Introduction and Executive Summary
As the United States enters its 18th year of war since 9/11, the shape of the country’s veteran community is rapidly transforming. The total number of American veterans is shrinking as the large, conscription-driven cohorts of World War II, Korea, Vietnam, and the Cold War fade away.1 At the same time, today’s smaller, volunteer-driven military is creating a new veteran cohort: one that has a different demographic profile and service experience than previous generations and that will increasingly dominate the veteran landscape.
These demographic shifts have already caused changes within the veterans nonprofit community. A new crop of veterans nonprofits emerged in the years after 9/11, and they control a growing share of the nonprofit market. These newer organizations are offering discrete services and seeking distinctive forms of engagement with the post-9/11 veteran cohort.2 Collaborative infrastructure has emerged to knit together these veterans organizations, health care organizations, employers, and others supporting or serving veterans.3 Moreover, these post-9/11 organizations have new ways of doing business and are growing at rates substantially faster than the overall market.
This report builds on the 2015 Center for a New American Security (CNAS) report “Charting the Sea of Goodwill,” which examined the landscape of veterans nonprofits through the lens of tax filings by those nonprofits.4 By applying a business analysis to individual and aggregated data regarding these tax filings, this paper identifies key attributes of the current veterans nonprofit market, showing long-term trends that exist for veteran-serving nonprofit organizations with respect to their size, wealth, and capabilities. Based on tax analysis, this report finds sharp divergence in the business characteristics of pre-9/11 and post-9/11 veterans nonprofits, including the following:
- While the overall veterans nonprofit market has only seen income growth of about 2.1 percent per year over the measured eight years, large post-9/11 organizations grew in excess of 15 percent per year – resulting in total growth over 200 percent.
- Large post-9/11 veterans organizations are achieving this growth at the expense of revenue diversification, with 87 percent of all revenues derived from contributions alone. This compares with 46 percent of revenues derived from contributions for large pre-9/11 organizations.
- Large pre-9/11 organizations still represent 68 percent of the total income generated in the veterans nonprofit market. Additionally, five of the six largest organizations by income fall into the pre-9/11 category. Total assets and net worth are even more skewed toward the pre-9/11 cohort, which controls 75 percent of the cumulative wealth of the community.
- While the pre-9/11 cohort controls most of the wealth, post-9/11 organizations save at a rate almost 2.5 times greater than pre-9/11 organizations. Our analysis shows a strong correlation between organization size and the generation of capital surpluses, implying that subscale organizations are competitively disadvantaged.
- Measured by the ratio of program expenses to total spending listed on tax forms, post-9/11 veterans organizations also demonstrate greater efficiency than their pre-9/11 counterparts.
- We observe numerous differences in these cohorts, which we hypothesize influence differences in business models and the disparity of metrics outlined above. The differences include demographics, engagement models, fundraising capabilities, membership models, governance, and size.
The differences in the cohorts outlined above, combined with divergent population trends for pre-and post-9/11 veteran cohorts, may shift the competitive landscape. Post-9/11 organizations operate differently than legacy organizations and may benefit from market transformations. As the size and influence of veteran cohorts shifts, veteran-serving nonprofits will need to respond to changing needs, which may have social, political, and economic impact as well as the potential for increased competition and conflict in the market. Leaders throughout the veteran community – including organizational leaders, government leaders, philanthropic donors, and corporate sponsors – must consider how organizations meet and adapt to shifts in the marketplace and changing demographics to ensure continued high-quality support to veterans from pre- and post-9/11 organizations alike. This report, which does not assess programmatic impact, offers an initial financial analysis and a framework with which to identify business trends within the veteran-serving nonprofit space.
The full working paper is available online.
- “Veteran Population,” U.S. Department of Veterans Affairs, August 2017, https://www.va.gov/vetdata/veteran_population.asp. ↩
- Matt Alderton, “Today’s veterans groups are not your granddad’s VFW,” USA Today, November 11, 2015, https://www.usatoday.com/story/news/nation/2015/11/11/new-generation-of-veterans-organizations/75516156/ ↩
- For more information on the changing needs of the veteran community, please see previous CNAS reports: Phillip Carter and Katherine Kidder, “A Continuum of Collaboration” (Center for a New American Security, April 2017), https://www.cnas.org/publications/reports/a-continuum-of-collaboration; and Phillip Carter, Katherine Kidder, Amy Schafer and Andrew Swick, “Onward and Upward” (Center for a New American Security, November 2016), https://www.cnas.org/publications/reports/onward-and-upward. ↩
- Katherine Kidder and Phillip Carter, “Charting the Sea of Goodwill” (Center for a New American Security, December 9, 2015), https://www.cnas.org/publications/reports/charting-the-sea-of-goodwill. ↩