Covid-19 May Have Cost Nonprofits 1 Million Jobs, Study Finds

Two years after the Covid-19 pandemic disrupted jobs nationwide, nonprofits employed one million fewer workers than at pre-pandemic growth levels, an early symptom of the sector’s sluggish recovery.

That’s according to a new analysis by the Center on Nonprofits, Philanthropy, and Social Enterprise at George Mason University, which based its findings on the Bureau of Labor Statistics’ most recent nonprofit employment data, ending in 2022. While employment at nonprofits fared somewhat better than at for-profits in the pandemic’s early days, nonprofits recouped the jobs they lost at a much slower rate than other employers.

Nonprofit employment data is released by the Bureau of Labor Statistics only once every five years. This delay thwarts researchers’ ability to analyze in real time the changing contours of the nonprofit workforce, which employs nearly one in 10 American workers. The BLS reports employment data in the private sector monthly.

“It’s an overstatement, but sometimes I wonder whether the sector could fall off the Earth, and we wouldn’t know about it until two years after the fact,” said Alan J. Abramson, director of the Center on Nonprofits, Philanthropy, and Social Enterprise, who bemoaned the dearth of federal data released regularly on nonprofit workforce trends.

For many nonprofits, the pandemic was a study in contrasts, remembered as a time of intense hardship and unusual opportunity. At the height of the crisis, many organizations saw an uptick in revenue in the form of emergency government grants and increased donations intended to bolster their response to the crisis.

Still, in those early months, nonprofits did experience layoffs. Some organizations — say, a local museum or after-school arts program — were forced to suspend services and hibernate through the pandemic’s deadly onset. Their staff cuts contributed to an overall loss of 580,426 jobs — or 4.5 percent of the workforce — in early 2020.

Yet, compared with the private sector — which lost 7 percent of jobs in that time — nonprofits fared relatively well in the pandemic’s early days, a resilience that Abramson attributes to government relief programs and the tendency for nonprofits to prosper financially in times of trouble when their services are needed most.

“Nonprofits can sometimes be a little counter-cyclical,” he said. “When the economy is down, we need nonprofits more. We want them to be doing more. And the government is apt to be funding them more.”

Sluggish Recovery

In the years that followed, however, for-profit enterprises quickly began hiring again, while nonprofit employers lagged behind in their recovery.

By 2022, the for-profit sector employed 2.2 percent more people than it did in 2019, a full recovery and then some. Nonprofits, on the other hand, still employed 1.4 percent fewer workers in 2022 than they did in 2019, before the onset of the pandemic.

As a result of those job losses, the nonprofit sector’s 12.8 million workers accounted for only 9.9 percent of all non-government employment in 2022, down from 10.2 percent in 2017.

“Government support might have slowed down over time,” said Abramson, making it harder for nonprofits to rehire workers than their for-profit counterparts, which benefited from a rapid economic recovery following the initial shock of the pandemic. Nonprofits also experienced a precipitous drop in giving from 2021 to 2022, further imperiling their ability to recover.

In recent years, charitable giving has remained low relative to years prior, and inflation has eaten away at both philanthropic and other sources of revenue.

Though data from 2022 show nonprofit wages nearly on par with for-profit salaries, in recent years, organizations have struggled to compete for workers even when they could afford them, in what many leaders called a severe hiring crisis. In 2023, 70 percent of nonprofits reported job vacancies, according to a survey by the National Council of Nonprofits, with half struggling more to find workers than they did before the pandemic.

Nonprofits may have recovered much of their workforce today — but there is no way to know for sure until the Department of Labor Statistics releases its next five-year batch of nonprofit employment data on the years 2023 to 2027 — in 2029.

Other findings from the report, which covers 2017 to 2022, include:

• The nonprofit sector remained the third-largest employer of any U.S. industry in 2022, with 12,766,057 employees, behind only retail trade and accommodation and food services.
• In 2022, nonprofits employed 70 percent of the country’s private educational workers, 60 percent of religious and civic organization workers, 43 percent of private health-care workers, and 40 percent of private social service workers.
• Arts and recreation organizations struggled significantly in the aftermath of the pandemic, losing 5.6 percent of their workforce between 2019 and 2022, with nonprofit arts wages also falling 2.6 percent behind their for-profit competitors.
• Religious, grant making, and civic organizations saw their workforce contract by 5 percent between 2019 and 2022, and they paid 18 percent less to workers on average than their for-profit counterparts.