Filed Under:Agent Broker, E&S/Specialty Business

Nonprofit/Charitable Organizations: Big Business, Big Risks

The nonprofit sector in the U.S. has grown significantly in the past generation, and it represents a significant portion of the economy. Independent Sector, a network of nonprofits, foundations, and corporate giving programs, reports eye-opening statistics:

  • There are more than 1.9 million tax-exempt organizations in the U.S.—a number that has doubled over the past 30 years
  • Nonprofits employ 13.5 million people, nearly 10 percent of the American workforce, according to the National Center for Charitable Statistics
  • The number of charitable organizations registering with the Internal Revenue Service increased by more than 60 percent from 1998 to 2008
  • Nonprofit organizations account for about 5.5 percent of gross domestic product (GDP), as reported by the National Center for Charitable Statistics.

Read related: "Agents Can Help Nonprofits Put Claims in the Right Place."

A key distinction is that contributions to 501(c)(3) entities typically are tax deductible, while contributions to 501(c)(4) entities are not. The latter have leeway to participate in legislative lobbying, advocacy and political activities.

There are eight major categories of 501(c)(3) organizations:

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