Nonprofits an Important Sector of Local Economy

Some folks think of nonprofits as organizations of questionable value run by “do-gooder” types with no business sense. Over the last several months I hope I have helped all donors in our community understand that a local nonprofit has to be as well organized and as fiscally responsible as any small or medium business enterprise. Recently, I found a study that measures nonprofits’ value in dollars and cents.

According to a report, “Economic Impact Study of WNC Nonprofits,” by The Community Foundation of Western North Carolina and the Environmental Leadership Center of Warren Wilson College, 2004-05, our regional nonprofits are an “important economic sector.”

In our region nonprofits are not just “do-gooder” human service agencies, but are also hospitals, schools, fire departments, performing acts programs, economic development programs and a variety of other services. In fact, the largest employer in the region, Mission Hospital, is a
nonprofit. Most nonprofits manage funds that are similar in amount to many local small businesses. We have talked before about the many accounting challenges that are facing nonprofits and the need to be better organized and transparently accountable to their donors and
the IRS. This report makes a point to say that the value of the nonprofit organizations to each community goes beyond the visible community service provided. When we look at local nonprofits, we are also looking at JOBS. We are looking at the capacity of local nonprofits to spend funds within the community. To purchase goods and services is a view of nonprofits that needs to come forward and be recognized.

Here are some points of information listed in the study:

  • There were 2,105 501(c)(3) public charities registered with the IRS in the 18 counties of western North Carolina in 2001. Religious
  • congregations were not included.
  • Of the 875 nonprofits meeting the threshold of $25,000 required to file a 990 with the IRS, there is even more breathtaking information: WNC nonprofits receive a total of $1.95 billion in revenue. Revenues are split as follows; 74% from fees and services; 20% from contributions, including 8% from government grants. Those nonprofits support 42,348 jobs – 28,035 jobs are supported directly by nonprofits and an additional 14,313 jobs are generated indirectly from economic activity of the nonprofits.

But let’s bring this closer to home. Henderson County, per this report, accounts for 1,736 nonprofit jobs and 685 jobs that are created though indirect support of nonprofits. That represents a payroll of $71,295,855 in 2001. And the study credits local nonprofits with generating $3,208,166 in State and local revenue, or $1,474,610 if nonprofit hospitals and colleges are excluded from the formula.

With the passage of the county’s 2005-06 budget, the county commissioners allotted $212,500 to be distributed to a number of human service agencies in the county. In addition, the Partnership for Economic Development received $199,500 to continue work in industrial development and local industrial expansions. There was also an additional sum of $77,500 distributed to local nonprofits with missions serving the environment, the arts and community development groups. I am sure there are some who question the involvement of the county in distribution of funds to any non profit.

However, after reading the impact of nonprofits in our community, I would say that the commissioners are wise to be investing in that sector of our economy. That’s right, nonprofits are part of our economic landscape – a very successful part by economic development definitions. So when the commissioners invest, not give away, $489,500 to local nonprofits, we get a great return on our investment. We get services that are less costly when provided by the non government sector of our community. We get measurable economic benefits and we get reliable community programs.

It is important to note that the commissioners are thoughtful and demanding with our tax dollars. They require application and evaluation information. They ask others to help evaluate the program requests. And they expect accountability from the nonprofits.

All in all, when local government gives to local nonprofits and when we make private contributions, we gain. We gain in services, we gain in quality of life improvement and we gain in jobs and positive economic impact.

July, 2005
July 2005 Nonprofits and the Economy

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