Infographic: What is Driving Nonprofit Sector’s Growth?

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During the recession, while for-profit businesses struggled with decreased revenues causing significant downsizing, high unemployment rates, and record breaking home foreclosures, the nonprofit sector continued its pattern of growth, and actually thrived. According to the recent Urban Institute’s Nonprofit-Government Contracts and Grants: Findings from the 2013 National Survey by Sarah L. Pettijohn and Elizabeth T. Boris, with Carol J. De Vita and Saunji D. Fyffe, one-third of revenue for public charities—501(c)(3) nonprofit organizations—in 2011 came directly from government grants and contracts. While according to the Urban Institute nearly 50 percent of organizations surveyed indicated they experienced a decrease in local, state or federal funds, the majority was able to survive without cutting programs or payroll. In fact, only 14 percent had to reduce their number of clients served when experiencing a cut in government funding.

The nonprofit sector is the third-largest workforce in the United States, behind retail and manufacturing, representing 10 percent of the total workforce in 2010. Public charities, the largest designation, contributed over $800 billion to the 2010 economy, making up 5 percent of the GDP and paying over $320 billion in wages. While the for-profit sector experienced an 8.4 percent decrease in employment and 8 percent decrease in wages, the nonprofit sector increased wages by 6.5 percent and overall employment by 4 percent. With the strong paid workforce, nonprofits also experienced an increase in volunteers and volunteer hours. In 2011, over 15 billion hours were contributed, with nearly 28 percent of U.S. adults supporting nonprofits through the volunteering of their time. More and more people are seeking ways to contribute to society either by changing careers, or through the volunteering with nonprofit organizations.

Education and healthcare are the two largest segments in the nonprofit sector, which explains the continued growth throughout the recession. The implementation of the Affordable Care Act and increasing support for education at all levels helps to explain the sector’s growth. Healthcare is by far the largest employer of nonprofit workers, representing 57 percent, with education second at 15 percent. While there is still some question surrounding how nonprofit hospitals will be affected by the Affordable Care Act’s new surveying requirements, it is still safe to presume that new jobs will continue to be added and administrative professionals will continue to be in high demand as greater focus and funding are placed on healthcare.

While traditionally the nonprofit sector is not top-of-mind when thinking about economic growth, the truth is that it successfully weathers economic downturns and contributes to the economy while providing much-needed services. How different would our world be if there were not dedicated individuals with a passion for helping others? Nonprofit organizations not only provide healthcare and education, but allow us to view great works of art, practice the religion of our choice, support the preservation of wildlife and the environment, help victims of natural disasters, and so much more. With competitive wages and benefits, strong job growth, and diverse opportunities, the nonprofit sector is becoming the sector of choice for many professionals dissatisfied in their for-profit sector careers. A strong background in public administration and a desire to change the world is all that is required to make the leap into one of the most growth oriented sectors in the U.S. economy.

The Rise

Infographic Source: USF’s Online Master of Public Administration

  • Brenda Peluso

    This infographic is interesting, but a little dangerous. For those of us doing policy work for nonprofits, this just adds to the perception many have that the nonprofit sector is too big, threatening to overwhelm the for-profit sector, and not in need of strong governmental support.

    The economic impact of nonprofits is important, but in Maine, where nonprofit employment is at 15%, we are always defending both our tax-exempt status and our need for strong government partnerships that pay the full cost of the services provided. When we emphasize nonprofit economic impact, many say that for-profits create jobs AND pay taxes – what makes nonprofits different? Why shouldn’t they pay taxes too? So while we do talk about the economic impact, we never do it out of context. We never do it with out explaining why we are different from the for-profit sector. We also are careful when we compare the entire nonprofit sector to one for-profit industry as if the nonprofit sector were a monolith – such as 15X more workers than the mining industry. In Maine, the nonprofit workforce is larger than any other single industry, which again is a double-edged sword.

    Additionally, The IRS began purging the rolls of nonprofits who failed to file 990s for 3 consecutive years. I believe that data won’t hit until the 2011 stats are revealed. In Maine, we lost over 1,000 organizations to that purge, so I will be curious to see if the sector is indeed growing now that nonprofits who stop operating will no longer be considered active. Because of this, we do not emphasize that the number of nonprofits is growing.

    I appreciate the desire to advocate for the sector and its important contribution to the economy and our quality of life. I’ve just learned over the years that how people internalize this information is very dependent on their perception of the sector.

  • LaQuilia

    I can vouch for this article. After graduating just before the recession,
    the only job I landed was with a non-profit (NP). The term “landed” is not used loosely,
    I was well qualified and had searched high and low for employment.
    Long story short, I am a non-profit professional today because my career has only consisted
    of jobs in the non-profit sector in…education and healthcare. Yep, Ms. Lambert is correct (numbers can lie however).
    As for the comment from Ms. Peluso, the sector is very large, perhaps too large. However, the services most NPs provide are vital and every job I’ve had impacted a population. Tax exemption is sticky, but there are many corporations
    who do not pay their taxes as well (you can Google it, but it’s at least 12-15%). So, those who cuss the non-paying card
    solely against NPs are not being fair.

  • glenda

    fascinating look at the nonprofit sector in the u.s. – it’d be interesting to see how the picture shifts when the frame is expanded to a global snapshot.

  • Tom Sills

    Interesting article regarding the strength of the nonprofit sector within the U.S. economy. I can better understand why the sector is under pressure to have its taxation status reviewed within the tax code. However, as long as the needs remain unmet by the private sector, and cannot be met by them due to the lack of profit margins, there will always be a need for the services that nonprofit enterprises provide. Monitoring and scrutiny is necessasry to weed out the bad actors but we should not interfere with the legal tax-free status of these institutions until we can come up with a better, or more efficient, delivery model for the services provided by this sector.

  • Little Sank

    This very interesting article states that in contrast to the suffering experienced by the for-profits, non-profits employment and wages both actually increased during the recession. As it is indicated that government sources of revenues generally decreased for non-profits during the great recession, combined with their reportedly increased hiring and wage increases, it seems there certainly may be at least a suggestion that non-profit services may have been the unfortuneate victim of these recession era non-profit wage and emplyee increases.

    Secondly, while 1/3 of non-profit revenue sources may be government grants etc, much of the other 2/3 would seemingly be from both successessful for-profit and non-profit individuals and from for-profit businesses as well as charitable foundations. In very general terms, it may be suggested that those individual givers are largely of the baby-boomer generation as they often have more money, and their sources of income may generally be somewhat more recession-proof than the younger generations. What happens in the not too distant future when the baby-boomers are gone?

  • Bob Fitzwilliam

    Non-profit hospital systems totally skew this non-profit data. They are a totally different category in the world of non-profits. At least do a w/hospitals and w/o hospitals report. I am guessing when you take out the huge hospital sector the non-p.’s won’t seem like such a go-go part of the economy.

  • Andrea Tosi

    Just mind boggling surreal that you all discuss this as this is a sign of progress. The premises of the NGO sector are to help, support, and fill in what the for profit sector and the government are unable or unwilling to do, as protecting special needs, making sure that human rights are respected, children truly not abused, small animals not tortured, all new media voices have a fair chance to be heard, etc , etc. You speak here as a booming market that is good for the economy because it creates jobs that ARE basically for revenue (the salary of the people employed there) PLUS exploit the value of the volunteers who give their time thinking that the sacrifice goes to radically change things, not to boost the industry of NGOs. This to me is a proof that the NGO sector has spoiled the mission of activism and responds to an institutional problem by creating another. So that next to big busines complained by the Left, too big to fail complained by the Right (with plenty of good reasons) we will have a too big NGO sector that tries to fix the wrong with band aids. Just incredible and outrageous that the author presents the issue with a sense of Hoorray! Good for change… (Good for whom? For the 99%?? Gimme a break and THINK.