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Recessions and Indiana's Nonprofit Employment

Nonprofit Employment Report #9
February 2014
Kirsten A. Grønbjerg, Project Director
Alexandra Toledo with Deb Seltzer

A Joint Product of the Indiana University Lilly Family School of Philanthropy, the School of Public and Environmental Affairs at Indiana University, the Indiana Business Research Center at Indiana University's Kelley School of Business, and the Johns Hopkins Center for Civil Society Studies

Click to read the press release for this study, a short summary or the full report. Note: the full report is a relatively large file (5.3 MB) and you will need a free copy of Adobe Reader to read these documents.

Introduction

The United States and Indiana are now emerging from the most severe recession since the 1930s. The early 2000s recession, which officially lasted from March to November of 2001, and the “Great Recession,” which officially lasted from December 2007 through June 2009, had an impact on the economic health of all sectors: nonprofit, for-profit, and government. The three sectors, however, followed very different paths.

Since the mid-1990s, when we began to obtain systematic data on U.S. nonprofits, the sector has grown significantly and outperformed the overall economy. Moreover, during times of recession the nonprofit sector continued to grow. This report, spanning from 1995 to 2011, documents the resilience of the overall nonprofit sector through two recession cycles – in sharp contrast to downturns in the for-profit sector and to some extent in the government sector.

The overall growth in the nonprofit sector, however, masks notably divergent patterns for major nonprofit industries – the primary focus of this report. We show how the economic growth engines of health and education reveal very different trajectories from the faltering industries of membership, social assistance, and arts, entertainment, and recreation. We also discuss the complex patterns within these industries.

Key Findings

The overall nonprofit sector in Indiana continued to grow throughout the Great Recession and recovery of the past five years, outperforming other sectors. However, the growth trends were not uniform across nor within nonprofit industries, indicating perhaps worrisome trends for the future of Indiana nonprofits. This report from the Indiana Nonprofits: Scope and Community Dimensions project presents new data on the size, composition, and distribution of Indiana’s private nonprofit sector from 1995 to 2011 with a particular focus on the two economic recessions during that period. All dollars are adjusted for inflation and are reported in constant 2009 dollars.

  • Total nonprofit employment and payroll outperformed the for-profit and government sectors in the Indiana economy. Nonprofit employment grew 34 percent, nonprofit payroll grew 61 percent, and nonprofit average wages grew 20 percent over the 1995-2011 period, significantly narrowing the gap with wages in the other sectors by 2011. See page 2 of the full report for more information.

  • Only the nonprofit sector grew in employment and payroll each year. In the height of the Great Recession, from 2008 to 2009, nonprofit employment grew 2 percent and payroll grew 5 percent, while for-profit employment and payroll each decreased 8 percent. Government decreased in both employment and payroll from 2009 to 2011. See page 4 of the full report for more information.

  • Health and education drove nonprofit sector growth. Education increased the most of all non-profit industries in employment (56 percent) and payroll (77 percent). Health was not far behind, with employment growing 36 percent and payroll 65 percent. In both industries, nonprofits increased their shares of total employees and payroll, led by two dominant sub-industries: colleges and universities and hospitals, respectively. See page 8 of the full report for more information.

  • Three smaller nonprofit industries faltered in employment and payroll during the second half of the time period. Arts, entertainment, and recreation peaked in 2001, social assistance in 2004, and membership in 2006. All lost employment and payroll during the Great Recession and subsequent re-covery. See page 15 of the full report for more information.

Methodology

The report draws on data generated by the Indiana Department of Workforce Development through surveys of Indiana workplaces carried out under the national Quarterly Covered Employment and Wages (QCEW) labor market information program administered by the U.S. Bureau of Labor Statistics as part of the unemployment insurance program. These data, compiled from quarterly reports submitted by employers in compliance with U.S. and Indiana law, were prepared for us by the Indiana Business Research Center at Indiana University's Kelley School of Business under a confidentiality agreement with the state.

For information about the methodology used in this report and for additional tables, please see the Appendices at the bottom of this page. Reports on nonprofit employment for other states are available at Center for Civil Society Studies at Johns Hopkins University.

Appendices

Our report includes several appendices with supplementary information. They include:

  • Appendix A: The QCEW Unemployment Insurance Labor Market Information Program - Sources of data, scope of coverage, and data processing and cleaning.
  • Appendix B: Data Tables
  • Appendix C: National and State Trend Comparison
  • Appendix D: Project Publications and Reports

Acknowledgements

This report was prepared as part of an ongoing project from the Indiana Nonprofits: Scope and Community Dimensions project made possible by the Efroymson Fund at the Indianapolis Foundation (an affiliate of the Central Indiana Community Foundation) through its support for the Efroymson Chair in Philanthropy; the Indiana University Lilly Family School of Philanthropy through its Indiana Research Fund (supported in part by Lilly Endowment Inc.) and its ongoing support for the Efroymson Chair in Philanthropy; and the School of Public and Environmental Affairs at Indiana University through its ongoing support for the Efroymson Chair in Philanthropy.

We are grateful to Carol O. Rogers, Victoria Nelson, and Jerry Conover at the Indiana Business Research Center for making the data on which this report is based available to us. We thank Lauren Dula, Kellie L. McGiverin-Bohan, Rachel L. Miller, and Angela Gallagher for their assistance in arranging the original data and providing comments and suggestions on the draft. Finally, we thank members of the Advisory Board for the Indiana Nonprofit Sector: Scope and Community Dimensions project for helpful comments and suggestions.