A Misleading View of Employment Trends

To the Editor:

The Chronicle’s article, “Hiring Stalls at Nonprofit Groups, Study Finds” (September 2) based on a report produced by OMB Watch, unfortunately provides a rather misleading view of recent trends in nonprofit employment.

Despite a title suggesting coverage of the entire nonprofit sector, the Chronicle article, like the report on which it is based, really covers only a part of this sector, and a fairly small part at that. This is important because the central conclusion of the report does not seem to apply to the major part of the sector the report purports to portray.

OMB Watch’s report, “Recent Trends in Nonprofit Employment and Earnings: 1990-2004,” is really a report on recent trends among American membership groups. Not only are these just one small subset of all nonprofit organizations classified under Section 501(c)(3) of the Internal Revenue Code, but a sizable proportion of them are not even charities.

Bureau of Labor Statistics data we have been able to examine through our Nonprofit Employment Data Project show, for example, that the membership organizations examined in the OMB Watch report account for less than 5 percent of all nonprofit 501(c)(3) organization employment nationwide. The report thus leaves out the vast majority of nonprofit workers — those working in the schools, clinics, hospitals, social-service agencies, day-care centers, nursing homes, theaters, orchestras, soup kitchens, shelters, and dozens of other types of groups that account for 95 percent of the charitable sector’s employment.

Worse yet, the report assumes that all of the employees working in membership organizations are working in charities. Not so. Only a portion of the establishments classified as “membership organizations” by the Bureau of Labor Statistics are 501(c)(3) charities. The rest are for-profit businesses or business and professional associations and unions. In fact, our data show that only 40 percent of all employment at membership organizations falls within the nonprofit philanthropic or charitable sector as Chronicle readers understand those terms.

These are not just academic quibbles: They fundamentally affect the story being portrayed. When the full picture of nonprofit employment is considered, and the noncharitable portion of the membership-organization industry excluded, what emerges is a picture of robust nonprofit job growth right through the recent recession. What is more, this record contrasts sharply with that of the for-profit sector, which not only failed to grow but actually suffered significant declines. Between 2000 and 2003, in fact, the nonprofit sector was the only net source of employment growth in many parts of our country.

Without doubt, it is important to understand employment trends among membership organizations in our country. But let’s not confuse this industry with the nonprofit sector as a whole. Despite continued, enormous strains, the nonprofit sector remains one of the surprising bright spots on the nation’s employment landscape, and there is little evidence that employment at nonprofit charitable organizations as a whole has stalled.

Lester M. Salamon
Director
Johns Hopkins Nonprofit Employment Data Project
The Johns Hopkins University
Baltimore

To the Editor:

At last, a study that hints at what’s really been going on in the nonprofit world for the past five years.

Since the late 1990s, I have been frustrated to read the results of research demonstrating that funding is going up, nonprofits are growing, and everything in the philanthropic garden is rosy. Few studies have even hinted at the fact that, while data show increases in giving over recent years, a huge percentage of this giving was specifically related to disaster relief. Nonprofit organizations engaged in services to inner-city children, relief for the homeless, substance-abuse treatment, care for the elderly, and a host of other essential activities were meanwhile sighing in disbelief at the statistics. The reality for these organizations has been entirely different.

Imagine being the chief executive officer of one of them. You’re faced with government funding cutbacks and declines in private philanthropy as a result of the stock market’s precipitous fall. And then you pick up your phone to hear the chair of your board haranguing you about the agency’s inefficiency. After all, he just read in The New York Times that charity is booming (statistics, as we all know, never lie) and he wants to know why your own performance is so seriously below par.

The chart accompanying your article is highly instructive: a sharp peak at the 2001 mark, followed by a sharp fall back to the prior, declining rate of growth. Yet while the theorists cite an immediate increase in nonprofit employment following the terrorist attacks of 2001, they don’t ask what the picture would look like if data were corrected for that event-specific adjustment.

Employment, the latest report further suggests, can be a lag indicator — that is, a decrease in employment levels might lag behind the actual downturn in the economy. I’d suggest that there was no lag. Most nonprofit organizations have been tightening their belts for years; it’s just that such dire realities were masked by an interim upward trend in disaster relief.

So let’s tell it like it is: Nonprofits across the United States are hurting. Even the good ones. Someone, please send relief soon.

Victoria Thurlow
Principal
Thurlow/Associates
Lawndale, Calif.