40 Percent of U.S.-Based International Nonprofits Ran Deficits in 2003

WASHINGTON, D.C., September 12, 2006—Despite widespread public concern in recent years about the plight of people in foreign lands, 40 percent of U.S.-based international nonprofits ran deficits in 2003, research from the Urban Institute shows.

Thirty-nine percent of the foreign-development and relief-assistance organizations finished 2003 in the red, as did 44 percent of the groups involved in international understanding and education and 47 percent of those dedicated to international affairs. Of the 5,598 nonprofits studied, 74 percent dealt with development and assistance, 16 percent handled academic and cultural exchanges, and 11 percent concentrated on peace and arms control, international affairs education, and related topics.

For 92 percent of all the international nonprofits, the positive net assets needed to weather financial shocks cushioned the negative operating balances.

"The International Charitable Nonprofit Subsector: Scope, Size, and Revenue," by Janelle A. Kerlin and Supaporn Thanasombat, used 2003 data filed with the Internal Revenue Service by foreign-focused charities with $25,000 or more in annual revenue. Many religious nonprofits were excluded because they are not required to provide financial information to the IRS.

Other findings

• In number and revenue, international nonprofits make up just two percent of America's nonprofit sector.
• Of the subsector's expenses, 89 percent went to program costs, 7 percent covered administrative expenses, and 4 percent was used for fundraising.
• Charities dealing with development and relief assistance received 89 percent of the subsector's revenue.
• Private contributions made up 70 percent of all revenue, government grants provided 20 percent, and program services and other sources made up the remainder. Over $6 billion, or more than a third of total revenue, came as non-cash contributions.
• While groups with budgets over $2 million made up only 11 percent of international organizations, they were 43 percent of those receiving government grants.
• The international subsector's revenues of $17.7 billion in 2003 slightly outpaced its $17.2 billion in expenses. Seventy-five percent of the organizations had less than $500,000 in revenue.

"The number of small organizations suggests the civic depth and programmatic diversity of U.S. involvement with causes abroad," Kerlin and Thanasombat point out. "Located mainly on both coasts and to a smaller extent in Florida and Texas, these organizations often draw on financial resources and local support from concentrated ethnic communities to serve related areas of the world."

"The International Charitable Nonprofit Subsector: Scope, Size, and Revenue," by Janelle A. Kerlin and Supaporn Thanasombat, is available at http://www.urban.org/url.cfm?id=311360. Kerlin, a former research associate in the Urban Institute's Center on Nonprofits and Philanthropy, is on the faculty at Georgia State University. Thanasombat, a former emerging scholar in the center, is a graduate student at the University of Michigan.

An earlier, related brief by Janelle A. Kerlin, "U.S. Government Funding for International Nongovernmental Organizations," examines which types of activities receive federal support and how that support is affected by shifts in foreign policy. This publication can be found at http://www.urban.org/url.cfm?ID=311332. The two briefs are based on "The International Charitable Nonprofit Subsector in the United States: International Understanding, International Development and Assistance, and International Affairs," a report by Elizabeth J. Reid and Janelle A. Kerlin. It is at http://www.urban.org/url.cfm?ID=411276.

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