, the 9,078 reporting public charities are the principal providers and supporters of nonprofit services in the City and, from a more practical research perspective, are the organizations for which financial information is known and available. Although the others are often critical to the health of our civil society, their limited size and activities make their contribution less relevant to the objectives of this study. For these reasons, this report refers to the group of 9,078 ìreporting public charitiesî as ìthe nonprofits.î In addition, we report selectively on the 4,762 New York City-based grant-making foundations. The different types of nonprofit organizations are explained further in Chapter 3.

These 9,078 nonprofits account directly for $43 billion in annual expenditures, more than 528,000 jobs, or 14% of New York City's employees, and an annual payroll of more than $22.7 billion.

In addition, they had assets of $65 billion and revenues of more than $48 billion in the year 2000, which is larger than New York City's manufacturing sector. An estimated 200,000 additional jobs result indirectly from purchases by nonprofits of goods and services from private firms. The 4,762 New York City-based foundations have annual expenditures of $5.2 billion, of which about $506 million is devoted to administrative costs and salaries, much of which is spent in New York.

Ten years ago, the Nonprofit Coordinating Committee of New York, Inc., the Fund for the City of New York, and the City of New York took a very important first step in documenting the vital contributions of these non-profit organizations to New York's economy through their publication of a nonprofit report based on information available in the late 1980s. The current project has updated and expanded this information to the year 2001. A separate Technical Report provides detailed information on the sources of data for the study and its methodology. The online Service Directory and Atlas makes use of recently developed techniques for mapping and an interactive website to provide users with an accessible way to find the location of nonprofits and the services they provide. A CD-ROM includes the Technical Report and tables summarizing the data findings as well as other study results.

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This second report of the NYC Nonprofits Project examines accessibility to nonprofit facilities and services. The location of these services within the city has a profound effect on their value to users. The analysis focuses on the fit between neighborhood service needs and the availability of local nonprofit providers. The objective is to identify significant gaps or saturation in coverage.

It is important at the outset to emphasize that New York City’s nonprofit sector is not like the complement of nonprofits elsewhere. The city is host to many headquarters or administrative offices of major national and international organizations and groups primarily engaged in fund raising and support of other nonprofits. Furthermore, many of New York’s nonprofits predated public and private sector provision of services and have retained a larger service role than in other places. Many are able to respond to service need more rapidly than their government counterparts. All of which is tempered by the fact that the city’s ethnic diversity and the magnitude of its recent immigration are not likely to be matched in other U.S. cities.

The findings show generally broad nonprofit coverage over the city’s neighborhoods, but significant unevenness attributable to:
the preference by many nonprofits for proximity to the city’s commercial hub
the much denser infrastructure and support network for nonprofit organizations in long-established middle and upper income neighborhoods
more rapid demographic, ethnic, and social changes in some neighborhoods than nonprofits’ ability to establish or relocate facilities
zoning issues that limit the numbers of neighborhood sites for facilities, and
rapid and large shifts in rental prices for facility space that affect location decisions

The specific findings demonstrate that:
a large share of the city’s nonprofits are headquarters offices that carry out administrative functions largely from offices in commercial areas of mid- and downtown Manhattan and do not provide direct service to residents
an additional group of nonprofits (e.g. performing arts centers, museums, universities, major hospitals) provide city-wide and regional services from large scale facilities that are overwhelmingly concentrated in the most accessible and higher income areas in Manhattan and relatively deficient in other areas of the city;
nonprofits that provide direct neighborhood-based services are widely but very unevenly distributed among all the city’s neighborhoods, even after allowing for differences in neighborhood characteristics and local service needs
white middle and upper income communities have a rich and dense network of virtually all types of neighborhood based nonprofit services
on the other hand, significant service gaps include a relative shortage of virtually all types of services in lower income neighborhoods and especially those communities with significant numbers of recent Hispanic/Latino and Afro-Caribbean immigrants
the service deficiencies in low income and immigrant communities can be partially attributed to gaps in government contracted programs that provide much of the revenues of nonprofits that serve low income communities
NIMBY (i.e., not in my backyard ) facilities, including shelters and substance abuse centers, are more concentrated in high than low income neighborhoods

Policy implications include the following:
the rationale for facility sites in midtown Manhattan cannot be justified for many nonprofits that target their social services to user groups who are remote from these facilities
nonprofits and their donors in communities with an abundance of services can help to mitigate the deficiencies by establishing satellite facilities and relocating whenever feasible to areas of concentrated poverty, accompanied by some redirection of charitable contributions and grants to assist local providers in these communities
land use policy can help to ease the issue of scarcity of sites for facilities in residential areas through more flexible use of zoning variances

This study and its methodology may provide some guidance for analyses of location and proximity issues in other cities, regions, and states. We emphasize here the importance of:

devising a classification of nonprofit activities relevant for the specific locale;
developing a classification of neighborhoods or other sub-areas based upon commonalities in expected service needs;
the use of Geographic Information Systems (G.I.S.) for mapping and analyzing the geographic location of facilities;
the use of econometric methods for testing the relationships between facility location and neighborhood contexts; and
devising suitable measures of the match of types of service activities to types of neighborhood conditions.

A comprehensive survey and analysis of NYC’s nonprofit sector was completed and findings released immediately after the WTC disaster. The report, New York City’s Nonprofit Sector (May 2002), emphasized the significant role of nonprofits in the city’s economy and labor force. A second major report, Nonprofit Services in New York City’s Neighborhoods (June 2004), focused on service access, responsiveness, and coverage within the city’s diverse neighborhoods. (For copies of these reports, please go to our website:

Yet, the events of the past several years since 9/11justify a fresh look at the financial vulnerability of nonprofits and especially the human service providers. The months after 9/11 were accompanied by an outpouring of immediate and generous support for local nonprofit agencies from government, private and corporate donors, and foundations. However, New York City has still not recovered fully from the recession that was compounded by the events of 9/11. The city’s unemployment and service-dependent population has increased while private and corporate donors have been less able to contribute at former levels.

Nonprofits that provide human services are also likely to be seriously affected by proposed cutbacks in revenues from government-contracted programs. Early indications of Congressional budget cutting efforts point to reductions of as much as 25 percent over the next several years in safety net social programs and Medicaid. Furthermore, budget deficits at both New York State and City levels will likely multiply the revenue problems for local service providers. Impacts are expected to be particularly severe for nursing homes, health care providers, social service agencies, Headstart, children’s health insurance, and senior and public housing. Human service agencies do not know if the anticipated cuts are temporary or if they represent a longer-run shift in political culture and policy direction.

Are New York City’s human service organizations on the verge of suffering major revenue cuts that will reduce their capacity to deliver needed services? Findings from a survey administered in late 2003 and early 2004 indicate some good news and some bad news:

Thirty percent of agencies expect revenues to be higher this fiscal year by five percent or more.
Yet, almost twenty percent expect revenue declines of five percent or more. These are primarily smaller organizations providing crisis intervention and social services. The revenue changes are directly related to the receipt and size of government contracts and donor contributions.
Reduced revenues translate into program and staff cut-backs affecting most seriously services to low-income families and children.
More than sixty percent of agencies experienced increased demand for their services and more than half were not fully able to meet the demand.
Most agencies are already attempting to increase their revenues and diversify revenue sources.

The full impacts of current and projected cutbacks in government funding for contracted services are likely to be felt later this year and should be monitored by an additional survey in the Fall of 2004.
This report provides an assessment of the entire nonprofit sector’s evolution in New York during the past decade when the city has experienced growth spurts, recession, the World Trade Center tragedy, and some recent recovery. The objective of the report is to explore signs of financial health and vulnerability in the sector as a whole and among types of organizations that differ by service activity, size, longevity, and location within the city. We assess how changes in the numbers of nonprofits and their distribution by size, service sector, and location over the past decade have been responsive to recent economic and social change in the city and to developments in private and public sectors. The findings include an assessment of the type and direction of growth in the nonprofit sector and its adaptability to the city’s rapidly changing environment. A final section targets financial issues among individual nonprofit organizations that affect their well-being and survival.

Major findings discussed in the repot include:

Currently, approximately 9,715 nonprofits are operating with revenues of more than $43 billion, including 3,699 that have been established in the past decade – the highest density of nonprofits of any city in the U.S.
The record shows healthy and responsive growth and a strong element of stability in the past decade
Growth demonstrated by an increase of 43% in the numbers of nonprofits and a doubling of total revenues, expenditures and assets in real dollars
Growth rates much faster than in private and public sectors.
Health demonstrated by enhancement in service capacity despite the effects of recent recession and World Trade Center catastrophe. More than four times as many new nonprofits were established in this decade than numbers terminated.
Responsiveness demonstrated by shifts in the numbers of nonprofits by service sector, size, and neighborhood location consistent with the city’s population growth and social and demographic change.
Stability represented by the survival and longevity of a large share of the city’s nonprofit organizations and their service capacity and infrastructure.
Growth in numbers of nonprofits was especially prominent in the zones of concentrated poverty and among the religiously-affiliated social services and slowest among services for seniors and youth

Despite these significant signs of sound financial health and development for the sector as a whole, some emerging trends are causes of concern.

Findings show that virtually all the expansion in revenues occurred among the very largest organizations while smaller nonprofits grew hardly at all
Contrary to national trends, revenue shares from contributions have been growing faster than income from program activities and fees
Few nonprofits are moving rapidly enough to diversify their revenue sources
In addition to the 776 nonprofits that closed down in the past decade, a number are in financial distress because of drastic decline in revenues, income from program activities, net revenues, fund balances, or combinations of these trends
Especially vulnerable are the smallest nonprofits and those in neighborhoods of concentrated poverty.

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