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Nonprofits Are Growing. What Is It They Do?

Author: Peter R. Orszag, Adjunct Senior Fellow
September 4, 2013
Bloomberg.com

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The U.S. nonprofit sector has survived surprisingly well since the 2008 financial crisis. Even during the depths of the downturn, its revenue rose steadily. Today, nonprofit sales of goods and services to households amount to almost $1 trillion a year -- or more than 5 percent of gross domestic product.

This continues a longer trend. From 2000 to 2010, nonprofit revenue increased by more than 40 percent in inflation-adjusted terms, Amy Blackwood, Katie Roeger and Sarah Pettijohn of the Urban Institute estimate.

Nonprofit employment has increased, too -- by almost 2 percent from 2007 to 2009, according to an analysis by Lester Salamon, S. Wojciech Sokolowski and Stephanie Geller of Johns Hopkins University. In the for-profit sector, in contrast, employment fell by almost 4 percent. As the authors conclude, "nonprofits have been holding the fort for much of the rest of the economy, creating jobs at a time when other components of the economy have been shedding jobs."

One in 10 workers outside government now works for a nonprofit, and that number is projected to keep rising. The 2013 Nonprofit Employment Trends Survey indicated that 44 percent of nonprofits intend to create new positions this year, while just 20 percent intend to freeze hiring, eliminate positions or gradually reduce staff.

What exactly, you may be wondering, does the nonprofit sector do? The best data we have come from the Internal Revenue Service; even though nonprofits don't pay taxes, the large ones are required to file informational returns. These records show that about 60 percent of nonprofit revenue is received by hospitals and other health-care providers. Education accounts for an additional 16 percent.

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