Nonprofit sector is asset to Michigan’s economic recovery

The nonprofit sector has long been the “invisible subcontinent” on the economic landscape of the U.S., says Lester M. Salamon, author of a new report entitled Michigan Nonprofit Employment.

“We know the good work that it does, but we rarely recognize its role as a source of employment, expenditures and general economic impact,” said Salamon, director of the Johns Hopkins University’s Center for Civil Society Studies.

Now this is changing, thanks to a new source of data on nonprofit employment that the center has developed in cooperation with the U.S. Bureau of Labor Statistics. A multiyear, $120,000 grant from the Charles Stewart Mott Foundation supported the Nonprofit Economic Data Project, and Michigan — Mott’s home state — is one of the first to benefit.

According to the just-issued report, nonprofit employment in Michigan grew 17.4% from 2001 to 2007 — the most recent years for which data is available — partially offsetting the massive job losses that were taking place in the state’s private business sector during this period. Among other key findings:

  • The nonprofit sector is the fourth largest employer among Michigan industries, employing nearly one out of every 10 workers in the state. These workers deliver health and human services, provide job training, offer cultural activities, serve as teachers, and perform dozens of other services.
  • The 374,537 nonprofit employees in Michigan earned nearly $14.5 billion in wages in 2009, which translated into an estimated $90 million of income tax revenue for state and local governments.
  • More than two-thirds — about 68% — of Michigan’s nonprofit jobs are in the health services field. Another 10% are in the state’s social services sector, and 9% are in education.
  • Nonprofit job growth took place in every region of the state, including rural, suburban and urban.
Lester M. Salamon headshot.
Lester M. Salamon.

“One of the fundamental stories coming out of the report is that Michigan is fortunate to be home to such an inventive, entrepreneurial nonprofit sector — one that is making a difference in a state under economic siege,” Salamon said.

Michigan’s nonprofit community has displayed great adaptability under financial duress, says Kyle Caldwell, who has directed the Michigan Nonprofit Association for the past four years. Not only are nonprofits serving more people — 74% reported serving more clients between September 2008 and March 2009 than during the same period the previous year — but also they are doing so with fewer resources, he says.

“Often, there is a huge misunderstanding of what institutions we are talking about when we use the word ‘nonprofit.’ Most people are surprised to find out that soon, all but one of Michigan’s major hospitals will be nonprofit. We want the public to understand that these organizations are a real help to the state’s economy and worthy of further investment,” Caldwell said.

“We intend to get this report into the hands of Michigan’s nonprofits and government officials — particularly the newly elected legislators — to educate them about the role the sector is playing in the state’s economic recovery.”

While the findings on Michigan nonprofit employment are particularly dramatic, research conducted in other states by the Johns Hopkins center has revealed a pattern of nonprofit job growth. In fact, across the country, nonprofit employment has been outpacing the rate of for-profit job growth by a ratio of two to one.

Perhaps most importantly, Salamon says, nonprofit employment in the 21 states that the researchers have examined to date continued to grow right through the recent recession, at least through the second quarter of 2009.

“Our findings indicate that the nonprofit sector stays the course even when the going gets tough. Nonprofit employers — hospitals, nursing homes, human service agencies, colleges, cultural institutions — don’t pull out of the field just because they don’t make a profit. They serve as reliable, durable protectors of the public’s interest,” he said.

“Now we’re able to track nonprofit employment, by field and by locale, throughout the U.S. Hopefully, this will allow us to put the sector on the economic map, track its health and, ultimately, get this information on the radar screens of policymakers.”

A large group of medical staff sit in a classroom setting with a figure in a bed nearby.
Health care is one of several growth areas for nonprofit employment in Michigan.

Salamon says the use being planned for the Michigan report by nonprofit leaders illustrates the important contribution this kind of data can offer.

“Policymakers need to begin viewing nonprofit organizations not only as crucial partners in providing essential services to citizens but also as important components of the state’s economy meriting serious attention and support,” he said.

In addition to providing important data on nonprofit employment in Michigan, the Johns Hopkins center also is cooperating with the Michigan Nonprofit Association through the Johns Hopkins Listening Post Project, which surveys nonprofit organizations in Michigan and elsewhere in the nation on key issues that the sector is facing.

With support from the Mott and Kresge foundations, Michigan is the first to collect a statewide sample for the project, providing crucial insights into how Michigan nonprofit organizations are coping with a wide assortment of challenges, from workforce recruitment to investment capital needs to health benefit cost escalation.

“We hope this new report provides a platform that will help state leaders better understand this important partnership and ultimately encourage them to bring nonprofits more fully into the policy planning process,” Salamon said.

For more information on the Johns Hopkins Center for Civil Society Studies’ Nonprofit Economic Data Project or its Nonprofit Listening Post Project, visit