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Nonprofit Growth Outpaces For-Profits 50:1

March 20, 2014 Posted by Arthur Rieman in Economic growth, Jobs, News

The Nonprofit AlmanacThose of us who work in the nonprofit sector sometimes point out that nonprofits employ 10% of the of American workers. But did you know that the growth in nonprofits during the last decade exceeded that of for profits by a ratio of 50:1?

According to the Urban Institute, between 2001 and 2011, the number of nonprofits in the U.S. increased 25 percent, whereas during the same period the number of new for profit businesses increased just ½ percent. Altogether, nonprofits account for 5.4 percent of U.S. G.D.P.

Nonprofits are also adding jobs. According to consulting firm Nonprofit HR’s annual Nonprofit Employment Practices Survey, 46% of nonprofits plan to add employees in 2014. Only 7% plan to cut their ranks. Why the growth in nonprofit jobs. “Nonprofits are hiring because there is a significant demand for their services, and the recognize that they must grow and develop their staff” to meet this demand, write Nonprofit HR’s President and CEO Lisa Morton Brown.

Why has nonprofit growth so exceeded that of for profits? Anna Bernasek, writing in the New York Times, suggests that “one reason is . . . the greater demand for health care services” driven by the aging of our population. Many health care organizations are nonprofits, including the nation’s largest, Kaiser Permanente Foundation. “Another factor,” according to Bernasek,  “is that charities focused on the needs of poorer Americans have experienced higher demand after the Great Recession.” A third factor is the growth in donor-advised fund organizations.

Charitable organizations make up the largest portion of nonprofits. Others include the now-notorious 501(c)(4)s, professional sports leagues, country clubs, PACs and labor unions, among others.