Nonprofits often exist in a scarcity mindset, and we’re all too familiar with the unending quest for financial resources – stacks of grant applications, constant deadlines, and resource-based anxiety. Even so, some nonprofits manage to grow at remarkable rates – some as high as 424% per year according to a study we recently published. Statistically speaking, what the heck is going on with these nonprofits? We analyzed the tax filings of more than 40,000 nonprofit organizations in Minnesota in order to explore what differentiated these high-velocity organizations from those who didn’t grow, or who experienced more modest growth.
Here are our top takeaways.
Takeaway #1 – Size matters, but it’s not all that matters
Perhaps unsurprisingly, the 500 fastest-growing organizations tended to be smaller — after all, it’s easier to make large proportional gains from a more modest starting point. However, we discovered that even large organizations were capable of major growth.
The Top 100 organizations were far more likely than the average nonprofit to be under $1M revenue. Yet, organizations outside the Top 500 fastest-growing who still saw year-over-year growth (what we call our “slow growers”) tended to be larger than the average nonprofit, suggesting that larger organizations were more likely to see growth overall, even if not rapid growth. So, fast growers = smaller-than-average nonprofits. Slow growers (but still consistent growers!) = larger-than-average nonprofits.
Fun Factoid: The largest human services organization in the Top 100 is Think Small, which grew from $9.6M to $24M in revenue in 2013 – 2015.
Takeaway #2 – Education organizations schooled everyone else
While we saw organizations of nearly every mission focus in the Top 500, education organizations blew the others out of the water.
Education organizations were the only group to outperform our baseline with a high degree of statistical significance based on the sample sizes available (p = 0.02; if you know what that means, you may want to check out our more in-depth findings here).
We’re not yet sure what education orgs are doing to turbo-charge revenue, but we’ll have whatever they’re having.
Takeaway #3 – It’s never too late to be a star
It was no shock to see that younger nonprofits had an advantage when it came to growth rate. But our major finding was that organizations could see triple- or high-double-digit growth rates several decades after founding. In fact, 66% of organizations in the Top 100 were granted federal tax exemption more than ten years ago, and 20% were more than 40 years old. We think this shows that it’s never too late for a growth spurt or comeback.
Fun Factoid: The Minnesota Museum of American Art was founded in 1894. Between 2013 and 2015, its revenue grew 54% per year.
Takeaway 4: Organizations relying on grants and contributions grew fastest
The two primary revenue sources cited throughout the data were charitable contributions/grants or program services revenue. The numbers indicate that the fastest-growing 100 organizations are more likely to receive the majority of their revenue from grants and donations, and by a wide margin. However, our good ol’ “slow growers” were much more likely to be driven by program services revenue. This indicates, we think, that grants and donations allow for rapid injections of needed cash-ola, but program services revenue may enable more consistent growth paths (read: diversifying funding streams is the best of both worlds 😉 )
The Top 500
Hey, we can’t all be education-focused nonprofits that are young, small, and grant-funded. The good news is that while some strong trends emerged, the top 500 fastest-growing organizations were surprisingly diverse. Nearly every size, age, region of the state, and mission focus are represented, an encouraging sign that indicates big growth is at least possible for most organizations. And while the fastest-growing nonprofits should be commended, from our view, there appears to be a distinct class of organizations — the “slow growers” — who also deserve recognition. They are continuing to see year-over-year consistent growth and tend to be older, larger, and rely more on revenue from program services versus contributions.
In conclusion *drumroll please* here they are, the top 500 fastest-growing nonprofits in Minnesota:
A spreadsheet of the Top 500 can be found here.
Can all the data nerds in the house raise their hands?* Click below to view the full, in-depth report (with tables! and charts! and more information about our methodology!) Feel free to send any questions to firstname.lastname@example.org.
*You can put your hand down now.