Transcript Economic Impact of the Nonprofit Sector – Empirical Work • Framing the economic influences and economic costs • Benefits: Contribution to social welfare •

Economic Impact of the Nonprofit Sector
– Empirical Work
• Framing the economic influences and economic costs
• Benefits: Contribution to social welfare
• Programs may complement or replace those of the government,
saving tax dollars
• If complementary, referred to as “crowding in” (as previously noted)
• If a replacement, saves tax dollars
• Employment – Third Sector is major employer, particularly in
states like Connecticut
• Supports activities (arts) that market may not.
Costs
• Loss in tax revenue (only from portion of public that itemizes)
• Waste of money if charity is one of the “bad apples”
• Creates no material or social value
Literature
• Takes two forms:
• Overall analysis of the nonprofit sector AND geographic analysis
of specific states, etc.
• Examples:
• General: (Grooters, Case Western Reserve)
• In 1996, nearly 11 million workers in nonprofit sector (Salamon)
• 1999, over 1.5 million full-time volunteers
• Could quantify the value of that work
• $1.65 Trillion in total revenue in 2012
• 2012, over 6.5 million nonprofits – accounted for 9.2% of all wages,
5.3% of GDP
• Valuing total economic contribution difficult (part of it is in kind)
• Sector very large
(National Center for Charitable Statistics)
Very difficult to place value on culture returns (arts, humanities,
etc.) that would not be supported in the absence of a nonprofit
sector
• One other method of valuing contribution would be to come
up with a figure that the government would have to spend to
replace the services of nonprofits
Other form of Analysis Regional
• Example:
• State Studies
• “Return on Investment” (study by Johns Hopkins on the impact of
nonprofits on Colorado)
• Key findings:
• Combined paid and unpaid (volunteer) workforce makes the sector the
third largest employer in the state
• 5.6% of the labor force
•
•
•
•
•
$13.1 billion in revenues
Spent $11.9 billion
$240 million in income and sales taxes
>5% of gross state product
Between 1995 and 2005, nonprofit employment grew by 39%
• Other impacts:
•
•
•
•
•
Attracts out-of-state dollars ($900 million/year)
Significant federal funding
Almost 50% of benefits are produced by mid-sized nonprofits
Impact is greatest in human services and education
Economic impacts are spread out over state
Also, can analyze individual nonprofits – As
you will be doing
Economic Effects of Fairfield
• Includes:
• Money spent by students and staff in community
• Large number of employees, who live and work locally
• Employment effects
• Give backs to the community through volunteerism, access to
facilities (library), etc.
• ?
Designing Nonprofits that
“Work”
• Considerations:
• Must be impactful (as laid out above)
• Must utilize contributions in a meaningful and effective way
• Should complement government spending
• Or concentrate on issues government does not address
• Must address needs of all stakeholders
• Donors, government (if grants involved), employees, recipients (if
long-term), benefactors (bequests)
• In some circumstances – others (At Fairfield, alumni also need to be
considered)
Details of Workshop
• Tonight:
• Choose an area (category) of the Third Sector that your group
wants to focus on (e.g. environmental, health)
• Determine a focus for your nonprofit (e.g. preservation of inland
water systems, childhood illnesses in Central America)
• Identify all stakeholders
• Determine how each stakeholder will be involved, and how the
organization will address the needs/wants of those stakeholders
• Assume your organization will eventually apply for government grants
• Determine the mechanism by which funds will be raised
• Address any concerns about efficiency (don’t want to end up on the Donor
Advisory list)
• Particularly if “events” are used to raise money
• How will your organization dispense funds?
• Will it partner with other nonprofits?
Next Steps…………..
• Create a 15-minute promotional presentation aimed at your
fundraising base (foundations, individual donors, corporations,
or all of the above)
• Presentation must include:
• Goals of the nonprofit, methods, efficiency metrics, uniqueness of
what the nonprofit does, links to other nonprofits
• Must address stakeholders’ roles, expectations and how your
organization will address those roles
• Address potential role of government funding
• If you decide to pursue an SME (B corps, Fair Trade
Organization, etc.)
• Must completely detail the mechanism through which the
SME accomplishes its social goal
• +customer base, product, etc.
• Prior slides may help sort out all these issues
Expectation
• Powerpoint presentation with appropriate graphics