Bad news about the nonprofit sector of our economy

Mary Beth Harrington, CVA

Last week, I attended the 14^th Annual Regional Economic Forecast and Innovation Expo convened by Greater Grays Harbor Inc., Economic Alliance of Lewis County, Economic Development Council of Mason County, Pacific County Economic Development Council and our own Thurston Economic Development Council.

This expo, the largest economic summit in our region, focused on the role of workforce development in building a resilient economy. This year’s theme was Building a Strong and Resilient Regional Economic Ecosystem. Since the focus of this column is the nonprofit community, you may be wondering what that has to do with the economy – the answer is a lot! But unfortunately, as you read on, you will see the news is not good.

As mentioned, one of the convenors of the expo was the Thurston Economic Development Council (EDC) which houses not one but two area nonprofit organizations. As a 501(c)4, the EDC partners with over 52 different nonprofit and government organizations to build a quality community. According to Michael Cade, executive director of the EDC, “the EDC looks to develop opportunities for excellence for everybody. We build wealth not just in dollars but in better libraries, food systems, healthcare even greater access to broadband. Every dollar contributed to the EDC has a return on investment of over $9 into the local economy.”

The EDC also hosts The Center for Business & Innovation

The Center is a 501(c)3 nonprofit that is the home to more than a dozen programs that support entrepreneurs at any stage of their business journey. These resources include startup training, business growth training, an online incubator program, an investment network, no-cost business coaching and advising, no-cost government contract advising, and Lacey MakerSpace. According to Cade, “the importance of cultivating and nurturing small businesses in our community is more important today than ever. To truly create an economy that is equitable, diverse, inclusive, and sustainable small businesses must be at the forefront.”

While both organizations support the growth of the local small business sector, the nonprofit sector is not forgotten. “Nonprofits provide the community with essential resources that the government can no longer provide, and the private sector cannot afford to provide,” said Cade.

Bad news about the nonprofit sector

This leads us back to our sobering statics about the nonprofit sector.

• Nonprofit employment is down  – A commonly used statistic is that nonprofits employ more than 7% of Washington state’s workforce. However, a more recent report from the Washington State Employment Security Department (ESD) indicates that Washington State lost a total of 24,132 nonprofit jobs between February and May 2020. While the nonprofit sector appears to be recovering, the data indicate the pace has slowed significantly and it is expected to take two additional years (until 2024) for the nonprofit sector to return to pre-pandemic levels.
• Volunteerism is down – Meanwhile, the rate of volunteerism has dropped from 65% in 2013 to 56% in 2021, according to Gallup polls. This is the first major drop in volunteerism I have seen in more than 30 years of working in the nonprofit sector.
• Giving is down – Individual donations, which decades ago made up as much as 85% of all giving, now account for only two-thirds of private philanthropy, according to Giving USA. The number of individuals giving to charitable nonprofits declined by 7% in the first half of 2022 compared to the same period in 2021. This is another instance of the first decline that I have seen in my career.
• Community needs are up – Despite these shortages in staff, volunteers, and donations, demand for nonprofit services continues to increase.

This is not just terrible news for nonprofits; it also illustrates a terrible trend for our local economy.

Blame it on the pandemic? Actually, these trends are driven by societal shifts, like growing wealth inequality. While they were worsened by the pandemic, they were not caused by it. Every person in the United States benefits from the work of nonprofits in one way or another.

When we donate to a nonprofit, it is easy to see how the nonprofit’s mission directly impacts our neighbors, who are the direct beneficiaries—such as when nonprofits provide food for the hungry and life-saving trauma care to someone in a car wreck.

It is harder to recognize the full impact of the indirect benefits nonprofits provide. For example, the mission of the “friends of the local public library” might be to promote reading, but taxpayers also benefit when the nonprofit raises funds to buy books and equipment. Or when our donation helps pay a portion of the salary of a nonprofit employee who then uses that salary to buy groceries, pay their rent or eat dinner at a local restaurant.

Nonprofits play a fundamental role in creating a more equitable and thriving economy in our community, so as we near the end of the year, please consider donating so that we may continue to build a strong and resilient local nonprofit sector.

 Soliciting your ideas

If you know of a nonprofit that is doing something great, celebrating a success, needs some outstanding volunteers, or hosting an event, let me know! This column (aside from a little education) celebrates nonprofits!

Mary Beth Harrington, CVA (Certified Volunteer Administrator) lives in Tumwater. She travels the country speaking at conferences and to individual organizations articulating issues facing nonprofits. Send your ideas to her at  MaryBeth@theJOLTnews.com

Editor’s Note: The Center for Business & Innovation has provided fiscal sponsorship services to The JOLT News Organization since July 2021.