A new report issued by the Johns Hopkins Center for Civil Society Studies gives the best glimpse yet of the economic importance of the nonprofit sector, both in the United States and around the world.
Some highlights of the report include:
• The nonprofit workforce, including paid and volunteer workers, makes up 7.4 percent of the total workforce on average in the 13 countries for which full data are available. This places it ahead of several major industries, such as transportation and finance. (In the U.S., the figure is 10.2 percent.)
• With the value of volunteer work included, nonprofit organizations account for 4.5 percent of gross domestic product in the 15 countries for which data are available. This is roughly equivalent to the share of GDP accounted for by the construction industry in these countries. (In the U.S., this figure is 6.6 percent.)
• Nonprofits spend the most on labor as opposed to other goods. On average, the report found, nonprofits devote the majority of their expenditures to labor costs, as opposed to so-called intermediate consumption—the purchase of goods and services from other industries for use in producing output. According to the study’s authors, this likely reflects the fact that nonprofits are most heavily engaged in the production of services. As such, they do not need to purchase as many goods and services from other industries to be fashioned into products as do industries such as manufacturing.
• Fees are the biggest source of revenue. Nonprofits derive their revenue from several different sources, which the report groups into three broad categories: fees charged for the provision of goods and services, the government, and private philanthropic giving and donations. The results indicate that nonprofits on average derive 43 percent of their revenue from fees they charged for their services, 32 percent from government sources and 23 percent from private philanthropic giving. Due to the difficulty of identifying certain types of government funding, the researchers said, it is likely these estimates understate the government share of funding and overstate the philanthropic share.
• The sector is a growing economic presence in countries throughout the world. According to the report, the GDP contribution of nonprofit organizations in the eight countries for which longitudinal data are available outpaced the growth of the economy overall. On average, the nonprofit sector’s contribution to GDP grew at an average rate of 5.8 percent per year over the period from the late 1990s to the mid-2000s compared to 5.2 percent for the economies as a whole in these countries.
In fact, if you removed the one country that reported a decrease—the Czech Republic—the average annual growth of the nonprofit sector would stand at 7.3 percent vs. 5.2 percent for the full economies of these countries.
Taken together, these and other findings in the report indicate that the nonprofit sector is a considerable economic force in countries throughout the world, and will likely remain so—a conclusion that justifies expending resources to advocate on behalf of the sector just as other major industries do.