Editor’s note: This is one of those pieces we see as required reading for leaders and board members of nonprofits and philanthropy. It is basic business intelligence that should help inform our work and strategies. The Bureau of Labor Statistics is providing real data on nonprofit organizations here, including employment, wages, and the number of establishments. It even provides a look at how nonprofit jobs are distributed geographically and what proportion of the jobs in particular fields are nonprofit. These new data provide insights into this important segment of the U.S. economy. Nonprofit employment, total annual wages, and the number of establishments grew steadily each year from 2007 through 2012, even during the 2007–09 recession. By contrast, these three measures were much more volatile over the 2007–12 period for the total private sector, with employment declining by 3.0 percent over the period and nominal wages and the number of establishments growing much slower than in the nonprofit sector.
In October 2014, the Bureau of Labor Statistics (BLS) released a new data series on nonprofit organizations covering the period from 2007 through 2012. BLS frequently receives information requests for this segment of the labor force. This new data product offers important insights into this cross section of the economy.
Many different types of organizations receive tax exemptions from the federal government. Section 501(c) of the U.S. Internal Revenue Code (26 U.S. Code) specifies 29 different classifications of nonprofits that are exempt from some federal taxes. These different categories include civic leagues and social welfare organizations (501(c)(4)), chamber of commerce and business leagues (501(c)(6)), and organizations of past and present members of the U.S. Armed Forces (501(c)(19)).
The most common type of nonprofit is section 501(c)(3), with more than 2 out of every 3 nonprofits falling into this category. This classification includes establishments engaged in charitable, educational, literary, animal welfare, child welfare, public safety, religious, or scientific pursuits. The new BLS research data are restricted to this class of nonprofits in the private sector.
Data on the nonprofit sector have many uses. Government agencies estimate nonprofit employment and wages as important inputs in their statistics. The Bureau of Economic Analysis currently uses an estimate of nonprofit data in their gross domestic product (GDP) calculations. The BLS Office of Productivity and Technology also uses nonprofit data when developing its productivity data.
Private sector groups also have a keen interest in nonprofit data. Over the years, researchers from Johns Hopkins University and the Urban Institute have produced numerous studies on section 501(c)(3) nonprofits by using publicly available Internal Revenue Service (IRS) nonprofit data as well as employment and wage data from the BLS Quarterly Census of Employment and Wages (QCEW) program.1 BLS built on and enhanced these approaches in developing this data series.
BLS combined existing QCEW microdata with publicly available IRS records on nonprofit institutions to produce these new research data. Utilizing the existing QCEW data sources avoided any increased respondent burden. The resulting research data measure employment, wages, and the number of establishments for 501(c)(3) nonprofit organizations.
In 2014, the Office of Management and Budget (OMB) released guidelines on using existing administrative data sources across federal government agencies to produce new data products. The “big data” concepts outlined in OMB memorandum M-14-06 encourage the sharing of data among federal agencies while preserving confidentiality and privacy.2
These new research data series on nonprofit organizations or sectors were developed with the use of two existing data sources: the QCEW microdata and the IRS Exempt Organization Business Master File.
The Quarterly Census of Employment and Wages. The QCEW data are the product of a federal–state cooperative program. The data are derived from summaries of monthly employment and total pay of workers covered by state and federal unemployment insurance legislation. The reported unemployment insurance summaries are a result of the administration of state unemployment insurance programs that require most employers to pay quarterly taxes on the basis of the employment and wages of covered workers.
Each quarter, every business with an unemployment insurance-covered employee is required to report monthly employment, quarterly wages, and unemployment insurance contributions to their respective state. State law mandates these data reports. Thus, the QCEW has extremely high coverage rates.
Employment and wage data for workers covered by state unemployment insurance laws are compiled from quarterly contribution reports that employers submit to the State Workforce Agencies. Federal civilian workers are covered by the Unemployment Compensation for Federal Employees (UCFE) program. Employers not only must submit the quarterly contribution reports, but employers who operate multiple establishments within a state also must complete a questionnaire called the “Multiple Worksite Report,” which provides detailed information on the location and industry of each of their establishments. The Multiple Worksite Report is the only detailed report covering individual worksites for multiple-establishment businesses of its kind. Its quarterly inclusion in the QCEW supports its accuracy for all levels of industry and geographical detail. QCEW data are derived from microdata summaries of employer reports of employment and wages that states submit to BLS; in 2012, these reports covered 9.1 million establishments.
Coverage of unemployment insurance and UCFE is broad and has been largely comparable from state to state since 1978, when the 1976 amendments to the Federal Unemployment Tax Act became effective, expanding coverage to include most state and local government employees. In 2012, unemployment insurance and UCFE programs covered workers in 131.7 million jobs. The estimated 126.9 million workers in these jobs (after adjustment for multiple jobholders) represented 95.5 percent of civilian wage and salary employment. Covered workers received $6.491 trillion in pay, representing 93.7 percent of the wage and salary component of personal income and 40.0 percent of the GDP.3
Major exclusions from unemployment insurance coverage include self-employed workers, most agricultural workers on small farms, all members of the U.S. Armed Forces, elected officials in most states, most employees of railroads, some domestic workers, most student workers at schools, and employees of certain small nonprofit organizations.
Internal Revenue Service. Information on nonprofits is publicly available from the IRS. Businesses wishing to obtain recognition of tax-exempt status by the IRS must submit a request to the IRS on Form 1023, Form 1023-EZ, or Form 1024. Information that is collected on these forms includes, but is not limited to, the Employer Identification Number