News Column

Report: Va. Nonprofits Have Fared Well, Face Challenges

Nov. 29, 2012

John Reid Blackwell

Virginia's nonprofit sector continued to add jobs during the recession, but it has seen a slowdown in growth during the post-recession economy and faces other challenges, according to a new report.

About 1 in every 15 employees in the state in 2011 worked for a nonprofit organization. The sector includes a broad range of institutions, such as some hospitals, schools and universities, along with religious institutions, homeless shelters, and some museums and theaters.

As of 2010, Virginia nonprofits generated more than $39.2 billion in revenue and spent more than $37.9 billion, including more than $11.4 billion in wages and compensation, according to the report commissioned by a group of about 15 foundations and nonprofits across the state.

"The nonprofit sector in the state of Virginia is a major economic force," said Lester Salamon, the report's author and director of the Center for Civil Society Studies at Johns Hopkins University in Baltimore.

Salamon made a presentation of his report at Virginia Commonwealth University to dozens of statewide nonprofit leaders, government officials and students Wednesday. The nonprofits providing funding for the report included The Community Foundation, VCU and the Richmond Memorial Health Foundation.

While the nonprofit sector has been highly resilient, "there are some very real threats to this sector that we need to face up to," said Salamon, who prepared the report as a follow-up to a 2008 study that looked at the economic impact of nonprofits in Virginia.

Among those threats is what Salamon termed a "loss of market share" by nonprofits in fields in which they have traditionally provided services, such as education and health care.

Between 2000 and 2011, Virginia's nonprofit workforce grew at an average annual rate of 2 percent, creating 45,792 jobs and outpacing the less than 1 percent annual growth rate of the for-profit workforce during the same period.

However, in fields such as social assistance, nursing care and hospitals, nonprofit employment declined as a percentage of overall employment during the same period, as for-profit employment grew at a faster rate.

One factor in that trend could be that nonprofits have less access to the capital needed for expansions compared with for-profit providers.

Among the report's recommendations is that Virginia needs a "concerted effort to promote the creation of endowed foundations" to provide support for nonprofits.

During the recession, employment in the nonprofit sector fared relatively well, growing by an average annual rate of 2.4 percent in 2008 and 2009, while Virginia's for-profit sector lost nearly 137,500 jobs.

After the recession, however, nonprofit employment stagnated from 2009 to 2010, and it grew only marginally _ about 0.6 percent _ from 2010 to 2011.

Salamon said that suggests it took longer for the recession to hit the state's nonprofits, possibly as federal stimulus dollars that had helped support many organizations during the downturn started to dwindle.

That nonprofit employment held up well during the recession was surprising to Ali Faruk, director of the Center for Housing Leadership at Housing Opportunities Made Equal, a nonprofit that educates and counsels first-time homebuyers.

"Having worked for a nonprofit, the recession was pretty grim," he said. "But it is exciting to see that we (nonprofits) were resilient. When recessions hit, the people that suffer the worst are low- to moderate-income people, and the services we provide are really important."

The report also found some regional disparities in nonprofit spending:

-- Virginia's nonprofits spent $4,725 per capita in 2010, slightly below the U.S. average of $4,856 but significantly higher than the averages in nearby states. That spending was skewed by the relatively high concentration of nonprofits in Northern Virginia, where about a third of the state's nonprofit employees work.

-- The nonprofits engaged nearly 365,200 workers as of the second quarter of 2011, up from the nearly 350,000 workers in the 2008 report. The engaged workforce figure includes 235,113 paid workers and an additional 130,073 full-time equivalent volunteer workers.

Including paid workers only, the nonprofit sector was Virginia's seventh-largest industry. When volunteer workers are included, the nonprofit sector is the third-largest industry in the state, behind only retail trade and professional services.

-- Most of the state's nonprofit economic activity and resources are concentrated in the health field. Despite representing 9 percent of all nonprofit organizations in the state, health organizations, such as hospitals, ambulatory health care services, and nursing and residential care facilities, accounted for half of all Virginia nonprofit jobs and 42 percent of the state's nonprofit expenditures.

Source: (c)2012 Richmond Times-Dispatch (Richmond, Va.) Distributed by MCT Information Services

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