Funding Flows in the Sea of Goodwill

Background

As the United States completes its second decade at war, the country’s veteran community and veteran-serving nonprofit landscape continues to change in accordance with shifting demographics. The Department of Defense reports a total 1.3 million active-duty service members and 800,000 Reserve forces.¹ Of the 2.1 million serving, approximately 250,000 separate from the military each year, joining the 20 million veterans who live throughout the United States.² However, this population is shrinking dramatically, as previous cohorts from the World War II, Korea, and Vietnam eras pass. It is projected to decline to 13.6 million by 2037.³ The shrinking veteran population is also changing and will require a distinct set of services and support.

Veterans from the All-Volunteer Force era, specifically Gulf War–era veterans, will increasingly come to dominate the landscape in the next few decades. Not only will Gulf War–era veterans be a larger percentage of the veteran population and the first fully-professionalized cohort, these veterans are increasingly diverse both ethnically and racially, more female, and more likely to have been married while serving.⁴ Additionally, a higher percent of post-9/11 veterans file claims for disability compensation than veterans of earlier conflicts, and those who do so cite a larger number of issues.⁵ Veterans are also transitioning back into a society that has seen marked changes in community engagement by comparison with previous generations.⁶ Accordingly, the veteran-serving nonprofit and philanthropy market, which serves a reduced veteran population and has already been impacted by changing veteran demo-graphics, must continue adapting to shifting needs in the space by continually adjusting the services provided.

Organizations providing critical support to veterans have existed throughout much of the history of the United States, often founded in the wake of major conflicts: Veterans of Foreign Wars (VFW) dates its history to 1899 in the aftermath of the Spanish-American War and Philippine Insurrection; The American Legion (1919) and Disabled American Veterans (DAV, 1920) were formed after World War I; Paralyzed Veterans of America (PVA, 1946) and American Veterans (AMVETS, 1944) were founded after World War II; and Vietnam Veterans of America (VVA) was eponymously formed in 1978. The post-9/11 era has been no different, resulting in Iraq and Afghanistan Veterans of America (IAVA, 2004), Wounded Warrior Project (WWP, 2003), and other more modern organizations. However, groups founded pre-9/11 still largely dominate the market financially and influentially. Newer organizations are making their mark, boasting distinct models of community engagement, fundraising, and programming compared with earlier veteran-serving nonprofits.⁷ Veterans themselves are demanding a different collection of services and style of engagement than have previous generations, and newer organizations have carved out roles alongside legacy organizations to serve veterans’ needs and advocate for specific legislative and policy changes.⁸

Legacy and newer organizations both provide vital services and support to this community. The so-called “sea of goodwill” of nonprofits serving veterans has supported this community for decades, supplementing and collaborating with the government and providing services locally across the nation. Responding to the perceived needs of veterans has been a key part of their focus and organizational makeup; having the resources to provide those services is foundational to the mission. Coordination between the public sector, private companies, and nonprofits has resulted in significant progress in addressing veteran unemployment and homelessness, which have both declined dramatically in recent years.⁹

Because of veteran-serving nonprofits’ large constituencies and the government’s reliance on them to fill gaps in service, these organizations have developed immense power, influence, and funding. Historically, the legislative power of congressionally chartered VSOs has made significant strides in supporting veterans.¹⁰ These nonprofits also serve as vocal critics of government programs that are not providing adequate services. Their representatives often testify at congressional hearings, citing concerns that their members, associations, and affiliates have at all levels—local, regional, and national. As a result, these organizations influence the VA’s annual budget decisions, impact legislative action taken by the Senate and House Veteran Affairs Committees, and draw attention to veterans’ issues.¹¹ Far less clear is the tangible impact of services provided by organizations with the loudest voices and the biggest budgets.

While congressionally chartered VSOs have long dominated the veteran philanthropy space by providing services directly to veterans, influencing policy, and operating as grant making institutions, many other organizations also serve veterans. The “Big 6” historically dominant VSOs – The American Legion, AMVETS, DAV, PVA, VFW, and VVA – are known to provide services and award grants. Numerous other large organizations who also provide direct services and fund veteran causes, including newer organizations founded post-9/11 have also quickly become influencers in the veteran nonprofit ecosystem, capitalizing on their social media presence and support from members to push legislative agendas.¹²

As the size of the veteran population shrinks and desired services shift, the nonprofit and philanthropic communities must prepare to carefully prioritize which needs to meet and how to resource programs. Understanding what needs in the veteran space are currently being supported is a crucial step that builds toward the long-term goal of identifying gaps that should be filled and aligning programming to fill them. In the veteran philanthropy market, the largest organizations with the most funding have an outsized impact on the space as well as on the veterans; therefore, trends in these organizations’ funding and services are key to understanding the market as a whole.

Past work has attempted to develop frameworks for comparing the vast number of veteran-serving non-profits. Organizations have developed taxonomies to determine which types of services are provided in the philanthropy ecosystem. Due to the wide variety of programs, classification is critical to evaluating the space. Many nonprofits, for instance, focus on providing direct services pertaining to employment and education, mental health, and housing. In comparison, organizations with nationwide chapters offer benefits assistance and fraternal networks, and set their legislative agenda based on expansive networks. In 2012, the Institute for Veterans and Military Families (IVMF) attempted to map collaborative work by military and veteran-serving organizations and established a blueprint for assessing network and benefit types.¹³ IVMF’s analysis of collaborating organizations found that most organizations focus on education, employment, health, or housing.¹⁴

In assessing veteran-serving philanthropy, 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 their tax filings, and the 2018 follow-on working paper “Changing Tides in the Sea of Goodwill: A Financial Analysis of Veteran-Serving Nonprofits,” which applied a business analysis to identify significant fiscal attributes of the market.¹⁵ CNAS now aims to move beyond financial analysis to identify the services and programs currently provided.

Funding streams are likely to shift as the veteran population shrinks and organizations built on large member bases adapt. How funders prioritize services will have a ripple effect on the community as a whole: as Figure 1 illustrates, the veteran-serving nonprofit market has overlapping funding streams and interaction between large and small groups; as this paper will demonstrate, the largest organizations play an outsized role due to their financial dominance.

This report focuses on capturing trends in funding of chapters, programs, and services by larger organizations At first glance, this is an immense space, totaling 38,000 organizations that serve veterans.¹⁶ However, only 153 have an annual revenue greater than $1 million, and 59 percent of revenue in the market is attributed to six organizations with the largest annual revenue.¹⁷ Previous work by GuideStar, a platform that reports on charitable organizations based on tax data, examined veteran-serving organizations and found that 65 percent are posts or chapters; 18 percent are charitable; and 17 percent fall into other categories of giving.¹⁸

Because of the wide array of veteran-serving organizations, a comprehensive analysis is all but impossible. Therefore, this report prioritizes high revenue organizations to examine a subset of them by expenditure based on the Internal Revenue Service’s (IRS’s) tax form 990 and self-published annual reports, as well as publicly available information from private companies and foundations. The examination of nonprofit operations is an area with few well-marked boundaries and definitions outside of tax reports. This report offers an important first step in a discussion of how veteran-focused philanthropy can identify and classify programs and grants. The following section explains the data and methodology used for the analysis presented in the remainder of the report.