After spending thirteen years in the for-profit sector as both a CPA and private banker, I transitioned my full energies to the nonprofit sector in early 2001. Over the years, I’ve come to realize just how many misconceptions people have about the sector. In my role as a Professor of Practice in Nonprofit Leadership at Clemson University, I spend much of my time addressing and clarifying the unique aspects of the U.S. nonprofit sector. Here are some intriguing facts about U.S. nonprofits that many of my students find most surprising —and you might too.
Historical Roots Run Deep:
Much like in The Bahamas, nonprofits in the U.S. have a history that stretches back well before the nation was founded (1789). In fact, one of the earliest charities was established to support formerly enslaved people, and the oldest charity that still exists in the U.S. is the First Scots’ Society, founded in Boston in 1657.
Volunteering with and for nonprofits is also a longstanding tradition that Americans and Bahamians share. According to a study by the U.S. Census Bureau and Americorps, 75.7 million (nearly one-third of the population 16 and up) formally volunteered through a nonprofit organization from September 2022 to September 2023, demonstrating the sector’s deep community roots.
The Birth of Modern Nonprofits:
The Peabody Education Fund is considered the first “modern” nonprofit in the U.S. Founded in 1867 after the Civil War, the PEF was launched with a $2 million gift from George Peabody. Its mission was to educate poor whites and the formerly enslaved through education funding in the southern educational system and southern states.
Revenue Earning Potential and Going Beyond Public Good:
Most people assume that all nonprofits chartered in the U.S. must exist for the public good, but this is not necessarily the case. Many professional organizations and fraternal groups enjoy nonprofit status, even though they exist for the benefit of a particular member group. Additionally, it is quite normal for nonprofits to earn revenue from the sale of items. Most of us, for example, have purchased items from a museum’s gift shop. These revenues, however, may be considered Unrelated Business Income (UBI), which may also be subject to federal and state income taxes.
“501(c)3” and “Nonprofit” Are Not Synonymous:
All 501(c)3s are nonprofits, but not all nonprofits are 501(c)3s. Many people assume that the terms “501(c)3” and “nonprofit” are synonymous. This is not the case, because many nonprofits are covered under different sections of the Internal Revenue Code. There are 32 different types or categories of nonprofits prescribed in the U.S. Internal Revenue Code. However, ALL nonprofits have one thing in common: they are exempt from federal income taxes.
The NP Sector is a Major Employer With Significant Economic Power:
The nonprofit sector is far from a niche or “boutique” industry. According to the U.S. Bureau of Labor Statistics, in 2022, over 300,000 nonprofit entities accounted for 9.9% of all employment in the U.S. In other words, one in ten Americans works in the nonprofit sector.
Likewise, the nonprofit sector significantly contributes to the overall U.S. economy. According to Independent Sector’s “Health of the Nonprofit Sector Annual Review” published in December 2024, nonprofits contributed more than $1.4 trillion to the U.S economy in 2023.
Further, choosing a career in the nonprofit sector does not mean that you are signing up for a life of financial struggle. Many people enjoy long, rewarding careers in the industry, and CEOs of larger nonprofits typically earn quite comfortable salaries. For example, CEOs of U.S. nonprofits with more than $50 million in expenditures earned an average of $364,564 in 2022 (according to Statista).
As I emphasize to my students, the private and government sectors are designed to do certain things well. That being said, there are specific roles and particular community development challenges that nonprofits are best suited to address. As the nonprofit sector continues to grow and evolve in The Bahamas, nonprofits will continue to play an even more impactful role in the country and its development, just as they have in the U.S. for nearly 400 years.
