Friday, October 09, 2009
The Nonprofit Market
CharityBrowser.com provides some statistics describing the size of the nonprofit marketplace. For the year 2006, they list a total of 1.4 million nonprofits in all 50 states plus the District of Columbia. That compares with the U.S. Census (2004) estimates of 25.4 million firms of which 5.9 million were firms with employees and 19.5 million without employees. About 4.4 million were small firms with 10 or fewer employees.
So, when board advocates are advising women to serve on nonprofit boards as a place to acquire top level governance experience, they are talking about a very small market. For every 1 nonprofit there are another 19 small businesses. For every 1 nonprofit, there are 4.5 small businesses with employees. For every 1 nonprofit, there are 3 firms with up to 10 employees.
Board of director positions at Fortune 500 firms total about 5,500 seats (assuming 11 directors each) and, at the next tier of Fortune 501-1000 firms, there are about 3,000 seats (assuming 6 directors each). That is a total of 8,500 director positions at Fortune 1000 firms. The Census reports a total of 17,000 firms with 500 or more employees. Assuming an average board size of 8.5, that would represent approximately 136,000 possible director seats (over and above those on the Fortune 1000). Even assuming that not all large companies have boards or have boards that size, we’re still talking a huge number of board seats.
CharityBrowser.com reports that just 7 states are home to 45% of all nonprofits. California leads with 134,000; followed by New York (88,000), Texas (83,000), North Carolina (71,000), Pennsylvania and Illinois (each with 59,000), Ohio (58,000) and Florida (56,000). Nevertheless, nonprofits in these most active states hold only $2 million in assets and $1.5 million in revenues on average.
Thus, there is no support for the expectation that board oversight of finances at nonprofits would be comparable to the multimillion dollar asset and revenue profiles of top corporations. Only the very largest nonprofits would be responsible for revenues of over $100 million. However, there are fewer than 260 such nonprofits among the top 7 states. New York leads with 78, while California has 69. No other state has even 40 nonprofits at that scale.
For those who thought it was hard to get onto a major corporate board, it looks like even that would be easier than getting on a top nonprofit with a comparable scale of financial responsibilities.
So, when board advocates are advising women to serve on nonprofit boards as a place to acquire top level governance experience, they are talking about a very small market. For every 1 nonprofit there are another 19 small businesses. For every 1 nonprofit, there are 4.5 small businesses with employees. For every 1 nonprofit, there are 3 firms with up to 10 employees.
Board of director positions at Fortune 500 firms total about 5,500 seats (assuming 11 directors each) and, at the next tier of Fortune 501-1000 firms, there are about 3,000 seats (assuming 6 directors each). That is a total of 8,500 director positions at Fortune 1000 firms. The Census reports a total of 17,000 firms with 500 or more employees. Assuming an average board size of 8.5, that would represent approximately 136,000 possible director seats (over and above those on the Fortune 1000). Even assuming that not all large companies have boards or have boards that size, we’re still talking a huge number of board seats.
CharityBrowser.com reports that just 7 states are home to 45% of all nonprofits. California leads with 134,000; followed by New York (88,000), Texas (83,000), North Carolina (71,000), Pennsylvania and Illinois (each with 59,000), Ohio (58,000) and Florida (56,000). Nevertheless, nonprofits in these most active states hold only $2 million in assets and $1.5 million in revenues on average.
Thus, there is no support for the expectation that board oversight of finances at nonprofits would be comparable to the multimillion dollar asset and revenue profiles of top corporations. Only the very largest nonprofits would be responsible for revenues of over $100 million. However, there are fewer than 260 such nonprofits among the top 7 states. New York leads with 78, while California has 69. No other state has even 40 nonprofits at that scale.
For those who thought it was hard to get onto a major corporate board, it looks like even that would be easier than getting on a top nonprofit with a comparable scale of financial responsibilities.
