Study focuses on role of nonprofits

June 23, 1994|By Patricia Horn | Patricia Horn,Sun Staff Writer

Nonprofits, a largely ignored third sector of the economy, play a far more significant role in the world economy than previously recognized, according to a new study.

One out of every eight service jobs in the United States and six other developed countries in 1990 came from hospitals, universities, museums, social service agencies and other nonprofits, reveals a study to be released today in Brussels, Belgium, by a Baltimore think tank.

Nonprofits "do not attract the media attention and they are not well understood by policy-makers in general, and we have very imperfect numbers on them," said Lester M. Salamon, co-author of "The Emerging Sector," the report by the Johns Hopkins Comparative Nonprofit Sector Project. But nonprofits worldwide are becoming more influential, he said, as they increasingly undertake services that governments traditionally have provided.

Economies are not simply divided into a public sector and a private sector, says the report. Instead, add a third: nonprofits, which are private in form but public in purpose.

An aging population, more women entering the work force and a general loss of confidence in government-run programs will increase the demand for nonprofit services, said Dr. Salamon.

"The trend has been that the government more and more frequently turns to the nonprofit sector for the delivery of public services and programs," says Peter Berns, executive director of the Maryland Association of Nonprofit Organizations.

Recent employment numbers for nonprofits reflect their growing influence. Even in the 1980s, as policy-makers focused on spurring private-sector growth, nonprofits created one out of every eight new jobs in the United States, France and Germany.

In the United States alone, nonprofits employed 7.1 million people, or more than one of every 15 U.S. workers, as of 1990.

The Johns Hopkins study gathered detailed data on nonprofits in seven countries: the United States, United Kingdom, France, Germany, Italy, Hungary and Japan.

According to the study:

* Nonprofits in the seven countries studied employed 11.8 million people in 1990.

* Nonprofits in the seven countries also employed the equivalent of 4.7 million full-time workers as volunteers.

* In 1990, nonprofits in these countries had operating expenses of more than $600 billion.

The United States' $341 billion nonprofit sector is dominated by hospitals and universities, according to the Hopkins report. Hospitals and other health care providers account for over 50 percent of nonprofit expenditures.

In Maryland, "nonprofits are a major economic force in the state," says Mr. Berns.

Nonprofits employed more than 181,000 Marylanders, or around 7 percent of the adult work force, in 1990. By comparison, local government employed around 190,000.

AT A GLANCE

Nonprofits by the numbers in the United States (1990 figures):

EMPLOYMENT

Total: 7.12 million

As % of U.S. work force: 6.8

OPERATING EXPENDITURES:

Total: $340.9 billion

As % of U.S. GDP: 6.3

REVENUE SOURCES

Earned income: 52.3%

Government: 29.2%

Private donations: 18.5%

Source: "The Emerging Sector"

AT A GLANCE

Nonprofits by the numbers in the United States (1990 figures):

EMPLOYMENT

Total: 7.12 million

As % of U.S. work force: 6.8

OPERATING EXPENDITURES:

Total: $340.9 billion

As % of U.S. GDP: 6.3

REVENUE SOURCES

Earned income: 52.3%

Government: 29.2%

Private donations: 18.5%

Source: "The Emerging Sector"

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