Nonprofits 'a major economic force,' study concludes They now employ 1 in 12 Md. workers

Maryland economy

September 10, 1997|By Ernest F. Imhoff | Ernest F. Imhoff,SUN STAFF

Maryland nonprofit groups employed one out of every 12 Maryland workers last year -- 10,000 more than worked for manufacturers. And that sector gained 35,000 jobs while manufacturers lost 30,175 during the period from 1989 to 1996, according to a study released today.

Maryland's 12,981 private, tax-exempt nonprofits, ranging from soup kitchens to universities, were described as "a major economic force" by the author of the study, Lester M. Salamon of Johns Hopkins University.

He also concluded that the organizations are "facing serious challenges" and deserve support such as tax credits for donors, annual monitoring and study by a gubernatorial commission.

Salamon's study is the first statewide survey of Maryland nonprofits. It was commissioned by the Maryland Association of Nonprofit Organizations and released in conjunction with MANO's annual meeting today.

"The world of nonprofits is still fairly invisible. It has a crucial role, but is largely unknown to most residents," said Salamon, who has written several books on the subject and prepared a 1990 study of nonprofits' impact in Baltimore.

Salamon directed JHU's Institute for Policy Studies until July, when he took over its Center for Civil Society Studies, which looks exclusively at nonprofits.

Peter V. Berns, MANO's executive director, called Salamon "the pre-eminent authority on the nonprofit sector internationally."

Berns said MANO already had begun an effort that would implement one of Salamon's key recommendations: "A systematic process of performance measurement" to promote public confidence in nonprofits.

"We have been working for a year and a half on a meaningful system of self-regulation in the area of ethics and accountability," Berns said.

As a way to gauge performance, MANO's 715 members will get copies of standards next spring. They will cover areas such as mission, board of directors, conflict of interest, financial management and legal compliance, and fund raising.

Salamon's 100-page report was produced over two years at a cost of more than $60,000.

Timothy D. Armbruster, president of the Morris Goldseker Foundation and the Baltimore Community Foundation, said, "The nonprofit] sector's impact is not widely appreciated, so this report will go a long way toward improving understanding of how important it is to the state's economy and its citizens."

MANO issued another study, in May, on the impact of nonprofits in Baltimore. It found that 2,142 agencies provide 56,000 jobs in the city, more than the 51,000 jobs in durable goods manufacturing throughout the metro area.

Today's report, "Private Action/Public Good: Maryland Nonprofit Sector in a Time of Change" is a heavily documented list of 12 observations and almost as many suggestions.

The findings were based mainly on extrapolation of a survey of almost 500 Maryland nonprofits and employment facts obtained from the state Department of Labor, Licensing and Regulation.

One-third of the almost 13,000 nonprofits, or about 4,400, have at least one paid staff member. The nonprofits are those designated by the Internal Revenue Service as in the tax-exempt category of 501(c)(3) or 501(c)(4), depending on their lobbying privileges.

The findings include:

Nonprofits account for 185,000 workers and their volunteers provide the equivalent labor of another 80,000 people.

The 35,000 nonprofit jobs created from 1989 to 1996 accounted for more than half of the 67,274 new jobs in all the state's industries including nonprofits.

Employment growth for nonprofits has slowed to 1 percent.

Maryland donors give less money to nonprofits "than is widely believed only 4 percent of total nonprofit sector income," compared with the national average of 10 percent. Half of that came from earned income of fees, related and unrelated businesses and investments. Most of the rest came from government support.

Nonprofits spend $13 billion a year on operations, not counting capital expenditures.

The report found lack of public support among the "serious challenges" to nonprofits in recent years.

"Over half of the nonprofit executives we surveyed believe that 'the public is becoming increasingly distrustful of nonprofit organizations,' " the study said.

Other challenges were increased demand for services, slow income growth, problems keeping staff because of meager or no benefit packages and increased workloads and wavering volunteer commitments. The nonprofits have taken a number of steps to try to meet these challenges.

A "Blueprint for Action" recommended "critical steps" be taken: The governor should name a one-time commission so politicians, business leaders and nonprofit people can engage in a "serious re-evaluation" of the nonprofit sector and its direction.

The state government and nonprofit community should use such data as that from DLLR to publish an annual "State of Maryland's Nonprofit Sector" describing its health.

The state should help promote private giving by such means as tax credits for generous donors and "above-the-line charitable deductions" for the three-quarters of taxpayers who don't itemize.

Nonprofits should improve training for managers.

A copy of the report will be available in about three weeks for $35 from MANO at 190 Ostend St., Suite 201, Baltimore 21230.

Pub Date: 9/10/97

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