Organizations founded to serve veterans following the Sept. 11, 2001, terrorist attacks are raising money more quickly than their pre-9/11 counterparts, save at higher rates, and may be poised for greater growth in the near future, a new study from the Center for a New American Security has found.
The fundraising for those organizations and implications for pre-9/11 "legacy" veterans groups, such as the American Legion and the Veterans of Foreign Wars, and the new crop of post-9/11 organizations were the focus of a CNAS report published last week and titled "Changing Tides in the Sea of Goodwill: A Financial Analysis of Veteran-Serving Nonprofits."
The 21-page report described a different type of veteran emerging from the post-9/11 wars that will force veterans organizations to adapt, setting up competition among the groups for funding.
"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 report says. "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."
But that change will not leave a vacuum, the report continues.
"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," it states.
Those changing demographics will pose a particular challenge for the legacy "Big Six" veterans service organizations -- the Legion, VFW, Disabled American Veterans, AMVETS, Paralyzed Veterans of America, and the Vietnam Veterans of America, the report adds.
Post-9/11 "new economy" organizations are generally experiencing faster income growth, faster wealth accumulation, and efficiencies of program delivery.
"These economic patterns for post-9/11 veterans organizations are likely to continue," the report states.
The bottom line, it adds, is that "the evolution of the veteran population has presented new challenges and changing demands for veteran service providers."
Vets Group Compete for Market Share
In 2016, charity donations in the U.S. totaled $390 billion, with the vast majority, $281.9 billion, coming from individual donations. Only about $3.6 billion of that total went for causes -- "a tiny fraction of what goes to universities, museums, hospitals, and houses of worship," the report says.
The competition for that tiny fraction could shift the competitive landscape in favor of the post-9/11 organizations, which "operate differently than legacy organizations and may benefit from market transformations," it says. "Moreover, these post-9/11 organizations have new ways of doing business and are growing at rates" that surpass those of the older organizations.
Among the CNAS report's findings is that over an eight-year period, the largest of the post-9/11 organizations grew at an average rate of 15 percent per year, for 200 percent growth overall for the measured period. The largest post-9/11 groups also saved at rates 2.5 percent higher than their legacy counterparts. However, large pre-9/11 groups still bring in 68 percent of the income generated by all groups in the veterans nonprofit market, the report found.
"Our analysis shows a strong correlation between organization size and the generation of capital surpluses, implying that subscale organizations are competitively disadvantaged," a report summary notes.
This is an important point, as CNAS found there are more than 38,000 non-profits nationwide whose stated purpose is to serve a shrinking veterans community.
And that number could be an undercount. According to the National Association of Veteran-Serving Organizations (NAVSO), there are more than 40,000 veteran non-profits listed as tax-exempt organizations with the Internal Revenue Service.
That number is down from a high of 48,000 veterans non-profits in 2008, possibly due to the consolidation of groups and a drop-off in donations to veterans causes following a surge after the 9/11 terror attacks, said NAVSO Chief Executive Officer Phil Ford. "Our country quickly forgot about 9/11," he said.
Many of the 38,000 non-profits appear to be veterans organizations in name only.
"We limited our analysis to nonprofit organizations reporting at least $1 in revenue, resulting in a dataset of just under 7,000 organizations," the report says.
Emma Moore, one of the three authors of the CNAS report, said the findings should not be seen as suggesting a decline in influence or impact for the pre-9/11 organizations, which "absolutely" perform vital services in claims processing and benefits that other groups tend to ignore.
"It doesn't at all mean the legacy organizations are going to be surpassed," she said, but the report does point to areas where they will have to "rise to the challenge."
The report itself notes that the newer organizations "tend not to deliver social services such as benefits counseling, employment assistance, or crisis intervention at the local level, services that demand pre-9/11 organizations employ more staff and use more real estate."
The CNAS summary of the report also stressed that the findings do not assess the value or "programmatic impact" of any particular veterans organization but rather offer "an initial financial analysis and a framework with which to identify business trends within the veteran-serving nonprofit space."
Older Organizations Stress Role
"We have been adapting for 118 years" to new generations of veterans from World War I through World War II, Korea, Vietnam, Desert Storm, and the nation's current conflicts, said Debra Anderson, the Quartermaster General, or chief financial officer, for the VFW in Kansas City.
"The [CNAS] report provides some interesting comparisons and analysis," she said, but "they admit upfront that it is based purely on numbers from the tax returns, and they have not looked at programs or services."
"We're not just a fundraising organization," Anderson said. She referred to the recent report by the Department of Veterans Affairs showing that VFW service officers helped recover $8.3 billion in VA disability compensation and pension benefits for more than 500,000 veterans in the past year.
John Raughter, who handles media relations for the American Legion, pointed out that the decline of legacy veterans organizations has been predicted -- and greatly exaggerated -- in the past. He referred to a 1971 Wall Street Journal report that stated that the Legion then was desperately "trying to preserve itself" with a new generation of veterans.
The legacy organizations don't necessarily see themselves as being in competition with the post-9/11 groups, said Barry Jesinoski, chief financial officer for Disabled American Veterans.
"Some of them do excellent work, great things," he said, "and it's pretty common for startups to be growing faster than established entities, no matter what they are."
However, "We are not a pre-9/11 organization. DAV is an organization that serves veterans of every era, of all ages," he said. "On claims benefits assistance, we saw 45,000 transitioning service members last year alone. Most of these newer organizations don't, and won't, ever see that many people for any reason in a year's time."
-- Hope Hodge Seck contributed to this report.
-- Richard Sisk can be reached at richard.sisk@military.com.
