May 2, 2012; Source: Oregon Business
A new study of Oregon’s nonprofit sector by the Nonprofit Association of Oregon and Portland State University, with funding from three prominent Oregon-based foundations, has captured headlines in the business press for its documentation of the sector’s economic impact. The Portland Business Journal notes that nonprofits, which account for 13 percent of Oregon’s private sector payroll and eight percent of its gross domestic product, rival the state’s manufacturing sector “for sheer impact on Oregon’s economy.” Oregon Business Editor-in-Chief Robin Doussard notes, “I think everyone greatly appreciates the work that nonprofits do. But rarely do I encounter a business group or summit that brings in the nonprofit sector as a constant, equal partner to discuss the economy of the state.”
Economic impact is only part of the story, however. The landmark study, based on financial data (primarily for the year 2010) from the Oregon Department of Justice’s database of public charities, as well as a February 2012 detailed survey representing over 600 nonprofit respondents, also suggests that the state’s nonprofits have weathered the worst of the long recession and are showing signs of resilience.
Sign up for our free newsletter
Subscribe to the NPQ newsletter to have our top stories delivered directly to your inbox.
In 2009, aggregate revenue and expenses for Oregon’s 10,000+ public charities was roughly equal. In 2010, program expenses rose by $1 billion (or roughly 7.7 percent), while revenue was flat. According to the February survey, nonprofit employment stabilized in 2011 and 60 percent of the responding nonprofits reported increased fundraising in 2011 as compared to the prior year. This doesn’t mean that nonprofits are getting a breather in terms of meeting demand for their services, however: 65 percent of respondents reported increased demand for services in 2011, and 51 percent had to turn away clients.
The Oregon study provides strong evidence that the nonprofit sector’s economic contributions are significant, and its health affects overall prospects for the state’s economic recovery. Furthermore, because of the people it serves (the study reports that 78 percent of Oregon’s public charity nonprofits serve low income populations), the sector’s health also affects the lives of the state’s most vulnerable people and communities. Finally, with 83 percent of its revenue coming from sources other than government, nonprofits are leveraging a tremendous amount of private capital for community betterment.
The recession has taken a toll on the sector’s underlying financial strength, however. In particular, cash flow is dangerously tight. One in four small/medium sized Oregon nonprofits report having less than one month of cash reserves to cover operating expenses. Over half (57 percent) of the state’s nonprofits have less than three months of unrestricted cash reserves, a condition that is significantly worse than the national average of 46-48 percent. This should be a matter of grave concern for policymakers who depend on the sector for jobs and critical services. How does the Oregon story compare with your experience? –Kathi Jaworski