Nonprofit Organizations Are Hiring Workers at a Faster Pace Than Government, Businesses

By Cassie J. Moore

The number of Americans who work at nonprofit organizations now exceeds 12.5 million, and hiring by

such groups has been rising faster than in business or government, according to a new report by two Washington organizations that study charities.

From 1997 to 2001, the average annual growth rate in employment at nonprofit organizations was 2.5 percent, which was higher than the growth at businesses (1.8 percent) or government (1.6 percent), says the report, which relied on 2001 data from the U.S. Bureau of Labor Statistics. Nonprofit employees make up 9.5 percent of the work force in the United States, according to an update to The New Nonprofit Almanac and Desk Reference, published in 2002 by the Urban Institute’s Center on Nonprofits and Philanthropy, a think tank in Washington, and Independent Sector, a Washington organization that represents charities and foundations. Additional Nonprofit Almanac updates will be released in the summer.

Employment Trends

Among other key findings:

• Overall employment fell in 2001 from the year before, with the economy entering a recession in March 2001. According to the Bureau of Labor Statistics, employment fell by 0.6 percent. (That figure does not include farm workers.) However, hiring increased in health services and private higher education.
• The largest percentage increase in employment from 1997 to 2001 among the major nonprofit fields was in social services, which saw a growth rate of more than 17 percent. The residential-care field grew the most, with an employment gain of almost 19 percent.
• The job outlook for workers in the health and social services is positive. From 2000 to 2010, the report says, the health-services industry is expected to add 2.8 million jobs. Social and human services will add another 1.2 million jobs, the report says, particularly in nursing, hospital, and residential-care services.
• Forty-two percent of all nonprofit workers are employed in health services. Education is second, employing 22 percent of nonprofit workers.

The difference in job-growth patterns at nonprofit groups and at other types of employers could be caused by numerous factors. The creation of new charities could account for some of the growth. In 2001, the United States had 1.4 million charities, foundations, and religious groups, referred to by the almanac as “independent sector” organizations. That represents an almost 17-percent increase from 1997, when 1.2 million such organizations existed.

In addition, nonprofit groups often feel the effects of an economic downturn later than do businesses, notes Diana Aviv, president of Independent Sector. “In 2001, the recession had already slowed things down,” she says. “But we only really felt the large effects afterwards, so the slowing down was later on, because people pledge gifts usually a year in advance, and in the case of foundations they commit for two or three years at a time to fund a program.”

Ms. Aviv added that cuts in state budgets over the past two years had probably forced some nonprofit groups to reduce jobs, while organizations that rely on Medicare and Medicaid, the federal government’s two primary health-care entitlement programs, had probably expanded their staffs as the number of people guaranteed benefits under the program multiplied.

Other experts said demographic forces that change the number of people demanding social services are a big part of the reason for job growth. Lester Salamon, who directs the Nonprofit Employment Data Project at the Johns Hopkins University, says that “recent social and demographic trends such as increased female participation in the labor force, the greying of the population, and the rise in the divorce rate have expanded the demand for services such as day care, nursing-home care, and counseling that nonprofits have traditionally provided. This has led to expanded nonprofit employment.”

The report, “Employment in the Nonprofit Sector,” can be viewed in its entirety online at http://www.independentsector.org/PDFs/npemployment.pdf. Copies of The New Nonprofit Almanac and Desk Reference, published by Jossey-Bass, are available for $38 apiece ($28 for Independent Sector members) at http://www.independentsector.org. Further information can be obtained from Independent Sector, 1200 18th Street, N.W., Suite 200, Washington, D.C. 20036; (888) 860-8118.