The nonprofit sector, the state’s fourth-largest industry, was one of the few bright spots of the economy in the last decade, since it added jobs even as most sectors shed them.
Ohio’s nonprofit employment grew at an annual rate of 1.7 percent between 2000 and 2010, while for-profit companies saw their payrolls shrink by the same percentage, according to a study by Johns Hopkins University. Nonprofit wages grew faster than those in business or government.
Nonprofits employ one in 10 Ohio workers, and many U.S. nonprofits expect to increase hiring this year.
But not all fields of the sector have enjoyed growth, and reductions in government support and charitable giving places pressure on many organizations to downsize or eliminate programs.
“Absolutely there are pockets of the nonprofit sector where employment is up, and that lifts the total numbers, but that may not reflect everyone’s experience,” said Mike Parks, president of the Dayton Foundation.
The workforce growth is also tied to increased demand for services, which indicates there are more needy residents in the community. Some researchers said growth in the “subsidized” nonprofit sector is not good for the economy in the long run.
Between 2000 and 2010, nonprofit employment in Ohio increased by 18 percent to 482,500 workers, according to an analysis by the Center for Civil Society Studies at Johns Hopkins. The center analyzed Quarterly Census of Employment and Wages data from the U.S. Bureau of Labor Statistics that is not made public.
In 2010, employment in Ohio’s nonprofit sector trailed only manufacturing (620,000 employees), retail trade (552,000) and local government (525,000), the center said.
Four of the top 10 employers in Ohio are in the nonprofit sector, and the industry features a wide range of fields that include education, health care, civic causes and arts and entertainment.
Nonprofit wages also rose 29 percent between 2000 and 2010, compared to a 23 percent increase in government wages and a 1 percent decrease in business wages, according to The Nonprofit Almanac 2012, which was released in November.
Nonprofits were not immune to the recession, but their payrolls grew, while many industries suffered job losses. Between 2007 and 2010, Ohio nonprofits added 17,900 workers, while the state’s private sector lost more than 385,000 jobs, the center said.
Part of the employment growth among nonprofits was tied to increased government spending, which continued during the recession because of federal stimulus funds, the center said. Billions of stimulus dollars were doled out to programs run by nonprofits that supported the arts, education, health care workforce retraining, youth mentoring, housing stabilization and other causes.
Harsh economic conditions and government cutbacks led to a rising demand for services, and nonprofit groups expanded to meet the increased demand, said Jennifer Eschbach, executive director of the Ohio Association of Nonprofit Organizations.
“Government has provided fewer services, and it is relying more on the nonprofit sector to fill that hole,” she said.
In the last 12 years, the nonprofit YMCA of the Greater Dayton added a handful of locations across the region, and its employment grew to more than 1,200 part-time and full-time employees from just a few hundred, said Amy Cunningham, the agency’s human resources director.
“One of the reasons nonprofits have expanded and continue to grow in employment is because the need has grown,” she said.
The organization has 11 branches and 62,300 members. It employed more than 1,643 part-time and full-time employees in 2011, up from 381 in 2000, according to 990 forms filed with the IRS.
More jobs in health care
Another main contributing factor in the growth is that nonprofit employment is concentrated in service fields that have outperformed other parts of the economy, experts said.
More than half of U.S. nonprofit jobs are in the health care field, and most nonprofit health care employees work in hospitals, health clinics and nursing homes, the center said.
Educational services, such as private schools, colleges and universities, account for 15 percent of the nonprofit workforce, and social assistance makes up 13 percent of workers. This field includes community food services, housing services, vocational rehabilitation and child care.
These fields enjoyed healthy job gains between 2000 and 2010, while for-profit employers — such as construction, manufacturing and transportation — cut workers.
Subsets of the health care sector, such as home health care services, are expected to be among the fastest growing jobs in the nation through 2020, according to the U.S. Bureau of Labor Statistics. Many types of manufacturing work are expected to experience the most rapid declines. A survey by Nonprofit HR Solutions found that 40 percent nonprofits increased their hiring in 2012, and 44 percent plan to add jobs this year.
CareSource, Ohio’s largest Medicaid managed care plan, grew to 1,079 employees in 2010 from just 67 a decade earlier. The Dayton-based nonprofit has since grown to about 1,500 employees, and it plans to add at least 250 workers more this year.
CareSource’s employment growth is directly tied to its expanding customer base, and the organization now serves about 900,000 Ohioans, said Pamela Morris, president and CEO.
“With more people in Ohio losing their jobs, and the higher unemployment rate, there was an increasing number of those individuals seeking health coverage through the Medicaid program,” she said. “Today we view Medicaid as more of a safety net than a way of life.”
Though the nonprofit workforce grew during tough times, industry experts said the growth was uneven and it is unclear what the future holds.
Charitable giving low
Nonprofits rely on income from fees for goods and services, government spending and private donations. But government spending is declining. Charitable giving — which fell in 2009 and 2010, but has grown since — remains below pre-recession levels. And there is increased competition by for-profit employers in many service fields dominated by nonprofits.
“In many cases, nonprofits are getting a double whammy of a drop in public support as well in private,” said Parks, with the Dayton Foundation.
The employment picture for nonprofits is a “mixed bag,” because some subsets have strong outlooks while others face weak prospects.
“There is a lot of pain out in the field, and a lot of the community-based, smaller nonprofits are feeling the pain and they are losing staff, shuttering programs and some are closing their doors,” said Rick Cohen, spokesman for the National Council of Nonprofits, based in Washington, D.C.
Nonprofit work often serves noble humanitarian purposes, but it usually makes a far less important economic contribution than the “real private sector,” which are fields where hiring and growth are overwhelming influenced by market forces, said Alan Tonelson, research fellow with the U.S. Business and Industry Council in Washington, D.C.
Growth and hiring in the “subsidized private sector,” such as social assistance agencies and health care services, will not strengthen the American economy in the long-term, because they often rely on government grants and transfer payments, he said.
“I view employment gains there the same way that I view employment gains in the public sector,” Tonelson said. “From a purely economic standpoint, the creation of government jobs does not genuinely add directly to the economy’s wealth levels.”