Income and outlays of households and of nonprofit institutions serving households.

Mead, Charles Ian ; McCully, Clinton P. ; Reinsdorf, Marshall B. 等

IN the, national income and product accounts (NIPA's), the personal sector comprises households and nonprofit institutions serving households (NPISH's). Since households and NPISH's are likely to differ in their circumstances and behavior, separate estimates of their income and outlays are of interest to many users of the NIPA's. As part of the comprehensive revision of the NIPA's scheduled for late 2003, BEA plans to introduce two new annual tables--one that provides separate estimates of the income and outlays of the household component and of the NPISH component of the personal sector and another that reconciles the new estimates for NPISH's to estimates in the Internal Revenue Service's (IRS) SOI Bulletin. The other NIPA tables will continue to show estimates for the personal sector, which consolidates households and NPISH's. This article provides background information on the new tables and presents some preliminary estimates.

The new estimates will help to distinguish the saving behavior of households and NPISH's in analyses of personal saving. They can also be used to answer questions about the importance of the nonprofit sector in the U.S. economy or in the provision of particular kinds of services, such as health care and recreation. The estimates of transactions between the household sector and the nonprofit institution sector can help to answer questions about the sources of revenue for NPISH's, including charitable giving, and about the NPISH's use of this revenue. Finally, the System of National Accounts 1993, which specifies international guidelines for preparing national accounts, places households and NPISH's in separate sectors. (1) The separate estimates for the household and NPISH sectors will therefore aid in comparisons of the United States with other countries.

Definition of NPISH's

An important criterion for classifying an organization as an NPISH is tax-exempt status, but many kinds of tax-exempt organizations do not qualify for treatment as an NPISH in the NIPA's. Some nonprofit institutions--such as chambers of commerce, trade associations, and homeowners' associations--are considered to serve businesses rather than households. These nonprofit institutions serving business are included in the business sector in the NIPA's. Some other nonprofit institutions that sell goods and services in the same way as for-profit businesses are also classified in the business sector. For example, tax-exempt cooperatives, credit unions, mutual financial institutions, and tax-exempt manufacturers--such as university presses--are treated as businesses.

The nonprofit institutions that are recognized as NPISH's provide services in one of the following five categories:

1. Religious and welfare, including social services, grant-making foundations, political organizations, museums and libraries, and some civic and fraternal organizations;

2. Medical care;

3. Education and research;

4. Recreation, including cultural, athletic, and some civic and fraternal organizations; and

5. Personal business, including labor unions, legal aid, and professional associations.

Almost all public charities are included in the first three categories, but a few are in the last two categories. Table 1 shows the industries in the North American Industrial Classification System (NAICS) that contain NPISH's. NPISH's account for more than half of the output in the following industries: Education; hospitals; social assistance; museums, historical sites, and similar institutions; and religious, grant-making, civic, professional, and similar organizations.

Measurement of output and income of NPISH's

Most of the output of NPISH's is considered to be purchased by persons, and the personal consumption expenditures (PCE) component of gross domestic product (GDP) includes the value of this output. The output of NPISH's is valued at its cost of production, an approach that distinguishes the treatment of NPISH's from the treatment of businesses in the NIPA's. Business output that is sold to customers is valued at the amount that they pay.

For businesses, sales generally exceed operating expenses, which include compensation of employees, purchases of intermediate inputs, indirect business taxes, and consumption of fixed capital (depreciation). For NPISH's, on the other hand, the relationship between sales and expenses is often the reverse: receipts from sales of program services are usually not expected to cover operating expenses. Instead, most nonprofit institutions rely on contributions, government grants, or dividend and interest income to cover at least a portion of their operating expenses. Because revenues from sales of services may be far below the cost of producing the services, sales are not a good measure of the value of NPISH output. However, the expenses that NPISH's incur to produce their output are a meaningful measure of the value of this output. (2)

The treatment of the income that helps NPISH's to fund the gap between their expenses and their sales depends on its source and nature. Transfers that NPISH's receive from households--or make to them--are excluded from personal income because they are intrasector transfers in the consolidated accounts of households and NPISH's. On the other hand, transfers that NPISH's receive from business and government are included in personal income, as is the property income that NPISH's receive as rental income, dividends, and interest. (3)

The primary data sources used for the NIPA's do not provide separate measures of the property income of NPISH's and the property income of households. In the NIPA's, personal income from dividends, interest, and tenants' rents are calculated as residuals on the basis of accounting identities. Personal dividend income is measured as dividends paid by domestic corporations, plus dividends paid by foreign corporations to U.S. residents, less dividends received by domestic corporations from U.S. and foreign businesses and by foreign residents from U.S. businesses, less dividends received by government. Personal interest income is measured as interest paid by domestic business, government, persons, and the rest of the world less interest received by domestic business, government, and the rest of the world. Personal rental income received from tenant-occupied housing is measured by subtracting an estimate of the amount received by business and government from an estimate of total rental income from tenant-occupied structures. (4) Our estimates of the share of personal income attributable to NPISH's must therefore depend on additional sources, such as data from the SOI Bulletin.

Data sources

The primary sources of data used to estimate the expenditures of nonprofit institutions included in PCE are the Census Bureau's quinquennial economic census and annual economic surveys that collect information on the expenses of NPISH's. (5) In addition, a few kinds of NPISH's--such as labor organizations, political organizations, religious organizations, and educational organizations other than technical and trade schools--are not covered in Census Bureau surveys. Estimates of their expenses come from alternative data sources, such as the National Center for Education Statistics, the National Council of Churches, and the Bureau of Labor Statistics. Estimates of transfer payments by households and nonprofit institutions to the rest of the world (which are not part of PCE but are part of personal outlays) are from the international transactions accounts.

Additional data sets that help to complete the new estimates of the NPISH sector and to improve their accuracy have also recently become available. The National Center for Charitable Statistics at the Urban Institute has produced data sets based on the information that tax-exempt institutions file with the IRS. These data sets include information on the type of service that the nonprofit institution performs, which is important for identifying the tax-exempt institutions that belong in the NPISH sector. Further, the American Association of Fundraising Council Trust for Philanthropy produces estimates of transfers and bequests from households to nonprofit institutions based on surveys and tax data. Finally, at least two surveys of charitable contributions to religious organizations have been primarily sponsored by the Lilly Endowment, Inc., and conducted by the Independent Sector--one in 1992 and a second in 1998.

Preliminary estimates of income and outlays

On average, from 1992 to 2001, over 50 percent of the expenditures of nonprofit institutions were for the provision of medical care, about 25 percent were for religious and welfare activities, and almost 15 percent were for the provision of education (chart 1). These shares vary only slightly over the years.

Table 2 provides preliminary estimates of the income and outlays of NPISH's and households from 1992 to 2001. These estimates do not reflect additional data that will be available in the upcoming comprehensive revision of the NIPA's. For comparison, the first panel of table 1 (lines 1-16) reproduces the income and outlays of the personal sector published in NIPA table 2.1. Corresponding items for the household portion of the personal sector appear in the second panel (lines 17-37), and estimates for NPISH's appear in the third panel.

Receipts from sales of program services (line 45) generally cover more than three-fourths of the expenses of nonprofit institutions (line 49), but this ratio declined slightly in 1998-2001. Medical care providers whose fees cover much of their costs are an important reason for the high expense-coverage ratio.

In table 2, the sum of household income (line 17) and the receipts of NPISH's (line 38) is larger than personal income (line 1) because one item in household income--transfers from NPISH's--and two items in the receipts of NPISH's--transfers from households and sales by NPISH's of program services--are removed when households and NPISH's are consolidated into a single sector. (6) The sum of household saving and NPISH saving does, however, equal personal saving. The transfers between households and NPISH's have no effect on the combined saving of these two sectors, because they count both as income and as outlays. The sales to households by NPISH's have no effect on the combined saving of these sectors, because they add the same amount to NPISH saving as they subtract from household saving. (7)

The preliminary estimates in table 2 suggest that households alone are responsible for the decline in personal saving from 1992 to 1998 but that NPISH's play an important role in the decline thereafter. From 1998 to 2001, NPISH saving dropped by more than $15 billion as the gap between the expenses and the sales of nonprofit institutions grew from $125.4 billion to $166.9 billion. (8) The use of capital gains to help fund operations probably played a role in the decline in saving.

A comparison of line 58 to line 1 in table 2 shows that less than 1 percent of personal income is received by NPISH's from business, government, or the rest of the world. However, the income received by NPISH's that is included in personal income is not a meaningful indicator of their importance in the personal sector, because it excludes the large amounts that NPISH's receive from households as transfers or as payments for services. Measured by the operating expenses on line 49, services of NPISH's constitute nearly 10 percent of PCE. In addition, some nonprofit institutions have sales from secondary activities (such as a restaurant operated by a golf club or by a hospital) and sales to business and government. These sales, which generally total less than 1 percent of PCE, are shown in the business sector or in the government sector rather than in the NPISH sector, but they are part of the total output produced within institutions classified as NPISH's. In addition, NPISH's gross transfers to households generally account for 0.3 to 0.4 percent of PCE.

Comparison with IRS estimates

Table 3 compares receipts and expenses of tax-exempt organizations published by the Statistics of Income Division of the IRS in various issues of the SOI Bulletin with BEA's preliminary estimates of the receipts and outlays of NPISH's. (9) Despite the differences in data sources and the estimation of portions of NPISH income as residuals, the unexplained discrepancies between the SOI estimates and the NIPA estimates are relatively small. After adjustment for differences in accounting concepts and in scope of coverage, the unexplained discrepancies between BEA's estimates of NPISH income and comparable figures based on SOI data range from -3 percent to 5 percent of BEA's estimates. For outlays, the unexplained discrepancies range from 3 percent to 9 percent of BEA's estimates.

The top half of table 3 shows a set of adjustments that accounts for conceptual differences between the SOI estimates of the receipts of nonprofit institutions and BEA's estimates. The residual discrepancy that remains after these adjustments (line 14) is attributable to statistical causes, such as differences in samples or in responses provided to the IRS and the Census Bureau. (10) The bottom half of the table shows a similar set of adjustments to the expenditures of nonprofit institutions and the unexplained discrepancy that remains after those adjustments (line 28). The largest downward adjustments to the SOI estimates are for hospitals and schools that are treated as part of government in the NIPA's and for "out-of-scope activity," such as activities of nonprofit institutions serving business, activities treated as businesses, and sales by NPISH's to business or government. The largest upward adjustment to the SOI Bulletin estimates is for omitted religious organizations; it generally raised these estimates by about 4 percent.

Conclusion

The introduction of two new tables that provide information on NPISH's is planned for the 2003 comprehensive revision of the NIPA's. The first table will show expenditures, income, and saving separately for NPISH's and households, which together make up the personal sector in the current NIPA tables. The second table will reconcile BEA's estimates of the expenditures and receipts of NPISH's with IRS statistics on tax-exempt organizations from the SOI Bulletin. The estimates in these tables will update the estimates presented in tables 2 and 3 to incorporate the additional and revised source data that will be used in the comprehensive revision of the NIPA's.

Preliminary estimates for 1992-2001 suggest two distinct phases in the decline in the personal saving rate, which expresses personal saving as a percent of disposable personal income. The decline in the personal saving rate from 8.7 percent in 1992 to 4.7 percent in 1998 was entirely due to the saving behavior of households; saving by NPISH's was stable. In contrast, from 1998 to 2001, declines in saving by NPISH's contributed to the further decline in the personal saving rate to a postwar annual low of 2.3 percent in 2001.

Table 1. NAICS Industries with Nonprofit Activity in Personal
Consumption Expenditures, 1997

1997 Percent of private
NAICS Description industry output that
code comes from NPISH's

 513 Broadcasting and telecommunications 0.4
 514 Information and data processing services 1.9
 541 Professional, scientific and technical
 services 1.9
 611 Education services 83.1
 621 Ambulatory health care services 11.1
 622 Hospitals 85.0
 623 Nursing and residential care facilities 38.0
 624 Social assistance 64.4
 711 Performing arts, spectator sports, and
 related industries 8.8
 712 Museums, historical sites, and similar
 institutions 89.0
 713 Amusement, gambling, and recreation
 industries 11.1
 721 Accommodations 0.5
 813 Religious, grant-making, civic,
 professional, and similar
 organizations (1) 89.9

(1.) Excludes business associations, which are nonprofit institutions
serving business.

NAICS North American Industry Classification System

NPISH Nonprofit institutions serving households

Table 2. Preliminary Estimates of Personal Income and Its
Disposition by Type, 1992-2001

[Billions of dollars]

Line 1992 1993 1994

 1 Personal income 5,390.4 5,610.0 5,888.0
 2 Wage and salary disbursements 2,982.6 3,085.2 3,236.7
 3 Other labor income 449.5 482.8 507.5
 4 Proprietors' income with inven-
 tory valuation and capital
 consumption adjustments 434.3 461.8 476.6
 5 Rental income of persons with
 capital consumption adjustment 63.3 90.9 110.3
 6 Personal dividend income 185.3 203.0 234.7
 7 Personal interest income 750.1 725.5 742.4
 8 Transfer payments to persons 751.7 798.6 833.9
 9 Less: Personal contributions for
 social insurance 226.6 237.8 254.1
 10 Less: Personal tax and nontax
 payments 635.8 674.6 722.6
 11 Equals: Disposable personal income 4,754.6 4,935.3 5,165.4

 12 Less: Personal outlays 4,340.9 4,584.5 4,849.9
 13 Personal consumption
 expenditures 4,209.7 4,454.7 4,716.4
 14 Interest paid by persons 118.7 115.4 117.9
 15 Personal transfer payments to
 the rest of the world (net) 12.5 14.4 15.6
 16 Equals: Personal saving 413.7 350.8 315.5

 17 Household Income 5,364.0 5,579.3 5,851.5
 18 Wage and salary disbursements 2,982.6 3,085.2 3,236.7
 19 Other labor income 449.5 482.8 507.5
 20 Proprietors' income with inven-
 tory valuation and capital
 consumption adjustments 434.3 461.8 476.6
 21 Rental income of households with
 capital consumption adjustment 62.1 89.5 108.8
 22 Household dividend income 175.0 191.5 222.3
 23 Household interest income 729.5 706.0 721.1
 24 Transfer payments to households 757.6 800.3 832.6
 25 From business and government 737.4 782.8 816.7
 26 From nonprofit institutions
 (1) 20.2 17.5 15.9
 27 Less: Household contributions
 for social insurance 226.6 237.8 254.1
 28 Less: Household tax and nontax
 payments 635.6 674.4 722.4
 29 Equals: Disposable household
 income 4,728.4 4,904.9 5,129.1

 30 Less: Household outlays 4,344.1 4,587.5 4,847.7
 31 Household consumption
 expenditures 4,116.8 4,359.8 4,612.5
 32 From business and government 3,803.1 4,023.7 4,262.0
 33 From nonprofit institutions 313.7 336.1 350.5
 34 Interest paid by households 118.7 115.4 117.9
 35 Household transfer payments to
 the rest of the world (net) 10.0 11.4 12.4
 36 Household transfer payments to
 nonprofit institutions (2) 98.7 100.9 104.9
 37 Equals: Household saving 384.3 317.4 281.4

 38 Nonprofit institution current
 receipts 458.7 485.2 507.8
 39 Rental income of nonprofit
 institutions with capital
 consumption adjustment 1.2 1.4 1.5
 40 Nonprofit institution dividend
 income 10.3 11.5 12.4
 41 Nonprofit institution interest
 income 20.6 19.5 21.3
 42 Transfer payments to nonprofit
 institutions 113.0 116.7 122.1
 43 From business and government 14.3 15.8 17.2
 44 From households (2) 98.7 100.9 104.9
 45 Receipts from sales of goods and
 services by nonprofit
 institutions (3) 313.7 336.1 350.5
 46 Less: Nonprofit institution tax
 and nontax payments 0.2 0.2 0.2
 47 Equals: Net current receipts of
 nonprofit institutions 458.5 485.0 507.6

 48 Less: Nonprofit institution
 outlays 429.3 451.5 473.5
 49 Nonprofit institution consump-
 tion expenditures (4) 406.6 431.0 454.4
 50 Medical care 228.6 244.9 255.4
 51 Recreation 13.0 14.1 15.2
 52 Education and religion 57.2 60.6 63.7
 53 Religious and welfare
 activities 95.5 98.9 107.0
 54 Personal business (5) 12.2 12.6 13.0
 55 Nonprofit institution transfer
 payments to the rest of the
 world (net) 2.5 3.0 3.2
 56 Nonprofit institution transfer
 payments to households
 (gross) (1) 20.2 17.5 15.9
 57 Equals: Nonprofit institution
 saving 29.2 33.5 34.1

 Addenda:
 58 Portion of NPISH revenue included
 in personal income (6) 46.4 48.2 52.4
 59 Gap between NPISH's expanses and
 sales 92.9 94.9 103.9
 60 Transfers between nonprofit
 institutions (7) 27.0 25.2 29.7
 61 Personal saving as a percentage of
 disposable personal income 8.7 7.1 6.1
 62 Household saving as a percentage
 of disposable household income 8.1 6.5 5.5
 63 NPISH saving as a percentage of
 disposable income of NPISH's 6.4 6.9 6.7

Line 1995 1996 1997

 1 Personal income 6,200.9 6,547.4 6,937.0
 2 Wage and salary disbursements 3,424.7 3,626.5 3,888.9
 3 Other labor income 497.0 490.0 475.4
 4 Proprietors' income with inven-
 tory valuation and capital
 consumption adjustments 497.7 544.7 581.2
 5 Rental income of persons with
 capital consumption adjustment 117.9 129.7 128.3
 6 Personal dividend income 254.0 297.4 334.9
 7 Personal interest income 792.5 810.6 864.0
 8 Transfer payments to persons 885.9 928.8 962.2
 9 Less: Personal contributions for
 social insurance 268.8 280.4 297.9
 10 Less: Personal tax and nontax
 payments 778.3 869.7 968.8
 11 Equals: Disposable personal income 5,422.6 5,677.7 5,968.2

 12 Less: Personal outlays 5,120.2 5,405.6 5,715.3
 13 Personal consumption
 expenditures 4,969.0 5,237.5 5,529.3
 14 Interest paid by persons 134.7 149.9 164.8
 15 Personal transfer payments to
 the rest of the world (net) 16.5 18.2 21.2
 16 Equals: Personal saving 302.4 272.1 252.9

 17 Household Income 6,161.1 6,505.0 6,892.1
 18 Wage and salary disbursements 3,424.7 3,626.5 3,888.9
 19 Other labor income 497.0 490.0 475.4
 20 Proprietors' income with inven-
 tory valuation and capital
 consumption adjustments 497.7 544.7 581.2
 21 Rental income of households with
 capital consumption adjustment 116.2 127.9 126.3
 22 Household dividend income 239.3 281.2 320.0
 23 Household interest income 768.2 785.3 834.2
 24 Transfer payments to households 886.8 929.8 964.0
 25 From business and government 866.9 909.6 942.8
 26 From nonprofit institutions
 (1) 19.9 20.2 21.2
 27 Less: Household contributions
 for social insurance 268.8 280.4 297.9
 28 Less: Household tax and nontax
 payments 778.1 869.4 968.3
 29 Equals: Disposable household
 income 5,383.0 5,635.6 5,923.8

 30 Less: Household outlays 5,115.3 5,406.5 5,729.3
 31 Household consumption
 expenditures 4,860.7 5,119.8 5,416.3
 32 From business and government 4,494.9 4,739.8 5,012.2
 33 From nonprofit institutions 365.8 380.0 404.1
 34 Interest paid by households 134.7 149.9 164.8
 35 Household transfer payments to
 the rest of the world (net) 13.1 14.3 16.4
 36 Household transfer payments to
 nonprofit institutions (2) 106.7 122.5 131.7
 37 Equals: Household saving 267.7 229.1 194.5

 38 Nonprofit institution current
 receipts 532.3 565.0 602.0
 39 Rental income of nonprofit
 institutions with capital
 consumption adjustment 1.7 1.8 2.0
 40 Nonprofit institution dividend
 income 14.7 16.2 14.9
 41 Nonprofit institution interest
 income 24.3 25.3 29.8
 42 Transfer payments to nonprofit
 institutions 125.7 141.7 151.1
 43 From business and government 19.0 19.2 19.4
 44 From households (2) 106.7 122.5 131.7
 45 Receipts from sales of goods and
 services by nonprofit
 institutions (3) 365.8 380.0 404.1
 46 Less: Nonprofit institution tax
 and nontax payments 0.2 0.3 0.5
 47 Equals: Net current receipts of
 nonprofit institutions 532.1 564.7 601.5

 48 Less: Nonprofit institution
 outlays 497.4 521.8 543.1
 49 Nonprofit institution consump-
 tion expenditures (4) 474.1 497.7 517.1
 50 Medical care 264.8 275.1 287.8
 51 Recreation 16.0 16.2 16.9
 52 Education and religion 67.5 71.3 74.7
 53 Religious and welfare
 activities 112.3 120.9 122.7
 54 Personal business (5) 13.6 14.2 14.9
 55 Nonprofit institution transfer
 payments to the rest of the
 world (net) 3.4 3.9 4.8
 56 Nonprofit institution transfer
 payments to households
 (gross) (1) 19.9 20.2 21.2
 57 Equals: Nonprofit institution
 saving 34.7 42.9 58.4

 Addenda:
 58 Portion of NPISH revenue included
 in personal income (6) 59.7 62.5 66.1
 59 Gap between NPISH's expanses and
 sales 108.3 117.8 113.0
 60 Transfers between nonprofit
 institutions (7) 28.0 31.0 33.1
 61 Personal saving as a percentage of
 disposable personal income 5.6 4.8 4.2
 62 Household saving as a percentage
 of disposable household income 5.0 4.1 3.3
 63 NPISH saving as a percentage of
 disposable income of NPISH's 6.5 7.6 9.7

Line 1998 1999

 1 Personal income 7,426.0 7,786.5
 2 Wage and salary disbursements 4,192.8 4,470.4
 3 Other labor income 490.6 510.2
 4 Proprietors' income with inven-
 tory valuation and capital
 consumption adjustments 623.8 678.4
 5 Rental income of persons with
 capital consumption adjustment 138.6 149.1
 6 Personal dividend income 348.3 328.0
 7 Personal interest income 964.4 969.2
 8 Transfer payments to persons 983.7 1,018.5
 9 Less: Personal contributions for
 social insurance 316.3 337.4
 10 Less: Personal tax and nontax
 payments 1,070.4 1,159.1
 11 Equals: Disposable personal income 6,355.6 6,627.4

 12 Less: Personal outlays 6,054.1 6,453.3
 13 Personal consumption
 expenditures 5,856.0 6,246.5
 14 Interest paid by persons 173.7 179.5
 15 Personal transfer payments to
 the rest of the world (net) 24.3 27.3
 16 Equals: Personal saving 301.5 174.0

 17 Household Income 7,384.8 7,746.6
 18 Wage and salary disbursements 4,192.8 4,470.4
 19 Other labor income 490.6 510.2
 20 Proprietors' income with inven-
 tory valuation and capital
 consumption adjustments 623.8 678.4
 21 Rental income of households with
 capital consumption adjustment 136.5 147.2
 22 Household dividend income 334.2 316.0
 23 Household interest income 936.7 940.5
 24 Transfer payments to households 986.5 1,021.3
 25 From business and government 963.4 996.9
 26 From nonprofit institutions
 (1) 23.1 24.4
 27 Less: Household contributions
 for social insurance 316.3 337.4
 28 Less: Household tax and nontax
 payments 1,069.9 1,158.5
 29 Equals: Disposable household
 income 6,314.9 6,588.1

 30 Less: Household outlays 6,072.0 6,471.6
 31 Household consumption
 expenditures 5,730.6 6,110.6
 32 From business and government 5,306.5 5,666.5
 33 From nonprofit institutions 424.1 444.1
 34 Interest paid by households 173.7 179.5
 35 Household transfer payments to
 the rest of the world (net) 18.1 20.1
 36 Household transfer payments to
 nonprofit institutions (2) 149.6 161.4
 37 Equals: Household saving 242.9 116.5

 38 Nonprofit institution current
 receipts 637.9 669.8
 39 Rental income of nonprofit
 institutions with capital
 consumption adjustment 2.1 1.9
 40 Nonprofit institution dividend
 income 14.1 12.0
 41 Nonprofit institution interest
 income 27.7 28.7
 42 Transfer payments to nonprofit
 institutions 169.9 183.0
 43 From business and government 20.3 21.6
 44 From households (2) 149.6 161.4
 45 Receipts from sales of goods and
 services by nonprofit
 institutions (3) 424.1 444.1
 46 Less: Nonprofit institution tax
 and nontax payments 0.5 0.6
 47 Equals: Net current receipts of
 nonprofit institutions 637.4 669.2

 48 Less: Nonprofit institution
 outlays 578.8 611.6
 49 Nonprofit institution consump-
 tion expenditures (4) 549.5 580.0
 50 Medical care 302.6 318.4
 51 Recreation 17.3 18.3
 52 Education and religion 78.9 84.6
 53 Religious and welfare
 activities 135.0 141.8
 54 Personal business (5) 15.9 16.9
 55 Nonprofit institution transfer
 payments to the rest of the
 world (net) 6.2 7.2
 56 Nonprofit institution transfer
 payments to households
 (gross) (1) 23.1 24.4
 57 Equals: Nonprofit institution
 saving 58.6 57.5

 Addenda:
 58 Portion of NPISH revenue included
 in personal income (6) 64.2 64.2
 59 Gap between NPISH's expanses and
 sales 125.4 135.9
 60 Transfers between nonprofit
 institutions (7) 40.1 43.6
 61 Personal saving as a percentage of
 disposable personal income 4.7 2.6
 62 Household saving as a percentage
 of disposable household income 3.8 1.8
 63 NPISH saving as a percentage of
 disposable income of NPISH's 9.2 8.6

Line 2000 2001

 1 Personal income 8,406.6 8,685.3
 2 Wage and salary disbursements 4,836.3 4,950.6
 3 Other labor income 544.2 570.4
 4 Proprietors' income with inven-
 tory valuation and capital
 consumption adjustments 714.8 727.9
 5 Rental income of persons with
 capital consumption adjustment 146.6 137.9
 6 Personal dividend income 375.7 409.2
 7 Personal interest income 1,077.0 1,091.3
 8 Transfer payments to persons 1,070.3 1,170.4
 9 Less: Personal contributions for
 social insurance 358.4 372.3
 10 Less: Personal tax and nontax
 payments 1,286.4 1,292.1
 11 Equals: Disposable personal income 7,120.2 7,393.2

 12 Less: Personal outlays 6,918.6 7,223.5
 13 Personal consumption
 expenditures 6,683.7 6,987.0
 14 Interest paid by persons 205.4 205.4
 15 Personal transfer payments to
 the rest of the world (net) 29.5 31.1
 16 Equals: Personal saving 201.5 169.7

 17 Household Income 8,370.1 8,647.2
 18 Wage and salary disbursements 4,836.3 4,950.6
 19 Other labor income 544.2 570.4
 20 Proprietors' income with inven-
 tory valuation and capital
 consumption adjustments 714.8 727.9
 21 Rental income of households with
 capital consumption adjustment 144.8 136.2
 22 Household dividend income 365.7 398.3
 23 Household interest income 1,049.5 1,063.4
 24 Transfer payments to households 1,073.2 1,172.6
 25 From business and government 1,046.9 1,144.5
 26 From nonprofit institutions
 (1) 26.3 28.1
 27 Less: Household contributions
 for social insurance 358.4 372.3
 28 Less: Household tax and nontax
 payments 1,285.8 1,291.5
 29 Equals: Disposable household
 income 7,084.3 7,355.7

 30 Less: Household outlays 6,929.9 7,226.8
 31 Household consumption
 expenditures 6,529.5 6,820.1
 32 From business and government 6,061.4 6,321.2
 33 From nonprofit institutions 468.1 498.9
 34 Interest paid by households 205.4 205.4
 35 Household transfer payments to
 the rest of the world (net) 22.2 23.5
 36 Household transfer payments to
 nonprofit institutions (2) 172.7 177.8
 37 Equals: Household saving 154.4 128.9

 38 Nonprofit institution current
 receipts 703.6 743.0
 39 Rental income of nonprofit
 institutions with capital
 consumption adjustment 1.8 1.7
 40 Nonprofit institution dividend
 income 10.0 10.9
 41 Nonprofit institution interest
 income 27.5 27.9
 42 Transfer payments to nonprofit
 institutions 196.1 203.7
 43 From business and government 23.4 25.9
 44 From households (2) 172.7 177.8
 45 Receipts from sales of goods and
 services by nonprofit
 institutions (3) 468.1 498.9
 46 Less: Nonprofit institution tax
 and nontax payments 0.6 0.6
 47 Equals: Net current receipts of
 nonprofit institutions 703.0 742.4

 48 Less: Nonprofit institution
 outlays 655.9 701.5
 49 Nonprofit institution consump-
 tion expenditures (4) 622.3 665.8
 50 Medical care 335.4 362.1
 51 Recreation 19.9 20.7
 52 Education and religion 89.7 95.0
 53 Religious and welfare
 activities 159.2 168.7
 54 Personal business (5) 18.1 19.2
 55 Nonprofit institution transfer
 payments to the rest of the
 world (net) 7.3 7.6
 56 Nonprofit institution transfer
 payments to households
 (gross) (1) 26.3 28.1
 57 Equals: Nonprofit institution
 saving 47.1 40.9

 Addenda:
 58 Portion of NPISH revenue included
 in personal income (6) 62.7 66.3
 59 Gap between NPISH's expanses and
 sales 154.2 166.9
 60 Transfers between nonprofit
 institutions (7) 41.3 38.5
 61 Personal saving as a percentage of
 disposable personal income 2.8 2.3
 62 Household saving as a percentage
 of disposable household income 2.2 1.8
 63 NPISH saving as a percentage of
 disposable income of NPISH's 6.7 5.5

(1.) Includes grants and allocations, specific assistance to

individuals, and benefits paid to members made by nonprofit
institutions, along with grants and allocations made by
private foundations that directly support households.

(2.) Includes individual contributions and bequests from households.

(3.) Excludes unrelated sales, secondary sales, and sales to other
sectors.

(4.) Expenditures are net of unrelated sales, secondary sales, and
sales to other sectors.

(5.) Includes legal services, labor unions, professional
association expenses, and club and fraternal housing.

(6.) Consists of the sum of nonprofit rental income, dividend income,
interest income, transfer payments from business, and transfer
payments from government.

(7.) Includes grants and allocations made by nonprofit institutions
and private foundations that indirectly support households holds
through the support of other nonprofit institutions, along with
their payments to affiliates.

NPISH Nonprofit institutions serving households

Table 3. Preliminary Comparison of Receipts and Expenses of Nonprofit
Institutions Serving Households, 1992-98

[Billions of dollars]

Line 1992 1993 1994 1995

 1 Receipts of nonprofit institu-
 tions recorded by the IRS
 and reported in the SOI
 Bulletin (1) 682.1 728.1 764.5 849.1
 2 Less: Portion of nonprofit
 receipts recorded by the
 IRS not included in
 receipts of NPISH's 265.6 258.0 279.1 324.6
 3 Adjustment for different
 accounting concepts (2) 18.3 22.2 20.1 36.8
 4 Adjustment for different
 accounting periods 8.3 4.3 4.9 1.7
 5 Nonresident institutions 10.8 10.3 12.6 12.6
 6 Government hospitals and
 schools (3) 85.4 82.1 88.6 91.3
 7 Out-of-scope activity (4) 115.8 113.9 123.2 154.2
 8 Transfer payments from other
 nonprofit institutions
 (5) 27.0 25.2 29.7 28.0
 9 Plus: Portion of NPISH
 receipts not included
 in IRS nonprofit receipts 27.5 28.4 31.4 31.6
 10 Religious organizations (3) 25.4 26.1 28.9 28.9
 11 Other organizations 2.1 2.3 2.5 2.7
 12 Equals: IRS-derived nonprofit
 receipts 444.0 498.5 516.8 556.1
 13 BEA-derived nonprofit receipts 458.7 485.2 507.8 532.3
 14 Nonprofit receipts gap -14.7 13.3 9.0 23.8

 15 IRS nonprofit expenditures
 (reported) (1) 633.6 673.6 700.8 764.2
 16 Less: Portion of IRS nonprofit
 expenditures (reported)
 not included in nonprofit
 outlays 222.8 220.3 244.3 268.1
 17 Adjustment for different
 accounting periods 7.3 4.0 4.4 1.6
 18 Nonresident institutions 9.9 10.0 12.2 11.5
 19 Government hospitals and
 schools (3) 64.7 72.4 78.2 83.8
 20 Out-of-scope activity (4) 113.9 108.7 119.8 143.2
 21 Transfer payments from other
 nonprofit institutions
 (5) 27.0 25.2 29.7 28.0
 22 Plus: Portion of nonprofit
 outlays not included in
 IRS nonprofit expenditures
 (reported) 31.2 32.5 35.8 36.7
 23 Adjustment for different
 accounting concepts (6) 3.9 4.0 4.3 4.7
 24 Religious organizations (3) 25.6 26.6 29.5 29.8
 25 Other organizations 1.7 1.9 2.0 2.2
 26 Equals: IRS-derived nonprofit
 outlays 442.0 485.9 492.3 532.8
 27 BEA-derived nonprofit outlays 429.3 451.5 473.5 497.4
 28 Nonprofit outlay gap 12.7 34.3 18.8 35.4

Line 1996 1997 1998

 1 Receipts of nonprofit institu-
 tions recorded by the IRS
 and reported in the SOI
 Bulletin (1) 919.5 987.3 997.1
 2 Less: Portion of nonprofit
 receipts recorded by the
 IRS not included in
 receipts of NPISH's 360.9 410.0 369.4
 3 Adjustment for different
 accounting concepts (2) 60.0 80.8 60.7
 4 Adjustment for different
 accounting periods 10.1 9.8 7.8
 5 Nonresident institutions 11.4 11.4 9.9
 6 Government hospitals and
 schools (3) 89.6 99.4 107.3
 7 Out-of-scope activity (4) 158.8 175.5 143.6
 8 Transfer payments from other
 nonprofit institutions
 (5) 31.0 33.1 40.1
 9 Plus: Portion of NPISH
 receipts not included
 in IRS nonprofit receipts 33.6 32.4 34.3
 10 Religious organizations (3) 30.9 29.5 31.2
 11 Other organizations 2.7 2.9 3.1
 12 Equals: IRS-derived nonprofit
 receipts 592.2 609.7 662.0
 13 BEA-derived nonprofit receipts 565.0 602.0 637.9
 14 Nonprofit receipts gap 27.2 7.7 24.1

 15 IRS nonprofit expenditures
 (reported) (1) 811.3 862.0 882.7
 16 Less: Portion of IRS nonprofit
 expenditures (reported)
 not included in nonprofit
 outlays 282.1 306.2 288.6
 17 Adjustment for different
 accounting periods 6.8 2.8 8.6
 18 Nonresident institutions 10.6 10.6 9.3
 19 Government hospitals and
 schools (3) 79.6 84.4 96.1
 20 Out-of-scope activity (4) 154.1 175.3 134.5
 21 Transfer payments from other
 nonprofit institutions
 (5) 31.0 33.1 40.1
 22 Plus: Portion of nonprofit
 outlays not included in
 IRS nonprofit expenditures
 (reported) 38.9 36.7 38.7
 23 Adjustment for different
 accounting concepts (6) 4.4 3.4 3.2
 24 Religious organizations (3) 32.3 31.0 32.9
 25 Other organizations 2.2 2.3 2.6
 26 Equals: IRS-derived nonprofit
 outlays 568.1 592.5 632.8
 27 BEA-derived nonprofit outlays 521.8 543.1 578.8
 28 Nonprofit outlay gap 46.3 49.4 54.0

(1.) The figure for 1996 includes an adjustment that has been made to
account for the lack of SOI statistics for some classes of tax-exempt
institutions for this year.

(2.) Reflects removal of the gains from the sales of assets.

(3.) Reflects adjustment for partial coverage in one of the data
sources.

(4.) Includes activities of nonprofit institutions serving business,
activities of NPISH's treated as businesses, and
secondary sales to business and government.

(5.) Includes grants and allocations made by nonprofit institutions
and private foundations that indirectly support households through
the support of other nonprofit institutions, along with their
payments to affiliates.

(6.) Reflects addition of capital consumption adjustments.

NPISH Nonprofit institutions serving households

Chart 1. Average Shares of Expenditures of
Nonprofit Institutions Serving Households
by Function, 1992-2001

Medical care (55.4%)
Recreation (3.2%)
Education and religion (14.3%)
Religious and welfare activities (24.2%)
Personal business (2.9%)

Note: Table made from pie chart.

U.S. Bureau of Economic Analysis

The authors are indebted to Helen Stone Tice, an economist whose work while she was at BEA provided much of the conceptual groundwork for the research presented in this paper.

(1.) See Commission of the European Communities, International Monetary Fund, Organisation for Economic Co-operation and Development, United Nations, and the World Bank, System of National Accounts 1993 (Brussels/Luxembourg, New York, Paris, and Washington, DC, 1993).

(2.) See Paula Cullen Young, "Nonprofit Institutions in an Input-Output Framework," Voluntas 4 (February 1993): 465-485.

(3.) Note that capital gains are not part of the income concept that the NIPA's measure. See Maria G. Perozek and Marshall B. Reinsdorf, "Alternative Measures of Personal Saving," SURVEY OF CURRENT BUSINESS 82 (April 2002): 13-24.

(4.) For additional information, see "Updated Summary Methodologies," SURVEY 82 (October 2002): 20-38. See also U.S. Bureau of Economic Analysis, State Personal Income, 1929-97 (Washington, DC U.S. Government Printing Office, May 1999).

(5.) For a description of how these data are used to create the estimates, see U.S. Bureau of Economic Analysis, Personal Consumption Expenditures, Methodology paper no. 6 (Washington, DC: U.S. Government Printing Office, June 1990), and "Updated Summary Methodologies," 20-38. The Census Bureau occasionally uses data from administrative sources, including the IRS, to fill in missing information about NPISH's.

(6.) The household portion of personal income consists of transfers from government or business, wages and salaries, benefits, proprietors' income, rental income, interest, and dividends. Pension plan reserves and life insurance reserves are considered to be owned by persons.

(7.) Sales to business and government by NPISH's are excluded from their receipts and subtracted from their expenses in table 2 because these sales are not included in PCE.

(8.) Under the assumption of no change in investment in tangible assets, table F.100a in the Federal Reserve Board's flow of funds accounts also implies an abrupt drop in saving by nonprofit institutions. It shows that net investment in financial assets less liabilities by nonprofit institutions fell from $48-$86 billion in 1994-96 to less than $10 billion in 1997-99. Unlike the NPISH sector in the NIPA's, the nonprofit sector covered by table F.100a includes nonprofit institutions serving business and excludes religious institutions.

(9.) For related comparisons of adjusted gross income from the SOI Bulletin and personal income from the NIPA's, see Thae S. Park, "Comparison of BEA Estimates of Personal Income and IRS Estimates of Adjusted Gross Income," SURVEY 82 (November 2002): 13-20.

(10.) Some statistical differences may arise from the adjustments for the coverage of hospitals, religious organizations, and schools. Whereas most of adjustment items in table 3 are calculated from SOI microdata, the adjustments for these industries are calculated as the difference between the BEA and the SOI industry estimates.