As you stuff your dollars into the red kettle this holiday season, know this: Orange County nonprofits reported a whopping $24.8 billion in income since 2020 — some 10% of O.C.’s gross domestic product, according to data from the Internal Revenue Service and the St. Louis Fed.
And that doesn’t even count the gazillions folks donate to churches and the like, which aren’t reported to Uncle Sam.
Which is to say, charities are an important segment of our local economy. Every city is home to nonprofits that generated millions in income, and several county islands weren’t far behind.
The big gorillas here host nonprofit hospitals (St. Joseph in Irvine, $1.2 billion; Memorial Health Services in Fountain Valley, $2.6 billion; Hoag in Newport Beach, $1.7 billion; Children’s Hospital Orange County in Orange, $1.1 billion; Providence Medical in Anaheim, $1.1 billion), but even little Rossmoor had a couple nonprofits of the religious variety, bringing in hundreds of thousands of dollars.
It stunned us a bit to learn there are more than 9,000 IRS-recognized, tax-exempt nonprofits in Orange County. That means they don’t have to pay taxes on the money they bring in. They’re an eclectic and sometimes strange lot, including quilting and surfing and meditation clubs, fraternities and Christian fiction writers’ groups and labor unions, parent-teacher organizations and poker clubs and addiction treatment centers. (A searchable spreadsheet is at the bottom of this story).
You’ll find Bardeen Partners listed there — the nonprofit land baron subsidiary of the mighty Irvine Ranch Water District. “The mission of the organization is to promote the common good and the general welfare of the residents, property owners and customers … by acquiring real and personal property,” is how officials explain it to the IRS. Bardeen owns two apartment properties and four commercial office buildings.
It can be dizzying to peruse all the nonprofits, and a skeptic’s eyebrow might rise. So be warned: It’s the time of year that charities (and scam artists!) hit you up for donations, so be sure the organization you’re about to contribute to is legit and your donation is actually tax-deductible. You can do that quickly and easily at https://apps.irs.gov/app/eos/ by just typing in the organization’s name.
But more than 8,000 Orange County nonprofits have lost their tax-exempt status over the last dozen or so years because they failed to file financial information with the IRS.
Sometimes they lost tax-exempt status because they ceased operations and are kaput; sometimes because another nonprofit picked up their tasks; sometimes because they didn’t understand that they must file the paperwork annually.
Some that lost nonprofit status this year include the Annual Anaheim Mayor’s Prayer Breakfast Committee (completely separate from the nonprofit Anaheim Chamber of Commerce’s event with much the same name), the Buena Park Sister City Foundation, the Solid Landings Foundation (related to a defunct addiction treatment rehab), Community Support Detox in Newport Beach (also rehab), teacher’s associations, fraternities, and the Kindness and Goodness Foundation in Cypress, which seems especially sad somehow. (You can find a spreadsheet of these organizations at the bottom of this story as well.)
There are ways to have nonprofit status reinstated, and some O. C. organizations on the revoked list could be in process with that. It’s unclear, though, if your donation in the interim would be tax-deductible, so proceed with caution.
Generally speaking, churches and religious organizations don’t want or need IRS status, so you won’t find the Catholic Diocese of Orange County or Saddleback Church on the list. Your donations to recognized religious organizations are tax-deductible anyway.
But you will find many, many smaller ministries with exempt status. It’s a bit perplexing, but when it comes to IRS rules, what isn’t?
“(M)any churches do seek IRS recognition of tax-exempt status because that recognition provides reliance to church leaders, members and contributors that a church is recognized as exempt from taxation and is eligible to receive tax-deductible contributions,” the IRS says. To that end, we find many Buddhist, Islamic, Jewish and Christian organizations on the list.
There are folks who suggest it might not be a bad idea to tax churches. When a little town in Michigan was on the brink of going broke, the mayor pointed out that churches got all the civic benefits – streets, police and fire protection, etc. – without paying a dime, placing a “tremendous burden” on property owners who do pay taxes.
Religious organizations in America are largely exempt from income, sales, property and other taxes – perks worth at least $71 billion a year in the U.S., according to one study. That translates into a break of some $7 billion a year for religious institutions in California, and some $700 million a year for those in Orange County.
We’ll be telling you more about the local charities that used commercial fundraisers who often kept gigantic chunks of what was raised for themselves — as well as about the county’s most and least generous ZIP codes.
O.C. organizations with revoked tax-exempt status
Source: Orange County Register
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