Not-for-profits affect state's bottom line: Health organizations account for more than half of state's not-for-profit workers

June 6, 2005

From 2000 to 2003, a period during which the state experienced an overall decline in jobs, employment in the notfor-profit sector grew.

That finding, among others, is part of a study of not-for-profit employment in the state, and an update of a report issued two years ago, by Indiana University's Center on Philanthropy, IU's School of Public and Environmental Affairs, and Johns Hopkins University.

The 5-percent increase in not-for-profit employment, compared with a 6-percent decline in the for-profit sector, suggests more stable, recession-proof employment within not-for-profits, said Kirsten Gronbjerg, project director for the study.

Employment within the government sector increased nearly 3 percent.

"One likely explanation is non-profits may be more in demand during economic constraints," Gronbjerg said. "People are less able to curtail the services nonprofits provide."

Health services, education, social assistance and charities make up the bulk of the more than 5,000 organizations granted Internal Revenue Service tax-exempt status that were chosen as a sample for the study.

About one out of every 12 workers, or 8.1 percent, are employed by a not-for-profit, the study found. Nationally, 6.9 percent of workers are employed by not-for-profits. The health services sector employs 52 percent of the state's not-for-profit workers.

The 228,000 not-for-profit Hoosier workers in the study sample are more than all employed in construction statewide and nearly twice as many as are employed by the state and federal governments combined.

Local government, including public schools, employs more workers, as do the retail and manufacturing segments, the study found.

And the latest numbers are up slightly from the initial study that showed 222,000 workers at not-for-profits. That study looked at employment data for 1995, 2000 and 2001.

Gronbjerg said her 30-member group conducted the study to raise awareness of a large chunk of the state's work force not typically thought of as playing a significant role in Indiana's economic well-being.

In fact, the sector is a driving force for the state's economic condition, said Scott Massey, president and CEO of the Indiana Humanities Council, a not-for-profit that has itself increased its work force 40 percent over the study's four-year period.

With 60,000 not-for-profits, "Indiana has an exceptionally robust non-profit sector for a state its size," Massey said.

The council has invested $8 million over the last three years toward launching statewide initiatives to strengthen educational services, an area that accounts for 13 percent of the not-for-profit jobs in the state.

The need for educational institutions to think of themselves more as critical economic players is a shift for many of them, Massey said. But it's happening.

Evidence of the shift can be seen in the trend of tapping leaders from the business community to head universities, as well as higher wages being paid faculty and staff, Massey said.

In fact, a wage gap that is narrowing between for- and not-for-profit employers is closing fastest in education and health services, the study found.

Research showed that a not-for-profit employee makes about 14 percent less than a for-profit employee and 13 percent less than a government worker, but in education, not-for-profit workers earn 36 percent more than for-profit workers and 14 percent less than government workers.

Overall, employers in the study's sample-representing only 8 percent of the not-for-profits statewide-paid $6.6 billion in wages in 2003.
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