Understanding the Vital Role of Very Small Nonprofits

Understanding the Vital Role of Very Small Nonprofits

Most people associate nonprofit organizations with large, well-funded institutions, yet, according to an article by Candid, the majority of US 501(c)(3) organizations are very small nonprofits operating on less than $50,000 annually, below the median US household income.

These organizations, often community-based and volunteer-driven, are easy to overlook due to their limited visibility and minimal reporting requirements. Unlike larger nonprofits that file detailed IRS Forms 990 or 990-EZ, very small nonprofits submit only a basic Form 990-N, offering little data for funders, researchers, and policymakers. A fact sheet from Candid sheds light on this underexamined group, revealing who they are, what they do, and why they matter.

Nearly 60% of all US nonprofits fall into the “very small” category. These organizations tend to be newer, with over half receiving tax-exempt status within the last 15 years. Despite their small size, they span every major subsector, including human services, education, the arts, and environmental work. 

They often play deeply local roles, boosting student programs, running youth sports leagues, and supporting community well-being. Notably, very small nonprofits also show more racial and gender diversity in both leadership and board composition than their larger peers.

However, their contributions are not matched by financial support. While they make up the majority of the nonprofit landscape, very small nonprofits receive a mere 0.4% of foundation funding. 

For nonprofit association executives, this data underscores how these organizations are foundational to community infrastructure and deserve greater visibility, support, and inclusion in sector-wide strategies.