Nonprofits in Washington: 2004

Introduction

This is the third in a series of reports on the scope and character of nonprofit organizations in Washington State. Like the previous editions, prepared in 1994 and 1999, it draws on data from public records, both published and unpublished, to sketch in general terms the numbers of recorded nonprofit organizations in the state, their size and financial characteristics, where they are located, and the services they provide.

(The earlier editions are available online: 1994; 1999)

Nonprofits in Washington: 2004 is a project of The Evergreen State Society. Since 1990, the society has worked to help other nonprofits be successful and to increase public knowledge of the importance of their work.

What Are Nonprofit Organizations?

People associate with each other to accomplish all sorts of purposes. Usually, these associations are quite informal, and do not appear in any official records. There are, though, many reasons for creating more formal and legally recognized organizations. Some of these are called "nonprofits" because they are formed and operated for some other reason than generating a profit for their owners. Nonprofits are often classified by their purposes as "religious," "mutual benefit" or "public benefit" groups. This report provides information from official sources about the nonprofit organizations that appear in official records for Washington State.

The state of Washington (like all other states) facilitates the formation of nonprofit corporations. The Revised Code of Washington (RCW) contains legal provisions for forming and maintaining nonprofit corporations with differing characteristics; "standard" nonprofit corporations are formed under RCW 24.03. There is no requirement that a Washington nonprofit corporation be "charitable" in the conventional senses of that word, only that it be formed in a way that does not allow individuals or for-profit corporations to own its assets or to have a right to share in its revenues. Many other provisions of Washington law make reference to nonprofit corporations -sometimes basing the definition on the Washington statutes and sometimes referring to the federal standards for tax-exempt organizations.

The Internal Revenue Code (IRC), the relevant federal statute, defines several types of organizations (usually corporations but officially described by the generic "entities") that are exempt from corporate income taxes on part or all of their net earnings. These organizations are often identified by the IRC section that describes them. The most familiar such description is probably "section 501(c)(3)," which refers generally to organizations formed for charitable purposes. Familiar nonprofits, such as hospitals, museums, social service agencies and schools, are "public charities" as defined by this section. This section also governs "private foundations." Individuals can often deduct from their personal income taxes amounts they have donated to 501(c)(3) organizations; generally foundations require 501(c)(3) status as a condition for making a grant. 

(For background on Washington's nonprofit corporation statutes, see "How to Form and Maintain a Nonprofit Corporation in Washington State" prepared by the Young Lawyers Committee of the King County Bar Association in 2001. IRS Publication 557 gives details of the requirements for federal tax-exempt status. Cornell University Law School provides the complete text of section 501 of the IRC online.)

A Note on the Data

This report is based on data drawn from several state and federal sources. Access to this data is rapidly becoming much easier. Still, each agency collects the information for its own administrative purposes. It is not always possible to match dates and scope from one source with another.

During the preparation of this report, the Corporations Division of the Secretary of State's Office provided special tallies of the number of nonprofit corporations. The National Center for Charitable Statistics "dataweb" was the source of detailed information from IRS Form 990 filings by Washington organizations. The Labor Market Information Center of the Washington State Department of Employment Security supplied a special report on nonprofit employers.

Detailed financial information is available from the Form 990 filed by many federally recognized tax-exempt organizations. There are two broad limitations on this source of information, however. Most churches are not required to report any financial information to the federal government, so this significant realm of activity is not reflected in these statistics. Also, organizations with less than $25,000 in revenues (or $100,000 in assets) are also not required to file so the numbers and activities of small, and often informal, organizations are not included in the analysis.

An expanded discussion of the limitations of the data used to prepare this report is in an Appendix.

A listing of similar reports for other states is available in an Appendix.

Online publication of Nonprofits in Washington:2004 is supported by Clark Nuber