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Sunday, 22 June 2014 22:00

Report outlines economic impact of Michigan’s nonprofits

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Economic impact studies often ignore the contributions of Michigan’s nonprofit sector, but a recently released study conducted by Lansing-based Public Sector Consultants Inc. aims to correct that omission.

The PSC analysis shows that Michigan’s more than 42,000 nonprofits employ more than 10 percent of the state’s workforce, pay about $5 billion every three months in wages to their employees and serve as anchor institutions in communities both large and small.

While the findings may surprise individuals not familiar with the state’s nonprofit sector, those with an intimate knowledge of the wide-ranging scope of the industry said they have long known about its impact.

“I actually don’t think most people are aware,” said Donna Murray-Brown, executive director of the Michigan Nonprofit Association, one of the sponsors of the PSC report. “This analysis brings about awareness to the general public, nonprofits and policymakers. This is a real opportunity to get this information out there.”

The 2014 analysis is the latest update in a series from PSC dating back to the mid-1990s and shows the nonprofit sector came through the Great Recession without the job losses and dislocation seen in other sectors. In part, that’s because nonprofits were experiencing a huge demand for services during the state’s economic downturn, Murray-Brown said.

“They were holding their own under tough economic circumstances,” she said. “Employment has actually increased since then.”

The nonprofit sector now employs about the same number of people as durable goods manufacturing, which includes the auto industry. More than 438,000 individuals, or 11 percent of the state’s workforce, were employed by nonprofits in 2013 — an increase of 0.2 percent from 437,000 in 2011 and a 2.8 percent increase from 2006.

Michigan nonprofits pay their employees more than $4.9 billion per quarter, hold assets of close to $217 billion, receive more than $69 billion in annual revenue and spend more than $80 billion annually, according to the PSC analysis.

According to the report, the 13-county region including Grand Rapids, Holland and Muskegon had 6,561 nonprofits with nearly $19.4 billion in assets that employed almost 72,000 people last year. The region ranked second in the state behind the Detroit area for total nonprofit assets. Ranking third was the seven-county Southwest Michigan region with more than $18.9 billion in assets from 3,449 nonprofits that employed more than 37,000 workers.

“Each day, nonprofits provide critical services and support in health care, education, social services, cultural enhancements, and community building,” Rob Collier, president and CEO of the Council of Michigan Foundations, one of the sponsors of the PSC study, said in a statement. “And, as PSC shows, in doing this work these organizations employ tens of thousands of your friends and neighbors and greatly boost our state’s economy and quality of life.”

Health services are the largest source of employment in the nonprofit sector, accounting for approximately half the jobs and two-thirds of the wages.

Michigan public charities, a subset of the nonprofit sector, spent $44 billion on charitable endeavors in Michigan in 2011. Health care is the largest component of public charities, but private colleges and art and cultural institutions are also important components, the report stated.

Being able to quantify the important role nonprofits play in the economy demonstrates the value that they bring with their expertise to mitigate the most pressing challenges faced by communities across the state, Murray-Brown said. This will require nonprofits to be proactive so that they can contribute in innovative ways, she said.

The report and its data should help people gain a better understanding of nonprofits’ role in the state economy, Murray-Brown said.

“These talks about dollars actually demonstrate the value we have as partners,” she said.

One example of the advisory role nonprofits can have in a community is the Detroit Blight Task Force that was formed to address the issue of dilapidated homes and buildings in the city, Murray-Brown said, adding that the group included representatives from nonprofits who were able to provide unique insights and solutions.

There will be more opportunities to partner with other organizations focused on providing stability for Michigan’s residents, she said.

Nonprofit leaders in Michigan said the services provided by their organizations play a vital role in the overall health of communities, particularly as it relates to their residents. They maintain that their services become even more critical when a community experiences economic downturns that trigger a wide range of social service needs similar to what is being seen in Detroit.

“Maintaining the critical infrastructure the nonprofit sector provides to the state’s economy is crucial to Michigan’s health and economic recovery,” the PSC analysis said.

“In strict economic terms, they invest billions, pay billions, and employ thousands, but their service roles are far more varied and important,” PSC’s CEO Jeff Williams said in a statement.

While filling in gaps and providing services to address the needs of residents remains a primary focus for nonprofits, Murray-Brown said the sector has the resources to effect change on a much broader scale.

“Nonprofits are centered in the recovery of cities and the reinvigoration of communities and this elevates the conversation,” she said.

Read 5910 times Last modified on Sunday, 22 June 2014 09:44

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