Kansas-City-Nonprofit-Impact-Report-2019

3 SECTION I: INTRODUCTION Executive Summary • There are 12,569 registered nonprofits in the Kansas City KC area • The combined annual revenue for KC nonprofits is more than $18.5 billio

Kansas City

Nonprofit Impact Study 2019

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Table of Contents

I INTRODUCTION

Executive Summary 3

Overview 3

Methodology 4

II NONPROFIT PRESENCE Sector Description 5

Areas of Focus – NTEE Codes 10

Organizations by County and Zip Code 12

Nonprofit Density 14

Nonprofit Growth 15

III NONPROFIT FINANCIAL IMPACT NFPs by Revenue 19

Top 50 Largest Organizations – All Types 21

Contributions 23

Sources of Contributions and Income 24

Assets 25

Expenses 25

Payroll Taxes 26

IV WORKFORCE 27 V FOUNDATIONS 29 VI VOLUNTEERS 30 SUMMARY 30 APPENDIX Sources 31

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SECTION I: INTRODUCTION

Executive Summary

• There are 12,569 registered nonprofits in the Kansas City (KC) area

• The combined annual revenue for KC nonprofits is more than $18.5 billion

• The combined annual net assets of KC nonprofits is $25.6 billion

• 11.3 percent of KC’s total workforce is employed by nonprofit organizations

• KC nonprofits paid nearly $5 billion in salaries and benefits in 2017

• KC nonprofits paid over $275 million in payroll taxes in 2017

• More than 840,000 people volunteer for registered KC nonprofits

The first part of this study provides a broad overview of the nonprofit sector, how organizations get started and become official at a state and federal level

Next we provide a snapshot of the entire KC nonprofit sector; the number of groups, the type of work they perform and where they are located

The third section examines the financial impact of the KC nonprofit sector in terms of

employment, revenue generated, assets and expenses and its overall contribution to the economy The fourth section provides information on KC foundations, including the different types, their revenue and assets and where they give money

The final section reports on KC nonprofit volunteers in terms of number of people and value of time donated

Information in this study will help:

• Provide a voice for organizations;

• Elevate the public’s knowledge and awareness;

• and inform legislators and policy-makers

about the vibrant Kansas City nonprofit sector and its importance to this region

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The report was commissioned by Nonprofit Connect, a regional association in Kansas City that serves more than 5,000 professional members from over 700 organizations of all sizes Nonprofit Connect links the nonprofit community to education, resources and networking so organizations can more effectively achieve their missions

The report was developed by BKD CPAs and Advisors, a national firm with industry expertise in nonprofit audits, accounting, taxes and governance

We are grateful for the generous support of Nonprofit Connect

Acknowledgements

• Nonprofit Connect: Luann Feehan, Jackie Baker

• BKD: Tondee Lutterman, Dan Prater, Cheryl Cooper, Laura Knese, Erin Rickert

• University of Missouri Kansas City: Dr David Renz, Dr Scott Helm

• Drury University: Dr Keith Coates

Information for nonprofit organizations was retrieved from the IRS Exempt Organization

Business Master File Other sources of information include the U.S Census Bureau, the Bureau

of Labor Statistics, the Bureau of Economic Analysis and Cause IQ

This report examines registered nonprofit organizations within the Kansas City MO-KS

Metropolitan Statistical Area (MSA) According to the Bureau of Labor Statistics this

encompasses 14 counties:

Kansas: Johnson,

Leavenworth, Linn, Miami, Wyandotte

Source: MARC.org MSA information and Map

SECTION II: NONPROFIT PRESENCE

includes museums, orchestras, fraternities and sororities, some day care centers, membership cooperatives, some credit unions and a variety of other types

Their footprint can be found in virtually every neighborhood throughout Kansas City

The sector is known by various terms:

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Nonprofits are well known for their ability and desire to work alongside other sectors

Organizations partner with for-profit companies, government agencies, religious congregations and schools to provide critical goods and services

One of the first steps in formalizing an organization is to become incorporated Individual states grant this status to organizations, making them eligible to receive certain benefits such as

exemptions from state sales and property tax Once incorporated, organizations can apply to the IRS for federal tax-exempt status

To qualify for exempt status, organizations must do one of the following:

• Advance education, religion or science

• Provide relief to the poor or distressed

• Promote health

• Promote youth sports

• Protect the environment

• Lessen the burden of government

• Erect or maintain public buildings, monuments or works

• Prevent cruelty to children or animals Others eligible for exemption include cooperative hospital service organizations, public safety or testing organizations, charitable risk pools, educational service groups and amateur sports

Tax-exempt organizations are classified by the IRS under Section 501(c) of the U.S Tax Code There are 29 categories of 501(c), and two divisions – charitable (donations are tax deductible) and non-charitable All charitable organizations are classified as either a public charity or a private foundation

Source: National Council of Nonprofits

In some cases, organizations don’t have to apply for individual exemption The IRS allows a group exemption, where a central organization is tax-exempt and affiliated organizations can be exempt without applying individually

Table 1

501(c)(1) Corporations organized under acts of Congress, which includes federal credit unions, and serve as instrumentalities

501(c)(2) Corporations created to hold titles for property owned by another nonprofit No

501(c)(3)

Private foundations or public charities Organizations for any

of the following purposes: religious, educational, charitable, scientific, literary, testing for public safety, fostering national

or international amateur sports competition or prevention of cruelty to children or animals

Yes

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501(c)(4) Civic leagues, social welfare organizations and local associations of employees, created to promote community

welfare for charitable, educational or recreational purposes No 501(c)(5)

Labor, agricultural and horticultural organizations that are educational or instructive, including unions, created for the purpose of improving conditions of work, and products of efficiency

No**

501(c)(6) Business leagues, chambers of commerce, real estate boards, etc., created for the improvement of business conditions No

501(c)(8) Fraternal beneficiary societies and associations, which provide payment of life, sickness, accident or other benefits

Yes*** 501(c)(11) Teachers’ retirement fund associations No

501(c)(12) Benevolent life insurance associations, irrigation companies, telephone companies, etc. No

501(c)(14) State-chartered credit unions and mutual reserve funds No

501(c)(15) Mutual insurance companies or associations which provide insurance to members substantially at cost No

501(c)(16) Cooperative organizations to finance crop operations in conjunction with activities of marketing or purchasing

501(c)(17) Supplemental unemployment benefit trusts No

501(c)(18) Employee-funded pension trusts created before June 25, 1959 No

501(c)(19) Post or organization of past or present members of the armed forces No

501(c)(21) Black lung benefit trusts, funded by coal mine operators to satisfy their liability for disability or death due to black lung

501(c)(22) Withdrawal liability payment funds, which provide funds to meet the liability of employers withdrawing from a

501(c)(23) Veterans’ organizations created before 1880, to provide insurance and other benefits to veterans No

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501(c)(25) Title holding corporations or trusts with multiple parent corporations, which hold titles and pay over income from

property to 35 or fewer parents or beneficiaries No 501(c)(26) State-sponsored organizations providing health coverage for high-risk individuals No

501(c)(27) State-sponsored workers’ compensation reinsurance organizations No

501(c)(28) National railroad retirement investment trust, which manages and invests the assets of the Railroad Retirement Account No

501(c)(29) Qualified health insurance issuers which have received a loan or grant under the CO-OP program No

* Contributions deductible if for public purposes

** Contributions not deductible except as a business expense

*** Must have a purpose similar to a 501(c)(3)

The IRS requires most tax-exempt organizations to file an annual information return, known as Form 990 Organizations choose the form type based on their gross receipts (the total amount they receive from all sources, without subtracting any costs or expenses)

Table 2

Organizations with gross receipts normally under

$50,000

Organizations with gross receipts less than $200,000 and total assets under

$500,000

Organizations with gross receipts greater than $200,000 and total assets greater than $500,000

Private foundations, regardless of financial position

Exceptions to the filing rule include church-affiliated organizations and governmental

organizations In addition, some types of organizations are required to file a specific form

regardless of the above thresholds For example, a section 509(a)(3) supporting organization is not eligible to file a Form 990-N even if gross receipts are normally less than $50,000

Information for Table 3 includes data from IRS Forms 990, 990-EZ, 990-PF and 990-N (also known as e-postcard)

Due to limited available information on Form 990-N, subsequent information and tables in this report contain data only from organizations filing IRS Form 990, 990-EZ and 990-PF

Information represents the most recent fiscal year publicly available and is based on the IRS Business Master File (BMF) Authors of this report have no responsibility for including entities not included on the IRS cumulative list and therefore not part of the BMF

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Table 3: Kansas City Nonprofits: All Types (990, 990-EZ, 990-N and 990-PF)

501(c)(1) 5 0.04 501(c)(10) 159 1.27 501(c)(2) 53 0.42 501(c)(12) 8 0.06 501(c)(3) 9,322 74.3 501(c)(13) 74 0.59 501(c)(4) 477 3.80 501(c)(14) 3 0.02 501(c)(5) 269 2.15 501(c)(15) 3 0.02 501(c)(6) 504 4.02 501(c)(17) 2 0.02 501(c)(7) 1,200 9.57 501(c)(19) 159 1.27 501(c)(8) 241 1.92 501(c)(25) 1 0.01 501(c)(9) 59 0.47 501(c)(27) 1 0.01

Table 4: Kansas City Nonprofits: All Types (990, 990-EZ and 990-PF, excluding 990-N)

501(c)(2) 27 0.96 501(c)(12) 5 0.18 501(c)(3) 2,210 78.54 501(c)(13) 12 0.43 501(c)(4) 90 3.19 501(c)(14) 3 0.11 501(c)(5) 100 3.55 501(c)(15) - - 501(c)(6) 179 6.36 501(c)(17) - - 501(c)(7) 61 2.17 501(c)(19) 27 0.96 501(c)(8) 30 1.07 501(c)(25) 1 0.04

The second most common type is 501(c)(6) Business Leagues These are business-promotion organizations such as chambers of commerce, real estate boards and professional associations.The third largest group with 61 organizations is 501(c)(5) Labor and Agricultural Organizations.Other popular segments of KC nonprofits include 501(c)(4) Social Welfare Organizations – civic leagues or organizations operated exclusively for the promotion of social welfare, and

501(c)(7) Social and Recreational Clubs, organizations that provide a benefit of some type through membership These include golf courses, hobby groups, college fraternities and

sororities and homeowner associations

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Exhibit 2

Area of Focus – NTEE Codes

The National Center for Charitable Statistics classifies organizations through the National

Taxonomy of Exempt Entities (NTEE) This system is used by the IRS to categorize tax-exempt organizations NTEE categories are assigned according to each organization’s primary activity, mission or purpose

There are ten broad groups, and within the groups there are hundreds of subcategories

Q International, Foreign Affairs 51 1.81

R Public, Societal Benefit 973 34.58

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Exhibit 3

The most common area of focus is Public, Societal Benefit These organizations are engaged in activities that promote the common good and social welfare of the people of a community Included in this category are management and technical assistance groups, advocacy for seniors, minorities, LBGT rights and research institutes

The Public and Societal Benefit category also includes areas of community improvement,

volunteerism, unemployment, employee associations, military and veterans’ support,

neighborhood associations, some life insurance providers, cemeteries and foundations

Source: The Urban Institute

With 760 organizations, Human Services is the second most common area of focus The direct services provided by these organizations tackle some of the region’s most pressing issues These include child welfare, shelters, food and nutrition, public safety, disaster response, youth

development and employment

Other popular types include Education, Health and Religion-Related Private schools and some universities, like William Jewell College and Rockhurst University, are included in the Education category Public institutions primarily supported through state government, such as University of Missouri – Kansas City (UMKC) and Metropolitan Community College, are not included

In addition to schools and universities, this category includes organizations that support various extra-curricular activities such as band boosters and athletic clubs

The Religion-Related category does not typically include religious congregations or churches These organizations, like Catholic Charities of Kansas City-St Joseph and Bott Radio Network, may be affiliated with a specific faith group, but do not have religious activities as their main mission or reason for existence

Areas of Focus (NTEE)

Arts, Culture, Hum Education Environ, Animals Health

Human Services Intl, Foreign Public, Societal Religion Related Mutual, Membership Unknown, unclassified

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Organizations by County and Zip Code

Where are KC nonprofit organizations located?

The breakdown of organizations per county correlates closely to population size

Counties with the largest population in the KC Metropolitan Statistical Area:

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Zip Codes

• There are 227 different zip codes within the 14-county Kansas City MSA

• 185 zip codes (81%) have at least one registered nonprofit organization

• Among KC zip codes analyzed, 4 had at least 100 nonprofit organizations each and 8 had

50 to 75 organizations each

Tables 7-8: Kansas City MSA Zip Codes with nonprofit organizations

Zip Codes with at least 100 organizations Zip codes with 50-75 organizations

Zip Code # of orgs % of KC NP sector Zip Code # of orgs % of KC NP sector

# Added # Added # Added # Added # Added #

2017 Total

According to IRS forms, a total of 263 new organizations were formed in the 6-year period 2012

through 2017 The Public, Societal Benefit and Human Services categories added the most

organizations Two small categories – International/Foreign Affairs and

Environment/Animal-Related – experienced the highest growth rates, increasing by 13 percent