High Impact: Nonprofits’ Effects on the Economic Sector

By Peter Gamache, Ph.D. & Jackie Sue Griffin, MBA, MS, Turnaround Life, Inc.

Few would dispute that nonprofits play a vital role in building healthy communities, but they may not fully understand the nonprofit sector’s crucial contributions to our healthy economy.

Data from the National Council of Nonprofits and Urban Institute’s National Center for Charitable Statistics shows that public sector charities had $1.51 trillion in revenue, $2 trillion in expenses and $2.71 trillion in assets. The economic impact of the U.S. nonprofit sector is greater than most countries and speaks to how well-managed this sector is.

This report by Johns Hopkins Nonprofit Economic Data Project also highlights the economic impact of the nonprofit sector in terms of employment and manufacturing; the nonprofit sector is the major employer and a major industry at both the city and state level.

Nonprofits improve local, state and national economies in many ways, such as the following:

  • The nonprofit sector employs 3 million people, and their payrolls exceed those of most other U.S. industries, including transportation, construction and finance.
  • Nonprofits also provide work opportunities for millions of people, aside from the millions they employ directly. For example, they provide care for children or older adults and allow family members to work who would otherwise have to stay home.
  • Nonprofits have an even more significant effect by creating jobs and economic activity for the whole community. For example, when going to a play at a nonprofit theater, you don’t just support the cast, crew and administrative staff; you also give a boost to local businesses by paying for parking or going to dinner before the show.
  • Nonprofits attract other employers. For example, brochures for local chambers of commerce often mention local nonprofits as one of the main reasons for businesses to locate there.
  • Nonprofits spend almost $1 trillion annually for goods and services that create more jobs from big expenses, like medical equipment for hospitals, to smaller purchases, including food, utilities and office supplies.

What This Research Means For You

Impact Drives Donations. While communicating your nonprofit’s vision, story and case for support, make it even more results-oriented and data-driven by quantifying your organization’s impact on your local economy.

Donations Allow Your Nonprofit to Invest in Infrastructure. Donors value a well-run nonprofit organization, and a strong infrastructure is an important factor of success. With the help of knowledge and numbers about how your nonprofit is making a difference, you can also attract investments in your business. Talk about return on investment when vying to attract funding for various capacity-building components like branding, staff positions and technology enhancements.

Here at Turnaround Life, Inc., we aim to help organizations and programs that make it possible for people to turn their lives around. For more information about us, visit our website.

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