June 6, 2012 | By: Carol Lea Spence

Kentucky’s nonprofits are funded more through fees from program services and contracts than from contributions and grants, as stated in a report recently released by the Kentucky Nonprofit Network, an outreach program of the University of Kentucky College of Agriculture. The report also confirmed that the nonprofit sector is diverse and provides a broad spectrum of vital services to the commonwealth’s citizens.

The report found that contributions, gifts and grants amount to only 12 percent of their revenue, approximately $2.7 billion, compared to about $19.6 billion from fees for program services and contractual partnerships—in most instances contractual relationships with government. This varies from the national average, which is typically a balance of 73 percent in fees and 22 percent in contributions and grants.

“Kentucky nonprofits must become more active in negotiating adequate reimbursement for providing vital services for our communities,” said Danielle Clore, Kentucky Nonprofit Network executive director. “They also need to make their voices heard on public policy issues that impact the financial resources available to fund these vastly important services and programs that improve our quality of life.”

In 2010, there were 13,436 charitable nonprofits in Kentucky registered with the Internal Revenue Service, compared to more than 1.16 million nationwide. These numbers do not include certain religious organizations that are automatically considered tax-exempt and are not required to file an annual tax return.

Nonprofit organizations cover the gamut of services and expertise. The report found that human service organizations make up 38 percent of reporting organizations in Kentucky—by far the largest group. Education is the second largest group at 17 percent, and health care and mental health is the third largest at 14 percent. Organizations that focus on community improvement and societal benefit are 10 percent of the total; arts, culture and the humanities make up 9 percent; religion-related groups and those dedicated to spiritual development make up 7 percent; environment and animal-related businesses are 4 percent and the remaining 1 percent includes science, technology and social science research groups.

Clore said they issued the report to educate the public, policymakers and the nonprofit sector itself.

“Most don't understand how large and diverse the nonprofit sector is and the dollars involved,” she said.

The nonprofit workforce is the country’s third largest, 15 times larger than the mining industry and 10 times larger than the agricultural industry. In Kentucky, one in 10 people are employed in the nonprofit sector.  Expenditures by charitable nonprofits in Kentucky totaled $22.4 billion in 2010, which represents an average increase of nearly 10 percent per year over the past decade.

“Kentucky’s nonprofits have huge economic impact through the value of the services they provide and their direct wages to employees and other expenditures,” said Justin Maxson, president of the Kentucky nonprofit organization Mountain Association for Community Economic Development.

One of MACED’s missions is to invest capital and technical assistance in people and enterprises in 54 Kentucky Appalachian counties. Their goal is to create economic opportunities, protect assets and provide critical services.

“From supporting economic development to restoring our environment to promoting our rich heritage, nonprofits are strategic assets to the state,” Maxson said.

Kentucky Cabinet for Health and Family Services Secretary Audrey Tayse Haynes served as senior vice president for the YMCA of the USA before joining Gov. Steve Beshear’s cabinet in April.

“Kentucky’s nonprofit organizations are important partners in the cabinet’s efforts to improve the lives and health of Kentuckians,” Haynes said. “My life’s work has been in public service and nonprofits, so I know firsthand the important impact nonprofits have as employers, advocates and service providers. The work they do is critical to our communities and to the commonwealth.”

The entire report is available at http://www.kynonprofits.org.

The Kentucky Nonprofit Network is the state association of nonprofit organizations. It serves and strengthens Kentucky’s nonprofit sector through educational opportunities, consulting services, and resources for organizations and their leaders.