One in five US nonprofits has under three months of reserves — and one in twenty is in the red
Form 990 filings of 539,974 tax-exempt organisations for fiscal year 2023: the median nonprofit could run for 12.6 months on its net assets, but 102,786 could not last a quarter and 24,944 have negative net assets. Reserves fall as organisations grow; officer pay takes 12 percent of spending at small charities and under 1 percent at the largest.
Questions this record answers
- How many months of reserves does the typical US nonprofit have?
- The median nonprofit could run 12.6 months on its net assets in fiscal year 2023 (527,186 Form 990 filers); a quarter have under 4.4 months and a tenth under 0.8.
- How many US nonprofits have less than three months of reserves or negative net assets?
- 102,786 organisations (19.5 percent) had under three months of reserves in FY2023, 57,777 under one month, and 24,944 (4.7 percent) reported negative net assets.
- What share of a US nonprofit's expenses goes to officer compensation?
- A median 6.5 percent across 193,578 filers: 12.2 percent at organisations spending $100,000 to $1 million, 2.5 percent from $10 million to $100 million and 0.8 percent above $100 million (Form 990, FY2023).
- Which US nonprofits are the largest by expenses?
- Kaiser Foundation Health Plan ($74.4 billion), Kaiser Foundation Hospitals ($30.7 billion) and UPMC ($22.7 billion) led FY2023; the ten largest filers spent $357.9 billion, 9.9 percent of the sector's $3.60 trillion.
Cite as: FACTANKER, https://factanker.com/record/one-in-five-nonprofits-under-three-months-of-reserves
Every US tax-exempt organisation above the smallest filing threshold reports its finances to the IRS on Form 990, 990-EZ or 990-PF, and the IRS publishes the electronically filed returns in bulk. We loaded them, matched each return to the IRS Exempt Organizations Business Master File for activity code and state, and computed, for every fiscal year, where each organisation stands against all filers, against its size class, its NTEE activity group and its state. Fiscal year 2023 is the latest with a complete set: 539,974 organisations reporting $3.60 trillion in expenses, $3.79 trillion in revenue and $10.23 trillion in assets.
Twelve months for the median, three for a fifth
The measure that answers "how safe is this charity" is months of reserves: net assets divided by annual expenses, times twelve. Across 527,186 filers with both figures the median is 12.6 months; a quarter have under 4.4 months and a tenth under 0.8. At the other end, 171,227 organisations (32.5 percent) hold two years or more and 79,172 (15.0 percent) hold five years or more — most of them small membership bodies, foundations and endowed funds.
Below the common three-month guideline stand 102,786 organisations, 19.5 percent of filers. 57,777 (11.0 percent) have less than one month, and 24,944 (4.7 percent) report negative net assets — their liabilities exceed everything they own. In fiscal 2019 the median was 11.2 months; the cushion of the typical nonprofit grew through the pandemic years rather than shrinking.
Reserves fall as organisations grow
Organisations under $100,000 in expenses hold a median of 18.6 months. The band from $100,000 to $1 million holds 10.8, $1 million to $10 million 10.6, $10 million to $100 million 9.0, and the 4,406 organisations over $100 million — hospitals, health plans, universities — hold 7.4 months, with a tenth of them below two days. Large nonprofits run on revenue, not reserves. The ten largest filers alone spent $357.9 billion in 2023, 9.9 percent of the sector, led by Kaiser Foundation Health Plan with $74.4 billion.
Who pays officers what share
Total officer compensation, as reported in Part VII, takes a median 6.5 percent of expenses across the 193,578 organisations that report both. The share is a function of size: 12.2 percent at organisations spending $100,000 to $1 million, 6.2 percent from $1 million to $10 million, 2.5 percent from $10 million to $100 million and 0.8 percent above $100 million. By activity, religion-related organisations (10.9 percent), civil-rights and advocacy groups (10.7) and community-improvement bodies (10.3) spend the largest share on officers; health care the smallest (3.5). The median organisation that reports officer pay at all pays its officers $113,050 in total.
Donations or earned income
The median nonprofit gets 57.5 percent of revenue from contributions, gifts and grants — 69.9 percent for those under $100,000 in expenses, 1.2 percent for those over $100 million, where program service revenue (patient fees, tuition, premiums) dominates. The median surplus margin is 3.9 percent of revenue; a tenth of filers ran a deficit of a third or more of revenue.
Where the cushion is thick and thin
Mutual and membership-benefit organisations hold a median 32.8 months of reserves and public-safety and disaster-relief groups 32.6; grantmaking foundations 20.0. The thinnest cushions are in mental health and crisis intervention (6.9 months), international affairs (8.0), recreation and sports (8.6) and religion-related organisations (8.7) — the groups whose work is hardest to pause. California has the most filers (58,517), followed by New York (38,222), Texas (32,951), Pennsylvania (24,839) and Florida (24,038); every state has its own benchmark page.
What this is and is not
Source: IRS Form 990 series e-file returns (Bulk XML), fiscal years 2016 to 2026 as filed, joined to the IRS EO Business Master File for NTEE code and state. One row per organisation and fiscal year, the latest return per year. Percentiles are computed in the database over all organisations of a group in the same fiscal year. Years before 2018 are thin because e-filing was not yet mandatory; 2024 and later are still filling as returns arrive. Reserves and shares are computed from the filed lines; "months of reserves" treats all net assets as spendable, which overstates liquidity for organisations with restricted endowments or illiquid property. Group returns appear as single filers. Every figure on an organisation's page links to the filed value.