UPDATE (9-15-11): Voting closed. Classifications established. I recommend you first read this post for the background. You’ll find the results of the poll in my September 15, 2011 post, “Votes Tallied. Classifications of Small Medium & Large Nonprofits Set.” Thanks again to all who participated! [End of update.]
The definition of a small nonprofit … a medium nonprofit … or a large nonprofit organization is a MYSTERY. It’s UNKNOWN.
Apparently there are no industry standards or guidelines so nonprofit organizations can easily be grouped by their size. We refer to nonprofits this way a lot but base the terminology on nothing “official.”
Let’s set the industry standards – please VOTE
Since nothing could be found … Let’s set the industry standards together.
Why bother? Well, for one thing it will add more consistency to all the research projects that occur within the nonprofit sector ― there’ll be no doubt what is meant by small, medium or large nonprofit. And when we attend conferences we’ll all have the same understanding when nonprofits are grouped by size during presentations or for any other reason. Polls, surveys, contests, blog posts, etc. … we’ll all be on the same sheet of music.
I’m establishing five (5) classifications because nonprofit gross receipts range from well under $1-million per year to over $60-billion (according to NCCS). Three classifications (i.e., small, medium & large), don’t allow for enough distinction based on gross receipts; and lump too many nonprofits together that really don’t belong in the same category in my opinion.
On the other hand we don’t want to get carried away and slice it too fine.
Please use the poll box below to vote on the following classifications (IF you “disagree,” please use the OTHER box to fill in your recommendations. Or IF you “click disagree” you can either add your recommendations in the POLL comment section or here in the comments for the Zapp Nonprofit Blog):
Micro … annual gross receipts less than $1-Million
Small … annual gross receipts greater than $1-Million and less than $10-Million (Range $1 – $10 million/year)
Medium … annual gross receipts greater than $10-Million and less than $30-Million (Range $10 – $30 million/year)
Large … annual gross receipts greater than $30-Million and less than $100-Million (Range $30 – $100 million/year)
Mega … annual gross receipts greater than $100-Million
[polldaddy poll=5374932]
Thanks for voting! And IF by chance you disagree with my classifications, please use the comment box for this blog to make your suggestions (unless you already wrote them in the “Other” box when voting).
The results will be published here in my blog after the voting is closed on September 10, 2011.
I have a favor to ask: I’d appreciate it if you would help spread the word throughout your own networks such as your co-workers, Twitter, Facebook, LinkedIn and email contacts.
My goal is to get as many votes as possible within the next few weeks and I need your help to accomplish that.
Oh, and if you know of some “official” definitions that I couldn’t find … please, please, please share them by adding a comment to this post (see below).
My research efforts
And just in case you’re interested in how I determined that there is no industry standard . . . my research began with several hours of online digging. I didn’t find anything that defined nonprofits by size in any way.
So I asked a number of folks who work at agencies, several of my peers (veteran freelance consultants with over 100 years of combined experience), and I raised the question in four different groups on LinkedIn for nonprofit professionals. Finally I also asked numerous vendors with years of nonprofit experience at the recent 2011 Bridge Conference.
Everywhere the answer came up as … “Gee, I don’t think I’ve seen anything but if you find it I’d love to know what it is.”
That’s how I came to the conclusion that there’s no definition – most likely based on annual gross receipts – to define nonprofits. In other words, there are no official industry standards or guidelines to determine which organizations could be classified as small, medium, or large nonprofits.
Don’t forget to vote using the poll box above! And please spread the word to get more nonprofit employees and consultants to vote so we can set some guidelines. It will help future research efforts, presentations at conferences, and so much more!
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{ 14 comments… read them below or add one }
Hi Karen,
I don’t know if you looked at groups and associations that serve nonprofits such as Independent Sector, Board Source, and state-wide centers like the NC Center for Nonprofits. They often have a sliding dues structure based on either asset size or staff size (or payroll). I’ve used these ranges to help with the small-medium-large question.
– Barbara
Thanks for weighing in, Barbara. I did consider that approach but felt that defining them by “gross annual receipts” would be more uniform; and perhaps also be a more generic definition (as opposed to “total assets”). And staff size can get into management philosophies (e.g., super lean and outsource, versus staff from within) where a nonprofit with a hefty amount of gross receipts might have a smaller staff than an org with larger staff and less gross receipts.
A voter had this comment:
“I think MICRO should be less than 250K annually (or possibly even less than 100K)
SMALL: $250K – $3mil
MED: $3mil+ ”
Other than that, I think this voter agrees with the classifications. That may be slicing the pie at the small end of the spectrum a bit too fine. What do you think?
I was going to agree with the voter mentioned above, but on reflection, I’m changing my vote to IN FAVOR of your classifications. Keeping it simple makes more sense, especially since these classifications will act as a statistical “sorting” instrument and thus give us material for meaningful industry analysis.
Yours,
Ellen
Ellen,
Glad to hear from you.
Yes, we can get carried away slicing and dicing these classifications. My thoughts were to set a reasonable starting point and go from there. No classification is ever “perfect.” Thanks for your vote of “AGREE.”
I agree with every thing you say except I think the “lowest” level or micro as you are calling it should be capped at $500,000.
There are a lot of small non-profits where the operating budget is 2 or 3 hundred thousand (or less) especially grass root organizations or even some that basically have no operating budget and are completly managed by volunteers with no paid staff.
I have directed agencies or programs with annual budgets of $85 million and I have directed programs/agencies with $350,000 budgets. They are all hard to raise money for and present their own unique challenges. But the difference between a $300,000 agency and a $750,000 is substantial.
After this study is done maybe you could look at the catagories of so called non-profits: to lump foundations, hospitals, universities, schools, etc into one large catagory and call them all non-profits is very confusing. All the studies and data seems to go towards salaries of the large top agencies and a distorted picture is painted nationally that all top non-profit administrators are paid in the hundreds of thousands of dollars…of course their high when you compare hospitals, universities, huge mental healt agencies, etc to local community non-profits. Sounds like another future project. Thanks for doing the survey…keep up the good work.
Hi Cliff,
Appreciate your vote and suggested modifications to the MICRO level (i.e., cap it at $500,000). Good points and again, thanks for sharing your thoughts and reasons why!
Karen, I would move the micro catergory to $500,000 or less. Then adjust the small number to $500,000 up to the next level. There are SO many nonprofits that have a budget of less than $500,000 that I think they need a category all to themselves.
Sandy
Hey Sandy,
Yup. It seems that adjustment to the MICRO classification would pretty well satisfy folks.
MICRO … up to $500,000/yr
SMALL … $500,001 – $10 million/yr
MEDIUM … $10 – $30 million/yr
LARGE … $30 – $100 million/yr
MEGA … greater than $100 million/yr gross annual receipts
Thanks for voting and sharing your insights.
Basically I agree, but would go with $10 – $49.99 million for “medium.” $50 million in revenue seems to be a milestone in the view of many nonprofits.
Karen,
I give you kudos for attempting to take on this issue. There’s so much variance within the sector that establishing parameters for the entire sector may become meaningless to the segments within it. For example, I work with cultural organizations — mostly museums — and I can tell you that the vast majority of them have budgets of less than $250K per year. Furthermore, there’s just a tremendous difference between an organization with a $500K budget and one with a $10M budget — professionalization levels and organizational cultures, including use of volunteers, committees and boards are vastly different. Likewise in the medium and large categories. If anything, I think the categorization needs to be far more nuanced.
Anne,
Your points are well taken. I don’t think we can ever get it perfect. But if we can at least get a lot closer then it will help everyone within the nonprofit sector (nonprofit orgs, consultants, agencies, beneficiaries). We need a starting point for testing and I hope this round of voting will accomplish that much.
When research institutes and large agencies do their research, they can all use the same standards to group respondents. The same challenges exist in the for-profit world. Seldom can we be ideally categorized but close is an improvement over totally random. We can compare apples to apples and draw better conclusions from studies; compare studies; etc.
I believe it will also help with grant guidelines. Let’s take a step forward and get some uniformity. 🙂 Thanks for voting!
I like simplicity, small – medium – large.
The terms micro and mega do not add value to either group.
regards
Errol Anderson
Registrar
New Zealand Trustees Association
Thanks for weighing in, Errol.
There was a logic to selecting the names micro, small, medium, large, and mega. But what we call the categories or classifications isn’t as important as where the breaks fall.
And as you can see from the many comments, the vast majority of professionals in our industry felt three classifications were too limiting; we needed to slice the pie into more pieces. I also didn’t expect to create a system that satisfied everyone – to me that was an impossible goal. But I firmly believe we needed common ground for all of us to stand on.
Hope you still find the final results … or rather, the final classifications useful.
– Karen