Introduction easuring and understanding the impact of nonprofi t organizations on their communities is a challenging task. Individual charitable organizations vary from many Mthat have no paid staff to those with hundreds of employees and multimillion-dollar operating budgets. Nonprofi ts also operate in widely disparate categories of services, such as health, arts or human services; and consequently the outcomes of their activities may be measured in diff erent ways. But when the revenues, budgets and services of all nonprofi ts are considered in total, it is apparent that the nonprofi t sector is a substantial part of the economy in Louisville and similarly sized communities. Charitable organizations likewise have a major impact on the quality of life in these cities, and on their opportunities for growth and abilities to adapt to changes in economic and social circumstances. In 2008 the Center for Nonprofi t Excellence produced the Nonprofi t Peer City Study to determine what variations existed in the nonprofi t sector in Louisville compared to 14 peer cities. Th is report expands upon the fi ndings of the original study by incorporating survey data from Louisville area nonprofi ts in addition to updating the 501(c)(3) public charity organizations data used in the 2008 report. Th e survey data cover topics such as Board Membership, Fund Development, Planning, Human Resources and Measuring Outcomes. Th ese data off er insights into the operations and challenges facing nonprofi ts in the Louisville area. Recently, other studies have examined the nonprofi t sector in Kentucky and some of Louisville’s peer cities using the National Center for Charitable Statistics (NCCS) data. Specifi cally, the Kentucky Nonprofi t Network has released a series of annual reports that include information about charitable organizations statewide and for individual Kentucky counties. Another report, Non-Profi t Presence in Cincinnati MSA, was produced in 2011 by the Center for Economic Analysis and Development at Northern Kentucky University and included Louisville among the fi ve comparison cities in the study. Th is 2012 Center for Nonprofi t Excellence report adds to the growing knowledge base about the nonprofi t sector in our region and provides opportunities for developing strategies to support the success of these charitable institutions. 2 Center for Nonprofit Excellence Executive Summary A family proudly takes pictures of the fi rst-ever college Th e Peer City Nonprofi t Study 2012 presents two very graduate in their family. An abused child wakes up in a place specifi c sets of data – one that analyzes Louisville’s of love and safety. A couple stands to applaud as they see position among its fourteen other peer cities and their favorite opera through unsuccessfully restrained tears. another that provides a milestone assessment of Neighbors breathe in cleaner air in the city’s West End. A Louisville nonprofi t policies and practices. child’s life is saved through miraculous medical care. People It is increasingly well understood that the nonprofi t marvel at the cast iron facades of the buildings on Main sector has a place of growing signifi cance in today’s Street. A neglected dog snuggles with his new owner, a boy economy. Th e Urban Institute reports that in 2010, who will learn he will never have a more faithful friend. nonprofi ts in the United States paid $587.7 billion Th ese are the real results achieved through the nonprofi t in wages to 13.7 million people, nine percent of the sector, working hand-in-hand with the business and country’s labor force. governmental sectors, with the support of people who give Th e economic importance of the nonprofi t sector is their time and treasure for a better community. equally or more signifi cant in the Louisville area, with While this study conducted by the Center for Nonprofi t $7.8 billion in revenue. Th at places it sixth highest Excellence (CNPE) cannot fully capture the true in unadjusted total revenue among the 15 peer cities collective impact of the work accomplished by Louisville’s studied, and it is roughly 13.2% of the $59 billion GDP nonprofi ts, it does provide a picture of where the generated in the Louisville region in 2010. nonprofi t community in the region currently stands Louisville area hospitals make up over half of nonprofi t and where it is going. revenue locally. When compared to the peer cities in the study, the Louisville region’s hospitals rank second in revenue generated per hospital and fourth highest in dollars per resident. Clearly, there is a downside to exceptionally high levels of spending for healthcare at the hospital intervention level, since this is the most expensive stage of healthcare administration. On the other hand, having top levels of medical care and expertise within the region is a favorable circumstance. Excluding hospitals, area nonprofi ts ranked fourth highest in revenue per organization and seventh highest in dollars per capita. Th e Louisville area ranks only 12th of the 15 peer cities in the number of nonprofi ts per resident. Th e local study of area nonprofi ts shows that larger nonprofi ts tend to be older, more established and better able to fi nancially withstand economic challenges – making them more sustainable. 2013 Survey Report 3 It is clear that the there is an economically emerged in 2011 with most area nonprofi ts in the study robust sector in Louisville and southern reporting revenue increases. Th e larger the organization, the more likely its budget grew in 2011. With the region having Indiana, with larger nonprofi ts on more than its proportionate share of larger organizations, this average than the peer cities. Signs of places a good many nonprofi ts in a seemingly competitive returning strength emerged in 2011 advantage, especially in a sluggish economy. with most area nonprofi ts in the study With projected resource scarcity for the sector, “collaboration” continues to be the mantra for the way reporting revenue increases.” forward. Louisville and southern Indiana nonprofi ts reported relatively encouraging levels of sharing administrative services How do we know that local nonprofi ts are making a (25%) and administrative staff (12%). diff erence? Are they, in the main, fi scally accountable, A very special thanks is extended to Eric Schneider, the eff ective in carrying out their objectives, and governed lead consultant on the combined studies contained in this in ways that assure ethical management and community report. Sara Renn was the team’s lead researcher and was improvement? How well do they work together for the assisted by Morgan Eklund, Alexander Narang and Lisa community good, to engage citizens in ways that help Van Coppenelle, who worked as VISTA volunteers and them reach their full potential and, in so doing, make graduate interns with CNPE. our region competitive and vibrant? Special appreciation is extended to the Brown-Forman for Th ese are the core issues into which this study sought to their support of CNPE’s capacity building programs that gain perspective and insight. their premier company has sponsored, including support It is clear that there is an economically robust sector in for this project. Many nonprofi t organizations whose Louisville and southern Indiana, with larger nonprofi ts stories are told among these pages would certainly join us on average than the peer cities. Signs of returning strength in that salute. 4 Center for Nonprofit Excellence Peer Cities Louisville’s peer cities include Metropolitan Statistical by Greater Louisville Inc (GLI), the Greater Louisville Areas (MSAs) that exhibit similar characteristics in Project, and the Brookings Institution, among others, have population density and regional economic ties. Peer looked at Louisville and its fourteen peer cities to determine Cities are thus established as benchmarks and comparison Louisville’s standing in key indicators tied to economic points for urban growth. Benchmark studies conducted well-being. Th e 15 MSAs included in this study are: Birmingham-Hoover, AL Greensboro-High Point, NC Memphis, TN-MS-AR Charlotte-Gastonia-Rock Hill, Indianapolis-Carmel, IN Nashville-Davidson-Murfreesboro- NC-SC Franklin, TN Jacksonville, FL Cincinnati-Middletown, OH-KY-IN Omaha-Council Bluffs, NE-IA Kansas City, MO-KS Columbus, OH Raleigh-Cary, NC LOUISVILLE-JEFFERSON Dayton, OH COUNTY, KY-IN Richmond, VA Columbus, OH Omaha-Council Bluffs, NE-IA Dayton, OH Indianapolis- Cincinnati- Carmel, IN Middletown, OH-KY-IN Richmond, VA LOUISVILLE- Kansas City, MO-KS Jefferson County, KY-IN Greensboro-High Point, NC Raleigh-Cary, NC Charlotte-Gastonia-Rock Hill, NC-SC Nashville-Davidson- Murfreesboro-Franklin, TN Memphis, TN-MS-AR Birmingham-Hoover, AL Jacksonville, FL Th ese fi fteen MSAs share population and geographic (North Carolina, South Carolina) and four Southern states characteristics. Th e population size ranges from 841,310 (Alabama, Kentucky, Florida, Tennessee). (Dayton, OH) to 2,133,203 (Cincinnati-Middletown, Six of the fi fteen MSAs are multi-state geographies. Th ose OH-KY-IN), according to 2010 Census fi gures. A MSAs include: Charlotte-Gastonia-Rock Hill, NC-SC; majority of the MSAs are geographically located within Cincinnati-Middletown, OH-KY-IN; Kansas City, MO-KS; the lower Midwest, South Central, Central, and Mid- Louisville-Jeff erson County, KY-IN; Memphis, TN-MS-AR; Atlantic states, where all fi fteen cities span eleven and Omaha-Council Bluff s, NE-IA. Among these multi- diff erent states. Th e fi fteen peer cities reside within two state geographies, Louisville-Jeff erson County, KY-IN, has Midwestern states (Indiana, Ohio), three Central states the second lowest population, with 1,283,566 residents. (Nebraska, Missouri, Kansas), two Mid-Atlantic states 2013 Survey Report 5 Methodology MSA Comparison Data Th e BMF is a cumulative fi le that includes basic information from IRS Forms 1023 and 1024 for all Th e Center for Nonprofi t Excellence collected data for “active” and registered tax-exempt organizations.