Independent Sector

What it reported doing in 2025

Public policy: independent sector works with nonprofits, philanthropies, corporate-giving programs, and lawmakers to shape and advocate for policy solutions and legislation that advance the common good, encourage organizations to become better advocates, and create healthy, equitable communities where everyone thrives.independent sector president and ceo dr. Akilah watkins shared our 2025 tax policy agenda with house and senate budget leaders, urging lawmakers to strengthen the nonprofit sector's financial resources, workforce, civic engagement, and public trust. Throughout the reconciliation process, independent sector tracked provisions affecting nonprofits and partnered with council on foundations, national council of nonprofits, and united philanthropy forum to raise concerns about harmful proposals in the house bill. Together, the organizations led a sign-on letter from more than 2,000 nonprofits in all 50 states urging congress to remove provisions that would harm nonprofits and philanthropy.independent sector also commissioned research on two proposed limits to charitable giving incentives a 35% cap on itemized deductions for high-income taxpayers and a 1% floor on corporate charitable deductions. The analysis found both policies would reduce charitable giving far more than they would generate in federal revenue. While independent sector opposed the final legislation, advocacy efforts helped prevent several damaging provisions from becoming law, including an increase to the private foundation excise tax, the return of the "parking lot tax, and language allowing the treasury department to revoke nonprofit tax-exempt status without adequate transparency or due process.nonprofits contribute significantly to the economy and pay an estimated $75 billion annually in federal payroll taxes, yet they are excluded from many employer tax incentives available to for-profit businesses. In july 2025, independent sector worked with bipartisan congressional leaders to introduce the small nonprofit retirement security act, which would extend retirement-plan tax credits to small nonprofit employers. "nonprofit workers should not have to choose between serving a mission-oriented organization and securing their own retirement," dr. Watkins said. "your legislation would strengthen the nonprofit workforce now and in the years to come."independent sector continued to equip nonprofits with tools, research, and data to strengthen advocacy and organizational effectiveness. In 2025, we expanded our policy trackers covering federal legislation, litigation, and executive actions; supported collaboration through the nonprofit coalition connection; and enhanced our nonprofit state profiles with new data on government grants and workforce financial insecurity. The profiles provide state-by-state data from the IRS, bureau of labor statistics, census bureau, americorps, and independent sector research to help organizations demonstrate the nonprofit sector's impact on communities and the u.s. Economy.

Financial Efficiency

• Mission deployment rate: 77.5%; rating input score 77
• Program expense ratio: 76.8%; rating input score 77
• Fundraising efficiency: $11.43 raised per $1 spent on fundraising; rating input score 37; 37th percentile among comparable filings

Transparency & Controls

• Consistency checks: 93.8%; rating input score 94; 19th percentile among comparable filings
• Pay-setting controls: 5 of 6 controls in place; rating input score 83
  • Compensation committee: Pass
  • Independent consultant: Pass
  • Other Form 990s reviewed: Pass
  • Written employment contract: Missing
  • Compensation survey or study: Pass
  • Board or committee approval: Pass
• Foreign activity oversight: Limited
• Grant itemization coverage: 80%; rating input score 80; 23rd percentile among comparable filings
• Major donor itemization: Yes; rating input score 100
• Related-party transparency: Limited

Accountability

• Independent voting board: 93.3%; rating input score 93; 22nd percentile among comparable filings
• Governance controls: 8 of 9 controls in place; rating input score 89
  • Conflict-of-interest policy: Pass
  • Whistleblower policy: Pass
  • Document-retention policy: Pass
  • CEO compensation review process: Pass
  • Other executive compensation review process: Fail
  • Form 990 shared with the board: Pass
  • Board meeting minutes documented: Pass
  • Audit committee oversight: Pass
  • Independent financial-statement audit: Pass

Sustainability

• Operating margin: 0.4%; rating input score 26; 26th percentile among comparable filings
• Total-asset coverage ratio: 2.01; rating input score 52; 52nd percentile among comparable filings
• Liabilities to assets ratio: 0.35; rating input score 37; 37th percentile among comparable filings
• Officer compensation ratio: 27.8%; rating input score 3; 3rd percentile among comparable filings

Growth

• Program expense growth: 0.6% per year; rating input score 100; 12th percentile among comparable filings
• Revenue growth: -1% per year; rating input score 0; 4th percentile among comparable filings
• Asset growth: -4.1% per year; rating input score 0; 2nd percentile among comparable filings