April 21, 2005
By Gail Matsunaga

A study of Southern California's nonprofit sector has discovered that the region's nonprofits are a $38-billion industry with more than $60 billion in assets. The figures represent per capita revenues of $1,843 for all Southern California residents.

"Southern California's Nonprofit Sector" – co-authored by Kathleen Costello, executive director of the university's Gianneschi Center for Nonprofit Research, and Peter B. Manzo of the Los Angeles-based Center for Nonprofit Management – was presented during a special town hall meeting last month in Los Angeles and earlier this month in Orange County . Subsequent town halls focusing on aspects of the report related to particular counties will continue to take place over the next two months.

Large organizations controlled the biggest share of revenue, with health organizations dominating the sector: 133 hospitals reported more than $12 billion in total revenues, more than one-third of the revenues reported by all Southern California nonprofits. Excluding hospitals and universities, because of their budget sizes, 13,171 NPOs reported per capita revenues of $1,098.

The report focused on charities in 10 Southern California counties: Los Angeles, Orange, Riverside, San Bernardino, San Diego, Santa Barbara, Ventura, San Luis Obispo, Imperial and Kern – counties that are home to almost two-thirds of the state's population and more than half of its reporting 501(c)(3) nonprofit organizations.

Costello noted that the number of Orange County organizations has risen over the years, "There were 17 percent more active organizations in 2000 than in 1997, and their revenues grew accordingly, from $3.9 billion in 1997 to $4.2 billion in 2000."

Established in 1996, the Gianneschi Center serves the community and the field of nonprofit sector research as a repository for data about philanthropic, charitable and volunteer activity in Orange County . Its first comprehensive report on the Orange County nonprofit field appeared nine years ago, with a second report issued in 2000.

"A demographic profile of nonprofit organizations is useful for planning and funding purposes," said Mary Joyce, Gianneschi professor of nonprofit marketing, who was a presenter at the Los Angeles town hall. "Nonprofits use such data for preliminary benchmarking.

This is one way they can calculate share of market and examine productivity of NPOs.

"Funders like this information to examine the state of nonprofit types – such a report can point out areas that are under funded," she added. "Government agencies can see what types of NPOs are being funded and might learn where they need to focus their efforts."

Joyce observed that "the nonprofit industry is oligopolistic – a few large organizations dominating an industry, with many smaller players.

"In effect, we see nonprofits emulating the fund-raising strategies of the leaders. So, everyone copies golf tournaments, black-tie events and award luncheons that purportedly bring in more money," noted Joyce. "Moreover, they all charge about the same amount for all of these events.

"My take is that the industry is drowning in mediocrity, because innovation takes a back seat to emulation. Now, I understand that imitation is the sincerest form of flattery, but NPOs have to think about what makes them different, and design offerings that reflect those points of difference."

Another aspect of the report that Joyce found interesting was what wasn't included. "Religious congregations and nonprofits with revenues less than $25,000 don't have to report to the IRS, so how do we measure these groups? And, what does this mean when we consider the increase in funding to faith-based organizations under the present administration? From 2000 to 2002, funding to faith-based organizations increased ten-fold in the state of California."

For more information about "Southern California's Nonprofit Sector" report, contact Costello at 278-5376, or visit the Gianneschi Center for Nonprofit Research website at http://www.fullerton.edu/GCNR .

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