Secular and Religious Nonprofits

¶ … United States it is under the federal tax code that the nonprofits organizations are primarily regulated and defined. These organizations are formal and don't have to pay the federal taxes since these are created for providing services to the public as it has been described in the revenue code as well. Profits aren't distributed by these organizations either. With only the religious groups as exception, rest of the nonprofit organizations which generate $5,000 or more in terms of revenue have to get themselves registered with the Internal Revenue Service (IRS).

The organizations which generate revenues of more than $25,000 have to file a yearly Form 990 (or perhaps Form 990PF, which is for private nonprofits). It is important to file this form with the IRS as the basis for majority of the financial data regarding the nonprofit organizations is provided by this Form 990 (Twombly, 2002). Under the section 501(c)(3) of the tax code there are some nonprofit organizations which can apply for the charitable status.

Some of these organizations can be the ones that work to serve the public with regards to religion, science, education, relief of poverty, literacy and other such activities which the public can benefit from. The organizations which are able to achieve the charitable status get the contributions which are tax-deductible. It is this particular group of the nonprofit organizations that is responsible for most of the tax-exempt organizations.

The mutual membership organizations like the recreation clubs, political parties, labor unions and credit unions are exempt from the taxes as well and come under the category of nonprofit organizations (Twombly, 2002). There is a lot of diversity seen in the charitable portion of the nonprofit sector. These organizations differ on the basis of their financial status and means, their missions, structure, origin and size. It becomes very difficult to understand these organizations and form suitable theories regarding them because of the extent of their diversity.

In order to measure the efforts being made by these organizations and the way that they are playing their part in the society a lot of research has been done recently. However, very little information has been achieved with regards to measuring the coalitions, religious organizations and informal groups. Not much information is available on the contributions that have been made directly or indirectly to the society by these nonprofit groups (Grobman, 2008).

In the last few years a lot of attention is being paid to the secular as well as the religious nonprofit organizations. The main reason behind this is the way that they operate themselves and how their main focus is on making the society better for the general public. It is true that majority of the times the main focus of the secular and nonprofit organizations are the typical issues present in our society.

However, the approaches that these organizations take in trying to deal with these problems are often quite different (Grobman, 2008). Even though these organizations have the same goals as the masses and they want to work for the betterment of the society in general. However, when the masses try to calculate or judge the work being done or planned on being done by the organization they find it very difficult to look at them with the same view of the betterment of society in their minds.

It is hard for the people to look at the complete picture rather they mostly focus only on the nonprofit aspect of these organizations. Not much data is available on the aspect that whether there is any clear difference between the secular and religious organizations with regards to the nonprofits. It is the aim of the paper to compare the secular nonprofits with the religious nonprofits (Bridgeland et al., 2009).

Secular and Religious Nonprofits A festering conflict has been generated between the social service and policy arenas because of the increase in the popularity of state and legislation activity to intensify the faith-based involvement.

There are 3 main issues that the ensuing debate is centered on, these issues are (Bridgeland et al., 2009): Having laws regarding the religious organizations being given the public contracts The probable decrease in the responsibility with regards to services by getting into contracts with the religious groups and • The lacking capacity of the religious groups to meet the needs of the poor people in an adequate manner (Bridgeland et al., 2009).

For instance it has been suggested by a few of the critics that the First Amendments establishment clause has been violated in a very obvious manner by the legislative initiatives. While there are also others who believe that the funding by the government are dangerous for the religious institutions with regards to their characters and that the bureaucratization of the religious groups can probably occur due to this.

Many times the critics of the religion-based initiative - while citing the research which explains the small congregations, their limited organizational and administrative capacities - question the capacity and ability of the religious groups to provide the contracted social services like the vocational rehabilitation or job training in an adequate manner to the public.

Also, it has been noted by some of the people who oppose the proposals related to religious nonprofits that the absence of empirical evidence in order to show provision of the social-service by the religious groups has proven to be much more fruitful as compared to the secular groups (Bridgeland et al., 2009).

Even though when it comes to the debate on the involvement of religion in the social services, it is characterized by controversy and assumptions but we must not forget the fact that history is a prove to the fact that in the local communities social services have been provided by the religious groups. Majority of the social service groups in the past were related to the organized religion.

Also, in the last decade a major role was played by the religious providers of the social service in fighting the war against poverty. Historically speaking, the separation of state and church in social service provision in the U.S. has been very permeable even though there were many concerns about it with regards to propaganda.

Majority of these groups have had the government support for a very long time along with the fact that the public priorities with regards to the distribution and extent of human services in the local communities were also set up with their help (Bridgeland et al., 2009). The latest debate in the present policy is regarding the small congregations and grass root level providers of the social services to be given the government support.

It is being expected that if the Charitable Choice is expanded by offering the donors with tax incentives the small religious groups and churches which usually don't have any government funds will be able to compete for the public contracts .This will be because now they will have the funds available to them (Bridgeland et al., 2009).

Although one question which might be asked by some is the extent of benefit that will be given to the local congregations due to the number of proposals being put forth for the increased involvement of the religious groups in the delivery of the services. Rather than focusing on the development of the workforce or services which can help in promoting the attachment of labor market, the services of the congregations are limited mostly to the particular populations like elderly or youth or to the emergency activities (Bridgeland et al., 2009).

Even if the small religious groups are allowed to enter into the contracting systems of the government on the basis of the state and federal policies, still the parties who will benefit the most from the spread of Charitable Choice and tax programs are going to be the established, large religious groups. Presently, there is a shortage of information on the differences and similarities that exist between the secular and religious nonprofit social service providers.

In the rest of this article a comparative analysis of the financial and organizational characteristics of the two kinds of service agencies has been done (Lee and Chang, 2007). Firstly, there are some particular organizational characteristics on the basis of which the large religion-based providers as well as the secular human-service organizations differ. For instance, the religion-based groups are a lot older than the secular providers.

It has been for the last 20 years that approximately three-quarters of the religious providers have been doing this business in comparison to the secular providers from among which three-fifth have been in business for the last 20 years. In contrast to this, the age of 20% of the nonreligious human service groups is actually less than 10 years as compared to approximately 10% of the religion-based providers.

On average it has been 25 years since the secular providers have come into business in comparison to the religious human service groups which have been in business for 38 years (Lee and Chang, 2007). Different sorts of human services are provided by the religion-based groups as compared to the secular nonprofits. Mostly the religious providers focus more on providing their services to the elderly people or participate in the multi-service programs.

In case of the secular groups, their focus is mostly on providing specialized and focused service programs whose focus is mostly on the children and families, skills' building related to labor or job training (Lee and Chang, 2007). As compared to the religious organizations, the secular ones focus 7 times more on the workforce skill development programs. Also, market niches have been developed by the secular providers in housing arena.

On average, there are more than three-quarter of large, secular human service groups whose main focus is on the programs related to housing in comparison to the religious groups from among which only 8% focus on housing. The focus that the secular nonprofits have on the workforce development, job training and housing shows that they are more interested in the contracting regimes of the government (Frumkin, 2005).

Even with the large amounts of variations in the service and age provision of the secular and religious groups they are still very well distributed all over the U.S. This distribution trend might seem very surprising to some considering the huge cultural differences that is present in various regions all over the country. Although, it might be though by some that it must be in the southern regions of U.S.

that most of the larger religious groups might be located in, however, no particular distinctions can be seen in the distribution of the secular and religious groups in the U.S. However, one question that is left unanswered by this phenomenon is if it is in the local social service systems that the church-based groups have been more prominent within the various parts of the country (Frumkin, 2005).

Secondly, in case of the larger social service providers, the religious groups as compared to the secular ones are a lot larger as well as fiscally healthier. In the past there were years when revenues as high as $14.5 million were generated by the religion-based providers as compared to the secular groups who generated $9.7 million. Important differences exist in the size of different kinds of revenues as well.

For instance, on average the religious nonprofits provide 80% more in the program service dollars as compared to the nonreligious human service groups and in case of other revenue the percentage is 56% more than the nonreligious human service groups. In contrast to this, the revenue that is generated by the secular providers with regards to the government contract is 92% more than the revenue that is generated by the religion-based groups (Wang and Graddy, 2008).

In case of other revenue sources and majority of the expenditure patterns there isn't any significant difference between the secular and religious human service groups. Although, a lot more is spent by the religious groups on the administration and management as compared to the secular groups. Recently, approximately $1.8 million were spent by religious nonprofits on management costs while, the average for the secular groups was less than $1 million in case of the administrative expenses.

These findings seem to be a little surprising since the religious organizations even the larger ones rely a lot more on the volunteers as compared to the secular nonprofits in order to offset the costs of the programs (Wang and Graddy, 2008). The major reason behind these differences in the management expenses of the religious and secular groups is because majority of the religious groups are more focused on providing services to the elderly and the management costs for these services are the highest from amongst all the services.

According to one study the money spent by the elder providers on average is about twice more than what is spent by the rest of the nonprofits on the administration. There is allot of difference in the fiscal health of the two kinds of organizations. Following are the three measures that are often used to calculate the fiscal health (Wang and Graddy, 2008): • fund balance • change in the measure of the fund balance • Excess of balance within one year (Wang and Graddy, 2008).

The difference between the total assets and liabilities at the end of one fiscal year is called the fund balance. The limits to which the net assets of a group expanded or declined in one year are revealed by the change in the measure of fund balance. The balance excess that occurs within a year is actually the difference between the total revenues and expenses in that year (Wilhelm et al., 2007).

The religious groups during the same time period on average had fund balances which were 80% larger than those of the secular groups. Although the larger size religious groups might have something to do with these findings as compared to the relatively smaller size of the secular groups. Higher net assets were also maintained by the religious groups during this time as well. The growth of the net assists in case of the larger religious nonprofits was $1.2 million while, the increase was $906,000 in case of the secular groups.

The average differential was also higher between the revenues and expenditure for the religious providers during that time.

One question that comes to mind after reading all these findings is, if "rainy day" funds or carryover accounts are being created by the religious agencies so that they could use them in the coming years in case that the annual government contracting funds become absent or less constant (Wilhelm et al., 2007)? Another significant point here is that although there are a number of revenue sources that the large religious groups as well as the secular nonprofits rely upon but their patterns of expenditure are more or less the same.

It is true that in the ways that the two groups spend their funds there aren't a lot of differences. Approximately four-fifth of the expenses in case of both the groups is related to the costs of the program. The administration and management expenses account for 15% of the total expenses and this includes the benefits and wages as well.

About 2% of the total expenses are used for fundraising activities; however, there is a chance that the religious groups might spend more on the fund raising activities as compared to the secular nonprofits. Both the secular and religious groups might spend less than 1% of the total expenses on paying the organizations affiliated to them (Wilhelm et al., 2007). Review of the similarities and differences between the 2 nonprofits There are strong historical ties that are present between the local communities and religious nonprofits.

These religious groups have connections with the government as well for providing them support for the programs however; these agencies are not as dependent upon the government as the secular nonprofits. On average the larger religious nonprofits.