The State of Philanthropy in the U.S. Economy in Four Charts

April 8, 2016
5 minutes


All nonprofits have one goal as a foundation. Simply put, it is to help those in need. That said, this sector is now at the point that it is providing a valuable service to the U.S. economy. Overall, nonprofits have grown significantly, providing about 10% of all private jobs in the U.S.; that translates to roughly 12 million people.

Overall Employment

In their 2019 Nonprofit Employment Report, the Center For Civil Society Studies at Johns Hopkins breaks down the data from the Bureau of Labor Statistics; specifically, the Census taken quarterly regarding Employment and Wages.

Researchers at the Center identified that at the end of 2016, the nonprofit sector was in third place in total employment, tied alongside American manufacturing. Second was accommodation and food services, with the leaders in job growth being the retail trade.

Employment in nonprofits vs. key industries, 2016


Payroll

When looking at payroll, the nonprofit sector once again, came in third. It had provided just over $638 billion. Manufacturing though, came in as the leader in this category, followed by professional services (doctors, lawyers accountants etc.). This ultimately speaks to the strength of the nonprofit sector as a stable growth network.

Total annual wages paid by nonprofits vs. U.S. industries, 2016

Additionally, this sector appears to continue to have grown year-over-year. The report notes that roughly 80% of all jobs in the nonprofit sector were sourced by three critical areas: healthcare (55%), educational services (14%), and social assistance (12%).

Yet this is complicated as more companies are now offering private services and with their entrance into the sector they are now competing for space. In the past decade, employment growth for nonprofits rose about 16% compared to only 4%, with for-profit organizations offering services that are similar. With respect to for-profit companies, almost all of their growth had occurred over the past five years. Prior to this, the sector was in decline for the past decade. The chart below shows how over 2007 to 2016, for-profit job growth rates exceeded nonprofits by a small margin

Employment growth rate, nonprofit vs. for-profit, 2007-2012, 2012-2016, 2007-2016

According to the Center, this shift might be happening with companies reaching out and receiving investments rather than relying solely on grants. This leverages companies to move quickly related as needs for certain services change. 

Fact is, many agencies' programs rely on tax disbursements or vouchers. To any service provider, these are considered fair game. 

Because the overall population is aging and there seems to be drug abuse issues unrelated to this going on simultaneously, these two issues alone show that the needs of social services are expanding beyond and into the larger parts of the community.

That means that treatment facilities, mobilized staff, new hospitals, nursing homes, and social service operations will need to grow. This is all producing a marked demand for field services. For-profits are quite good at capturing these areas. This, of course, may not be as good for employees. When you review field upon field specifically at average wage levels, it is clear that nonprofit organizations will pay more than for-profit companies. In fact, nonprofits have paid 55% more on average on a weekly basis than amongst the social assistance groups. The Center reported that it was followed by 45% more for education and about 24% for outpatient healthcare. Additionally, they noted that Hospital workers actually gained 14%.

Nonprofit vs. for-profit average weekly wages, selected fields, 2016


There may be a good reason for these figures. For-profits may be employing part-time workers only at sub-par or lower wages and, by doing so, will avoid benefits payments. They might be requiring fewer qualifications for the same positions as well, and by doing so, they will pay less for seemingly less skilled work. There is consensus to believe that it would ultimately affect the quality of care. There is always a risk when for-profits provide services to dependent populations who are not in it for the long haul. They will eventually reduce hours and staff significantly or turn and run when the economy declines. Nonprofits, on the other hand, will stay and remain committed to riding out the storm, making use of donations, benefactors, volunteers, and other charitable contributions.

Stay in the nonprofit loop.

Get weekly updates on tips, trends, and best practices to help power your nonprofit. #nonprofitz4lyfe

Oops! Something went wrong while submitting the form.