Economic Impact of Nonprofit Organizations
The beginning of a new year often prompts us to set goals for improving ourselves and our communities. Some people choose to give back by donating time and money toward nonprofit organizations, which work year round to help communities and individuals. Tax-exempt charitable nonprofits typically provide goods and services, dedicate their operations to improving public services, and collaborate with businesses and government entities to solve local issues. Utah’s nonprofits also play a role in the state and national economy by employing more than five percent of the state’s workforce and generating key revenue.
Although revenue varies by the size and type of nonprofit organization, larger nonprofits in Utah typically earn the majority of revenues in the sector. For instance, in 2013, fewer than 9 percent of Utah public charities reported total annual revenues over $1 million, but those organizations brought in 96 percent of the nonprofit sector’s revenues. Putting these percentages into perspective, a total of 8,335 nonprofit organizations were registered in Utah at the end of November 2014. Of these, 1,668 were healthcare and education organizations. Because large-scale healthcare and education nonprofits, such as hospitals and universities, operate largely by charging fees for services, their revenue is much higher than the average nonprofit. Total revenue reported in 2013 by the other 6,667 nonprofits in Utah was over $10 billion. When healthcare and education were included, that number almost doubled—surpassing $19 billion.
According to the Utah Nonprofits Association, public charities make up the biggest percentage of nonprofit organizations in Utah—55 percent. The National Center for Charitable Statistics lists Intermountain Healthcare as the largest public charity in Utah in terms of both gross income and total assets. Eight of the ten largest nonprofit organizations in Utah (by gross income) are either healthcare or education organizations.
While revenue is certainly important, it is not the primary benchmark for measuring economic impact. Revenue and donations received by the majority of Utah nonprofits are typically under $100,000, but each one serves its community and target audience in meaningful ways. One such way is employment. Looking specifically at the largest subset of nonprofit organizations, public charities employed over 5.5 percent of Utah’s workforce in 2014.
Beyond dollars and percentages, nonprofit organizations provide vital assistance for their local communities. Goods and services make their way to people in need, and residents receive essential healthcare and education. Nonprofits positively impact local economies by acting as a channel through which individuals can meaningfully contribute to their communities—they connect givers and receivers. By bringing in donations, generating revenue, and providing employment, Utah’s nonprofit organizations play a crucial role in the state’s economy.
This post is part of an ongoing series of data-driven commentary on current events. It was originally published in the Zion’s Bank Economic Outlook Newsletter and the Deseret News.
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Randy Shumway founded Cicero Group (www.cicerogroup.com) in 2001. It began humbly, with four people working out of Randy’s house. At the beginning of 2017, when Randy stepped down as CEO, Cicero had grown to a highly-respected, global management consulting firm.
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