About Michigan's Nonprofit
Giving and Volunteering
for the Common Good
[APRIL 1, 2002] Michigan's nonprofit sector involves
a wide range of services and activities that make a significant
difference in the quality of life in the state. The sector commonly
is recognized for its public spirit, service to others, altruism,
and ideals. Nonprofit action can occur unobtrusively, among individuals,
or very publicly and visibly through the work of statewide, national,
or international organizations that meet complex health, education,
or cultural needs. This chapter examines the scale and scope of
nonprofit action in Michigan, with emphasis on the contribution
it makes to daily life, and the significance of giving and volunteering
Nonprofits operate under the Internal Revenue Service
(IRS) definitions that classify tax-exempt organizations under section
501(c) of the Internal Revenue Code. A group deemed tax-exempt may
operate for a purpose outlined in one of the 27 section 501(c) categories
(see Exhibit 1). A group also may choose
to incorporate as a nonprofit in Michigan by submitting a formal
document of organization, such as articles of incorporation and
bylaws, to the Michigan Department of Consumer and Industry Services.
Any group that holds assets in Michigan or solicits funds in the
state must register with the Charitable Trust Section of the state
attorney general's office.
An organization recognized as nonprofit under 501(c)
is exempt from federal income tax. Depending on state and local
laws, these nonprofits also may be exempt from sales, use, income,
and property taxes. The largest percentage of the sector is comprised
of 501(c)(3) nonprofits, which must operate for charitable, religious,
scientific, literary, or educational purposes. Also referred to
as charities, these organizations may benefit from national,
state, and/or local tax deductions/credits that provide an incentive
for people to engage in charitable giving: federal income-tax deductions
for donations and, in Michigan, an income-tax credit for gifts to
certain types of charities.
The legal and tax definitions tend to capture only
the largest and most active nonprofit organizations, but Michigan's
nonprofit sector far exceeds the officially recognized organizations.
There are thousands of local and informal groups undertaking nonprofit
action that neither have nor need legal recognition. Any formal
analysis of the sector relies on valid data, which can be gathered
only for formally organized organizations, and this means that much
of the nonprofit sectorthe informal componentis statistically
invisible. Nevertheless, there are some data that provide insight
into the scale, structure, and character of the Michigan nonprofit
sector as a whole.
Range and Location of Nonprofits
Michigan nonprofit organizations provide a wide range
of services; most may be grouped into six major categories.
- Arts and amusement nonprofits include radio
and television broadcasting, dance education, orchestras, amusement
services, museums, and art galleries.
- Recreation nonprofits include camps and
- Health nonprofits include medical instruments
producers, doctors and other health practitioners, nursing and
personal-care facilities, hospitals, medical laboratories, and
home health care services; health nonprofits employ more people
than any other component of the state's nonprofit sector.
- Education nonprofits include elementary
and secondary schools, colleges and universities, libraries, and
- Social services nonprofits include individual
and family services, job training, child daycare services, and
residential-care programs; social service nonprofits are the second
largest employer in Michigan's nonprofit sector.
- Membership nonprofits include business associations;
professional, labor, civic, and social organizations; and religious
The number and activity level of nonprofits varies
from place to place. Where one lives determines the type and range
of services that are available. Southeastern Michigan and major
metropolitan areas host the full range of nonprofit services, while
less populous and more remote areas have more a limited range.
AN ECONOMIC FORCE
Nonprofit organizations, through employment and spending,
are important to the Michigan economy. At the state level, an economic-benefits
study of the nonprofit sector (Public Sector Consultants, 1999)
- the assets of Michigan nonprofits exceed $60 billion;
- the nonprofit community spends about $28 billion
annually, of which nearly all (95 percent) remains in the state;
- the sector directly provides about 380,000 jobs
for Michiganians and nearly $10 billion in personal income annually
(only durable manufacturing, services, government, and the retail-trade
sectors provide more Michigan jobs).
The National Center for Charitable Statistics (Washington)
finds that in 1999 there were 23,640 registered 501(c)(3) organizations
in Michigan, but only 7,498 meet the financial threshold that requires
that they regularly report to the IRS. (The wide difference in the
numbers illustrates the absence of common definitions for and data
collection on the nonprofit sector.) The counties having the most
reporting nonprofits are Wayne (1,254 organizations), Oakland (1,081),
Kent (653), Ingham (436), Washtenaw (415), Kalamazoo (282), Genesee
(256), and Macomb (233).
Nonprofit finances derive from many sourcesfor
example, service fees, grants, and donations from the public, corporations,
and foundations. Donated resources often allow nonprofits to reduce
the cost of their services, permitting more people at all income
levels to benefit. Details about household giving in Michigan are
available from public opinion surveys, most recently, Giving
and Volunteering 2001, which was commissioned by ConnectMichigan
Alliance, the Council of Michigan Foundations, Michigan Association
of United Ways, Michigan Community Service Commission, and the Michigan
Nonprofit Association and conducted in October and November 2001.
- Almost 90 percent of Michigan adults made a charitable
contribution during the 12 months preceding the survey.
- Men and women are equally likely to make a charitable
- Giving rates are similar across all major religions.
- Giving is strong across all age groups, with the
6064 group having the highest rate (96 percent).
- Giving tends to increase with income, but there
also is high participation among people in the lowest income groups:
Of people with annual household income under $10,000, 78 percent
reported making a charitable contribution during the year preceding
the survey, and of those with annual household income of $10,00019,999,
the figure is 74 percent.
- Most survey respondents (64 percent) say that in
2002 they plan to give about the same amount they gave in 2002,
27 percent plan to give more, and 10 percent believe they will
- Government financial support (e.g., contracting
for services with faith-based organizations) is supported by 59
percent of Michigan residents.
- Of the respondents who are Internet users, 25 percent
said they have gone on line to learn more about a charitable organization,
and 6 percent have made a charitable donation on line.
MICHIGAN'S COMMITMENT TO VOLUNTEERISM
Michigan has a long history and strong commitment
to volunteerism and frequently is cited as one of the leading states
in the nation in this regard. This proud distinction reflects Michiganians'
high degree of collaboration and innovation in their approach to
volunteer service. The distinction is no accidentit grew from
many years of effort and innovation and a willingness to put aside
the partisan political agenda to serve the common good.
Although the greatest strides in volunteerism have
come in the last decade, the foundation of the modern volunteer
movement was laid more than 30 years ago when George W. Romney was
elected governor. He lived the concept of citizen service and championed
its cause throughout Michigan and the nation. Governor Romney saw
volunteering as vital and necessary to community problem solving
and considered it to be the responsibility of every individual.
Few who met him failed to be moved by his passion for service or
challenged by his conviction. Among his permanent contributions
to the field of service are establishment of the Volunteer National
Center (1970) and the Points of Light Foundation (1990). He also
receives credit for conceiving and kindling the Presidents' Summit
for America's Future (1997). Although the summit occurred after
Governor Romney died, it is testament to his legacy that the event
marked the first time in U.S. history that all the living presidents
joined forces to address a volunteer issue.
Today Michigan has an extensive network of public
and private organizations that support volunteer service, and these
are supplemented by the work of national, regional, and local affiliates.
To name but a few, statewide organizations include the ConnectMichigan
Alliance, Council of Michigan Foundations (CMF), Michigan Association
of United Ways, Michigan Campus Compact, Michigan Community Service
Commission, Michigan League for Human Services, Michigan Nonprofit
Association (MNA), and Volunteer Centers of Michigan. Although each
serves a particular constituency (with some small overlap), all
work closely at the state level to coordinate their efforts and
foster community collaboration. As other state networks and organizations
evolve to promote volunteerism, they inevitably become part of this
growing circle of support.
Voluntary action is popular in Michigan, but its nature
is difficult to formally capture. Many volunteer activities are
so central to daily lifesuch as helping in a schoolthat
they are seen not as volunteering but as routine. Whether a given
activity is seen as volunteering is a matter of personal
interpretation, and such designation varies by culture, religious
affiliation, and socioeconomic group. Volunteering also is affected
by a number of societal phenomena, including single-parent families,
dual-income households, family and corporate volunteer programs,
national service, and changing lifestyles.
Sometimes there is confusion about the difference
between volunteerism (something one does because s/he wishes
to) and community service (something one does because it
is mandated, usually by a school or court). Often, however, the
terms are used interchangeably, and there certainly are no boundaries
restricting what may be considered volunteering. The
tasks one may volunteer to do are unlimited, ranging from raking
a local park to helping organizations raise funds to advocating
for a cause to serving on a community organization's board. Moreover,
people become involved in volunteerism in any number of ways: at
their own initiative, as part of an elective group (e.g., family,
youth organization, service club), or as part of a prescribed group
(e.g., classroom, workplace). However people come to volunteer,
their efforts generally fall into one of three categories: service
learning, service corps, or mandatory/compulsory service.
- Service learning is tied to an education
curriculum or has a specific education component. Not only is
a service rendered for the greater good, but the volunteer gains
from the personal development that comes from helping others.
- A service corps is a team of volunteers
organized to perform service over an extended period. Full-time
corps members may receive living allowances and/or education awards;
examples are AmeriCorps, AmeriCorps*VISTA, National Civilian Community
Corps, and the Peace Corps. Programs involving a shorter commitment,
such as the Youth Volunteer Corps, may offer no financial support.
- Mandatory or compulsory service is carried
out when an authoritative body, such as a school or court, requires
such service as a way to earn credit or discharge an obligation.
Volunteering is a popular way to make a difference
in one's community. It is promoted through such large-scale national
events as Make A Difference Day (annually, in October) and National
Volunteer Week (annually, in April) and through such individual
organization and local efforts as Day of Caring, Alternative Spring
Break, and Nickelodeon's Big Help Day. As the nonprofit sector takes
on new and expanded functions, the role of volunteers is likely
to increase. In addition, welfare reform and other initiatives are
drawing volunteers from nontraditional sectors, and this will increase
the frequency of volunteering. All indicators point to volunteerism
continuing to have a strong presence in Michigan, with volunteers
becoming more active, vocal, and selective (that is, they look for
opportunities through which they may help to meet real community
needs) in their efforts.
A number of surveys have been conducted to ascertain
the extent of volunteerism in Michigan and gain information about
the people who do it. The 2001 survey on giving and volunteering
in Michigan reveals the scale of volunteering in the state.
- Fifty percent of the adult Michigan population
volunteered during 12 months prior to the survey, with men and
women volunteering at the same rate.
- The age groups most likely to volunteer are 4049
years (55 percent volunteer), 1824 years (54 percent) and
5059 years (54 percent); the age group least likely to volunteer
is 2529 years (41 percent).
- Volunteering occurs most in the northern lower
peninsula (57 percent of residents) and least in the southwest
- Among survey respondents who are Internet users,
19 percent have searched on line for volunteering information
- Almost two-thirds of volunteers seek out volunteer
work on their own.
- Common ways of learning about volunteer opportunities
include friends and family (55 percent) and advertising (29 percent).
- Almost 15 percent of volunteers use a referral
organization, such as a volunteer center, to locate their volunteer
- The most common reasons for volunteering are to
give back to the community (96 percent of volunteers) and to express
compassion for those in need (98 percent).
- There is a strong association between volunteering
and giving: 96 percent of volunteers also make charitable donations.
The nonprofit sector is heavily influenced by local,
state and federal public policy. Government affects the daily activities
of charities through regulation, contracting, tax breaks, incentives
for charitable giving, in-kind donations, and more. This interdependence
is most evident in four categories.
- Regulation As mentioned
earlier, the federal and state government regulates charities'
finances and operations, ensuring accountability through IRS Form
990, and state requirements for financial and operation reports,
lobbying registration, and solicitation licenses.
- Client Government
often contracts with nonprofits to provide training, housing,
food, medical care, and much more to state and local residents.
- Funding Public funding
is important to nonprofits; contributions from government currently
comprise 32 percent of nonprofit support.
- Partnership To solve
today's most pressing social needs, government, nonprofits, and
also the business sector must work together. As partners, these
sectors can provide the legal, financial, and "people power"
necessary to keep a civil society running.
Today and throughout history, charities have acted
as a voice for sustaining their own work and as a voice for those
who do not have onechildren, the elderly, the sick, and so
on. The Michigan Nonprofit Association represents the interests
of nonprofits across the state in enhancing the relationships listed
above. The public policy priorities of the MNA and its members are
federal, state, and local government actions that will serve to
- encourage tax incentives for charitable giving
to Michigan nonprofit organizations;
- permit nonprofits to continue to communicate and
interact with elected or appointed officials;
- continue funding for national service programs;
- maintain and extend sales, use, and property tax
- increase volunteerism;
- eliminate fraudulent nonprofit fundraising; and
- monitor government activity that regulates the
activities of nonprofits.
A foundation is a nongovernment, nonprofit
organization established to aid social, education, charitable, religious,
or other activities serving the common welfare, primarily through
making grants. Foundation funds and programs are managed by the
foundation's trustees or directors.
There are over 50,000 grant-making foundations in
the United States; 1,980 are located in Michigan.
- Michigan foundations have total assets of $22 billion
and in their last reporting year made annual grants totaling $1.2
- Over a third of Michigan foundations have assets
- The great bulk of the assets held and grants awarded
in Michigan are by the 720 foundations that have assets exceeding
Foundations are characterized both by flexibility
and diversity in their giving. Requests to foundations vastly exceed
their funding capability, obliging trustees to define specific programmatic
and geographic areas to which funding will be directed. Exhibit
2 presents the findings of a recent sample of the annual giving
of 46 of Michigan's nearly 2,000 foundations: a total of $787 million
during 2000. Because the sample is based on only one year's grants,
the figures may not accurately represent the continuing pattern
of giving by Michigan foundations, but they do give an idea of the
foundations' major areas of interest.
Council of Michigan
The Council of Michigan Foundations is a membership
association of more than 490 private, family, community, and corporate
foundations and giving programs. The CMF's mission is to improve,
increase, and enhance philanthropy in Michigan. For more than 30
years, the organization has offered one-on-one, on-site consultation
to individuals, families, corporations, and communities interested
in establishing a foundation and setting up grant programs. The
council's publication, Establishing a Charitable Foundation in
Michigan, explains the laws and regulations pertaining to foundations
and presents the advantages of each type of foundation.
People desiring information about a specific foundation
or corporate-giving program may communicate directly with the foundation
or corporation or visit a Michigan Foundation Center cooperating
collection library. Foundations and corporate-giving programs will
be pleased to send an annual report or an informational statement
if one is available. In addition, the CMF, in association with the
Foundation Center (New York), publishes The Michigan Foundation
The Michigan Foundation Center Cooperating Collections
are an excellent resource for grant seekers. The Foundation Center
gathers information on philanthropy nationwide and disseminates
it through its publications and through cooperating libraries. The
library reference collections are available to the public without
charge and offer a wide range of materials, including books and
periodicals about foundations and philanthropy as well as foundation
annual reports, newsletters, and press clippings. The 11 Michigan
libraries listed at the end of this chapter have Michigan Foundation
Center reference collections.
Types of Foundations
There are different types of foundations. Although
they have different structures and intent, all serve the common
interest. The leading forms of foundation organization are private,
community, and corporate.
A private foundation (also may be called an independent
foundation) is a fund or endowment so designated by law that
has grant making as its primary function. Such foundations' assets
most commonly are derived from a gift by an individual or family.
Many function under the voluntary direction of family members and
are known as family foundations. Others, which may bear a
family name, have an independent board of trustees and are managed
by professional staff.
Typically, private/independent foundations have a
broad charter but in practice limit their giving to a few fields
of interest, although they may move into new fields in response
to changing priorities. Depending on their range of giving, they
also may be known as general purpose or special purpose
foundations. Some private foundations are operating foundations,
which means their primary purpose is to operate research, social
welfare, or other programs determined by their governing body. Such
foundations may make some external grants, but the number generally
is small relative to the funds directed into the foundation's own
In the United States, of the 50 largest private foundations
having assets of over $1 billion, four originated in Michigan, including
the nation's third largest, the Ford Foundation, now headquartered
in New York.
Community foundations receive and administer endowment
and other funds received from private sources; funds are managed
under community control and directed to charitable purposes that
focus primarily on local needs. Community foundations are characterized
by multiple funding sources, and their expenditures benefit a specified
Internal Revenue Service regulations (1) require a
community foundation's governing body to represent broad community
interests and (2) classify the foundations not as private foundations
but as public charities, the same category into which it
places churches, schools and colleges, hospitals, and certain other
Community foundations are growing in importance not
only as professional grant-making organizations but as a flexible
means to administer many kinds of charitable funds for local benefit.
Michigan is fortunate to have 65 community foundations
and 34 affiliate funds (subfunds established by community foundations
to serve specific locales within their service areas), and in total
they cover all 83 counties. For a listing of the community foundations
and their service areas, see the CMF Web site,
www.cmif.org. This statewide coverage is due largely
to a major challenge grant from the W.K. Kellogg Foundation to give
every state resident access to benefits and services of a community
foundation. The same challenge grant resulted in the endowment of
86 community foundation youth funds statewide; these funds are directed
toward the needs of youth and are overseen by youth advisory committees,
annually involving more than 1,500 high schoolers as grant makers.
The statewide growth of community foundations and
the involvement of youth as grant makers has led the state, through
the Michigan Community Service Commission, to contract with the
CMF to distribute a portion of the interest earned on Michigan's
share of the national tobacco settlement. These funds go to community
foundations, based on the population of youth and seniors in their
service areas, to be used for Healthy Youth and Healthy Seniors
programs. To date, the 65 community foundations have received more
than $20 million, and 50 percent of the funds have been permanently
endowed. The governor's proposed FY 200203 budget recommends
an allocation of $4 million to continue this unique partnership.
The state provides a tax credit to individuals and
businesses that make a gift to an endowment held by a community
foundation. Michigan is one of only three states to offer this incentive
to charitable giving, which rewards thousands of state taxpayers
annually for helping to build the nonprofit endowment funds held
by their local or regional community foundation. The maximum tax
credit allowed is
- $100 for individuals,
- $200 for families, or
- $5,000 or 10 percent of single business tax liability,
whichever is less.
A company-sponsored or corporate foundation is classified
as a private foundation under the tax law and derives its funds
from a for-profit company or corporation. It is independently constituted,
and its purpose is to make grants, often on a broad basis. Company
officials as well as people not affiliated with the company may
serve on the board. It is not uncommon for a company-sponsored foundation
to assume responsibility for the parent company's giving in locales
where offices, production or service facilities, or distribution
outlets are located. Such a foundation makes it possible for a company
to set aside funds for use in years when company earnings may be
lower than normal, which may coincide with a general economic downturn
that generates a greater-than-usual need for charitable spending.
Company-sponsored foundations are different from corporate-giving
programs, which are administered within a corporation and may make
grants for limited purposes closely associated with the corporation's
interests, although this is not always the case. In some instances,
the two types of giving are coordinated by a company under one general
policy; in others, there may be a private foundation that bears
a name associated with the corporation but has few if any ties with
the original source of its funds.
In Michigan there are 29 company-sponsored foundations
that have assets exceeding $1 million. The largest, in terms of
annual grant making, is the Ford Motor Company Fund (nearly $1 million).
The CMF first partnered with the state in the late
1980s, on the distribution of Exxon settlement funds. In addition
to the tobacco-settlement partnership mentioned above, the CMF also
works with the Michigan Department of Community Health through the
Michigan AIDS Fund, a collaborative response by foundations and
corporate givers to prevent the spread of HIV/AIDS and help those
affected. The CMF also assists the Michigan State Housing Development
Authority in partnering with 20 community foundations to help create
permanent endowments to support homelessness emergency programs.
The most recent collaboration, the Michigan IDA Partnership,
is with the Family Independence Agency. This five-year, public-private
effort matches the contributions that up to 2,000 low-income working
families make to their individual development account (IDA), a savings
account that they may use toward buying a home, obtaining advanced
education, or starting a small business. In 51 program sites, participating
families complete financial-literacy training as they save up to
$1,000, which will be matched, to put into their IDA.
The nonprofit sector is an important vehicle in delivering
services that people and communities see as important to themselves
and others. Michigan's nonprofit sector is a vital force in meeting
the social, spiritual, and service needs of the community, but the
sector is more than just a collection of organizations. Nonprofit
action takes many forms, from simple acts of kindness to informal
networks and associations to the formal world of nonprofit organizations.
The continuing growth of the sector is testimony to its dynamism
in the face of changing economic, social, and political conditions.
Nonprofit Sector Research Fund
One Dupont Circle, N.W.
Washington, DC 20036
BoardSource (National Center for Nonprofit Boards)
1828 L Street, N.W., Suite 900
Washington, DC 20036
Center on Nonprofits and Philanthropy
The Urban Institute
2100 M Street, N.W.
Washington, DC 20037
Charity Lobbying in the Public Interest
2040 S Street, N.W.
Washington, DC 20009
1200 18th Street, N.W., Suite 200
Washington, DC 20036
National Center for Charitable Statistics
The Urban Institute
2100 M Street, N.W.
Washington, DC 20037
National Council for Nonprofit Associations
1030 15th Street, N.W.
Washington, DC 20005
1048 Pierpont, Suite 3
Lansing, MI 48911
(517) 492-2444 FAX
Council of Michigan Foundations
One South Harbor Avenue, Suite 3
Grand Haven, Michigan 49417
(616) 842-1760 FAX
Michigan League for Human Services
1115 South Pennsylvania Avenue, Suite 202
Lansing, MI 48912
(517) 371-4546 FAX
Michigan Nonprofit Association
1048 Pierpont, Suite 3
Lansing, MI 48911
(888) 242-7075 (Michigan only)
(517) 492-2410 FAX
Michigan Association of United Ways
1627 Lake Lansing Road, Suite B
Lansing, MI 48912
(517) 371-1801 FAX
Association of Volunteer Administrators
P.O. Box 32092
Richmond, VA 23294
Corporation for National and Community Service
1201 New York Avenue, N.W.
Washington, DC 20525
Michigan Campus Compact
1048 Pierpont, Suite 3
Lansing, MI 48911
(517) 492-2444 FAX
Michigan Community Service Commission
1048 Pierpont, Suite 4
Lansing, MI 48913
(517) 373-4977 FAX
Points of Light Foundation
1400 Street, N.W., Suite 800
Washington, DC 20005
Volunteer Centers of Michigan
1048 Pierpont, Suite 3
Lansing, MI 48911
(517) 492-2444 FAX
Alpena County Library
Reference Room, 2d Floor
211 North First Avenue
Alpena, MI 49707 (989) 356-6188
Farmington Community Library
32737 West 12 Mile Road
Farmington Hills, MI 48334
Grand Rapids Public Library
1100 Hynes Avenue, S.W., Suite B
Grand Rapids, MI 49507
Henry Ford Centennial Library
Adult Services, 2d Floor
16301 Michigan Avenue
Dearborn, MI 48126
Michigan State University Library
Social Science and Humanities Reference
Michigan State University
East Lansing, MI 48824
Michigan Technological University
J. Robert Van Pelt Library
1400 Townsend Drive
Houghton, MI 49931
Northwestern Michigan College
Mark & Helen Osterlin Library
1701 East Front Street
Traverse City, MI 49684
University of MichiganAnn Arbor
209 Hatcher Graduate Library
Ann Arbor, MI 48109
University of MichiganFlint
Frances Wilson Thompson Library
303 East Kearsley Street
Flint, MI 48502
Wayne State University
5265 Cass Avenue
Detroit, MI 48202
Funding Resource Center
7 West Van Buren Street
Battle Creek, MI 49017
By Mark Wilson, MSU Institute for Public Policy and Social Research;
Rob Collier and Jeri Fischer, Council of Michigan Foundations; and
Robin Lynn Schultheiss and Erin Skene, Michigan Nonprofit Association
CONTENT CURRENT AS OF APRIL 1,
© 2002 Public
Sector Consultants, Inc.
Sponsored by the Michigan Nonprofit Association and the Council
of Michigan Foundations