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Other (Non-Religious) Non-Profit Organizations Also File Bankruptcy

posted by Pamela Foohey


NumberNRYesterday I posted about the number of religious organizations that filed chapter 11 between 2006 and 2017, and how their filings track fluctuations in consumer bankruptcy filings during those years. Non-religious non-profit organizations also file chapter 11, but in fewer numbers than religious organizations. As shown in this graph, between 2006 and 2017, a mean of 44 other non-profits filed chapter 11 per year (note: I count jointly-administered cases as one case).

 In comparison, a mean of 79 religious organizations filed chapter 11 per year between 2006 and 2017. Over these twelve years, 36% of all chapter 11 cases filed by non-profit organizations were filed by non-religious non-profits.

For a bit of context, according to the National Center for Charitable Statistics, there were about 315,000 congregations operating in America in 2016. This number has remained relatively stable over the last decade. Also according to the National Center for Charitable Statistics, there were about 1.5 million tax-exempt organizations operating in the United States in 2016. This figure includes 501(c)(3) public charities (which include congregations), 501(c)(3) private foundations, and other exempt organizations (such as labor unions and farm bureaus). Removing other exempt organizations and congregations, about 815,000 other non-profits operated in the United States in 2016. Based on these figures, as a percentage of operating organizations, religious organizations filed chapter 11 in far greater (though still very small) percentages than other non-profits. (There surely are logical hypotheses as to why -- to be delved into later.)

In addition, unlike religious organizations' cases, other non-profits' chapter 11 filings track fluctuations in business chapter 11 filings. For instance, over the past few years, chapter 11 filings with predominately business debts have remained steady. Other nonprofits' chapter 11 filings likewise have remained steady, as evident in the below graph (note: business chapter 11 filing data is from the Administrative Office of the United States Courts, Table F-2 ,U.S. Bankruptcy Courts - Business and Nonbusiness Cases Filed, by Chapter of the Bankruptcy Code).

Comparison

Interestingly, similar to how religious organizations' chapter 11 filing track consumer bankruptcy filings, but lagged by a year, other non-profits' chapter 11 filings seem to lag business chapter 11 filings by one year. Other non-profit's filings peaked in 2010, while business chapter 11 filings peaked in 2009. As I have done with religious organizations' chapter 11 cases, I intend to analyze data from other nonprofits' chapter 11 filings to answer questions about these cases' place within the business bankruptcy system and the non-profit sector. In short, stay tuned for more on these cases as well.

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