Nonprofit Q & A
Submitted by miabutzbaugh on Mon, 2006-05-01 17:56.
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What is a nonprofit organization?
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A nonprofit organization is a corporation formed under the rules of Oregon Revised Statutes Chapter 65. There are three types of nonprofit corporations in Oregon:
- public benefit — undertake activities to benefit their communities. They work in the area of social services, health care, education, the arts, and other activities to improve the quality of life
- mutual benefit — membership organizations like homeowners associations and clubs
- religious — organizations like churches, synagogues, and temples
- public benefit — undertake activities to benefit their communities. They work in the area of social services, health care, education, the arts, and other activities to improve the quality of life
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How is the term “nonprofit” generally used?
- Even though there are three types of nonprofit corporations in Oregon, the term “nonprofit” is generally used to refer only to a public benefit corporation, formed to provide broad benefit to many people. Throughout this profile, “nonprofit” is used to mean “public benefit corporation.”
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What’s a charitable organization?
- The Internal Revenue Code creates special provisions for nonprofit organizations that are deemed “charitable” under code section 501(c)(3). These organizations, sometimes called “501(c)(3) organizations,” serve broad public purposes, including educational, religious, scientific, and literary activities, as well as the relief of poverty and other public benefit actions.
Donors may deduct contributions to 501(c)(3) organizations as charitable deductions on their tax returns. 501(c)(3) organizations are exempt from corporate income tax.
The IRS determines whether an individual nonprofit corporation qualifies as 501(c)(3) organization based on that organization’s written application for tax exempt status.
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If not all nonprofits are charitable organizations, what are they?
- About half of the nonprofits that have applied to the IRS for “charitable” status have received a favorable determination. The remaining half may be exempt from corporate income tax under other parts of the Internal Revenue Code, but donors may not deduct contributions to these organizations as charitable contributions.
Other types of tax-exempt organizations include social welfare/advocacy organizations (501(c)(4)), labor and agricultural associations (501(c)(5)), business leagues (501(c)(6)), and fraternal beneficiary societies (501(c)(8)). In most cases, contributions to these organizations are not tax-deductible.
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Where do the statistics in the profile come from?
- The data in this profile of Oregon’s nonprofits comes from the following five sources:
- Oregon Corporation Division
- Oregon Department of Justice
- Oregon Employment Department
- National Center for Charitable Statistics’ database of IRS Master Business File data
- The Oregon Community Foundation's 2006 Giving in Oregon Report
- Oregon Corporation Division
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What did we learn from the Oregon Corporation Division statistics?
- The Oregon Corporation Division maintains the official record of all corporations in Oregon. All for-profit and nonprofit corporations must register annually with the Corporation Division. The Division provided Oregon Involved with a list of all nonprofit corporations, including both Oregon nonprofit corporations and “foreign” nonprofit corporations (incorporated in other states that are registered to conduct business in Oregon). This data was then sorted by public benefit, mutual benefit, and religious organizations to obtain the number of organizations within each of these categories.
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What did we learn from the Oregon Department of Justice statistics?
- Oregon’s Department of Justice maintains the official database of all public benefit corporations in Oregon, both those that the IRS have determined to be tax-exempt under section 501(c)(3) and those that are organized as public benefit corporations but have not yet obtained an IRS determination of tax exempt status. Oregon Involved sorted this data to obtain the number of nonprofit organizations within each region of the state.
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What did we learn from the Oregon Employment Division?
- The Oregon Employment Division (OED) collects data on employment and wages from each Oregon employer, both for-profit and nonprofit, for the administration of the unemployment insurance program. The data is available in brief form in an annual report entitled “Covered Employment and Wages.” Oregon Involved submitted a request for a tailored search about nonprofit employment. All regional and economic impact data presented in this profile comes from the OED.
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What did we learn from the Giving in Oregon Report?
- The 2006 Giving in Oregon Report presents 10 years of comparative data on charitable giving in Oregon. The report by The Giving in Oregon Council of The Oregon Community Foundation is part of a continuing effort to recognize and promote philanthropy in Oregon. The report presents data on the activities of the 9,880 Oregon public benefit corporations that were registered with the DOJ in 2003. These are a subset of the 12,665 public benefit nonprofits registered with the DOJ in 2006, including 2,336 nonprofits headquartered outside Oregon but conducting activities within the state. The Giving in Oregon Report provided the data for this profile's breakdown of nonprofit organizations by activity type.
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What did we learn from the National Center for Charitable Statistics?
- The National Center for Charitable Statistics (NCCS) works closely with the IRS and other government agencies, private sector service organizations, and the scholarly community to build compatible national, state, and regional databases and develop uniform standards for reporting the activities of charitable organizations. NCCS uses the IRS Business Master File as its primary source to compile data on all registered nonprofit organizations. Data comparing growth rate and expenditure levels for Oregon and nationwide comes from the NCCS database.
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How accurate is the NCCS data?
- Many small nonprofits with little to no income, and likely with a high volunteer base, do not apply for tax exempt status and are not included in the IRS data. Tax-exempt status is obtained through application to the IRS. Nonprofit organizations that the IRS has granted tax exempt status under section 501(c)(3) must file annual reports with the IRS only if they receive over $25,000 in gross annual receipts. While some 501(c)(3) organizations file reports with the IRS even if they receive less than $25,000, those that do not file are not included in NCCS data.
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How are regions defined?
- Oregon Involved grouped counties into regions and used these regions to report this nonprofit profile data (as well as information from a 2005 state-wide public opinion survey conducted by Davis, Hibbits, and Midghall).
The counties within each region are:
- Eastern Oregon — Baker, Grant, Harney, Lake, Malheur, Morrow, Umatilla, Union, Wallowa
- Central Oregon — Crook, Deschutes, Gilliam, Hood River, Jefferson, Sherman, Wasco, Wheeler
- Southern Oregon — Coos, Curry, Douglas, Jackson, Josephine, Klamath
- Willamette Valley/Oregon Coast — Benton, Clatsop, Columbia, Lane, Lincoln, Linn, Marion, Polk, Tillamook, Yamhill
- Metro — Clackamas, Multnomah, Washington
- Eastern Oregon — Baker, Grant, Harney, Lake, Malheur, Morrow, Umatilla, Union, Wallowa
