Nonprofits add jobs

Outpacing for-profit firms in hiring, construction

July 01, 2008|By Jamie Smith Hopkins | Jamie Smith Hopkins,Sun reporter

Nonprofits - especially big ones - are continuing to drive employment growth in Maryland, a new report suggests.

Nonprofit employment grew almost three times faster than for-profit employment in 2006, according to a study released yesterday by the Johns Hopkins Center for Civil Society Studies and the Maryland Association of Nonprofit Organizations. The charity sector includes small-budget homeless shelters and soup kitchens but is dominated by big anchors like the Johns Hopkins University and the National Aquarium in Baltimore.

Nonprofit jobs increased by 2.9 percent from 2005 to 2006, the most recent numbers available. For-profit employment increased by 1.1 percent, the study found. All told, nonprofits accounted for nearly 245,000 jobs - about one out of every 10 statewide. That's higher than the nation's tally of one for every 14.

Nonprofits are responsible for nearly one out of every three private sector jobs in Baltimore, which has been losing for-profit employment for years.

"Nonprofits are more diverse than a lot of people think," said Stephanie Lessans Geller, co-author of the report and research project manager for the Center for Civil Society Studies. "They're a very important economic engine in Maryland."

They added more than 6,800 jobs in total in 2006. That's a quarter of all private sector job growth in the state.

The study, which looked at all 501(c)(3) organizations, best known as charities, isn't catching a one-year blip. Employment grew about 20 percent among nonprofits versus 7 percent among for-profits since 1999.

These numbers don't take into account the current economic slowdown, which is affecting the state as well as the nation. But the charity sector tends to expand in bad times as well as good, said Nancy Hall, senior adviser at the Maryland Association of Nonprofit Organizations. She's hearing from nonprofits that "there's a demand for their services and that they're growing."

"A lot of growth that we're seeing in the sector is coming from the larger organizations," Hall said.

The larger organizations are really large. The Johns Hopkins University employs more than 29,000, making it the biggest private employer in the state. Nonprofit hospitals and medical systems, including MedStar Health and the Johns Hopkins Health System, are also near the top of the list.

Add the Johns Hopkins institutions together, and they employed 45,000 in 2006. They've been creating about 700 jobs a year.

"It's more than just serving soup," said Daraius Irani, director of applied economics at RESI, Towson University's consulting arm. The nonprofit sector's impact on the state "is pretty big."

Still, he questions whether it's fair to compare job growth among nonprofits and for-profits, which tend to do very different work. Manufacturers are part of the for-profit group, and they have been cutting employment for a long time. Hospitals, on the other hand, keep expanding to meet the voracious demand for health care - and in Maryland, nearly all are nonprofit.

The upside to nonprofit growth is that it's usually local. Maryland charities may work internationally - nearly half a dozen relief organizations are based in Baltimore - but they're not sending jobs overseas to save on salary costs, Hall said.

The downside, at least from a government budget perspective, is that they don't pay property taxes. "It's good for the city to have jobs, but then it's bad for the city in terms of tax base," said Irani. "The only way it can recoup some of that tax base is hopefully having some of those people live in the city."

Nonprofits point out that their employees do pay income taxes. The Johns Hopkins study estimated those local and state taxes at $482 million in 2006.

One ripple effect that's frequently overlooked: construction. The Downtown Partnership predicts that hospital and biotech expansion in downtown Baltimore will create almost 8,000 construction jobs through 2012 and hundreds of millions of dollars in business for construction companies. Kirby Fowler, president of Downtown Partnership, said nonprofits will drive almost all of this growth.

"Nonprofit institutions spin off so much income and indirect economic impact," he said.

Nonprofit employment increased across the metro area in 2006. Baltimore County had the most new jobs - about 940 - but growth was fastest in smaller Carroll County, at 4.9 percent. Nonprofit job growth outpaced for-profit growth in all the Baltimore-area counties except for Howard.

The city's nonprofit jobs increased by 1 percent, or about 840, in 2006. Among the institutions expanding was the Annie E. Casey Foundation, which makes grants and provides direct services to children and families. It had about 50 local employees when it moved its headquarters from Connecticut to St. Paul Street in 1994; by the end of last year, it had 191.

The growth in nonprofits has meant more opportunities to collaborate, said Dana Vickers Shelley, Casey's director of strategic communications. "Together, that work can be even more effective," Shelley said.

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