First-ever State of the Sector addresses progress of nonprofits in Alabama

For the first time ever, the Alabama Association of Nonprofits has published a “State of the Sector” report, highlighting the progress nonprofits have made throughout the past few years. Keep reading for all the details.

The data from the State of the Sector report

Here are some key facts to know about the nonprofit sector in Alabama, according to the report:

• There are 5,578 501(c)(3) organizations in Alabama that filed a Form 990 in 2021, 2022, or 2023 and that reported at least $1 in assets, $1 in income, and less than $10 million in income. Organizations included in this range are what most Alabamians picture as a “typical” nonprofit.
• 44% of Alabama’s nonprofits report no staff which means they are volunteer driven. The median staff size is 1, again showing how many are led by volunteers; the average staff size is 13.
• Approximately 66% of nonprofits reported a net surplus, 3% reported breaking even, and 30% reported a net deficit in 2022.
• Two-thirds of CEOs report more than 15 years of experience in the nonprofit sector. Almost 20% have more than 15 years of CEO experience, and 23% have been in their current positionfor more than 15 years.
• Almost 58% of responding organizations report engaging in advocacy work.
• Respondents represented 17 different sectors of service. The top five sectors—human services, health, education, children and youth services, and arts, culture, and humanities—comprised 61.8% of responses.
• Responding organizations reflect 23 counties, with the largest number located in Jefferson County. Mobile, Montgomery, Madison, and Shelby Counties round out the top five. For comparison, an estimated 26.3% of Alabama 501(c)(3) nonprofits are headquartered in Jefferson County.

Overall, the report suggested the following:

• Alabama nonprofits are a significant economic engine, but not all organizations are financially secure
• 30% of Alabama nonprofits lost money in 2022
• There is potential for improvement in the clarity + timeliness of organizational documents
• There is potential for improvement in the diversity of nonprofit leadership
• There is potential for improvement in nonprofits’ engagement with the broader community, especially political + business leadership
• There is potential for enhanced connection between leaders, between organizations, and between organizations + professional associations

“Alabamians depend on our nonprofit organizations. They help make life better for people across the state. They provide critical services. Something that we learned in the report is maybe not surprising, but Alabama’s nonprofits are small and lean. They are doing very hard work to solve Alabama’s most pressing problems with fewer resources than a business would probably enjoy. An overarching plan after learning about this in the report is to certainly be stronger advocate for the nonprofit organizations across Alabama.”

Danielle Dunbar, Executive Director, Alabama Association of Nonprofits

The inaugural roundtable event

On Thursday, January 11, the Alabama Association of Nonprofits hosted the inaugural roundtable event to take a closer look at the report. Leaders from around the state gathered on a panel to share their thoughts on the data gathered from previous years, as well as what the future holds for Alabama’s nonprofit sector.

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