BUSINESS Views: Nonprofits have big economic impact

A new study commissioned by the Vermont Alliance of Nonprofit Organizations (VANPO) finds that the charitable nonprofit organizations in the state contribute 10.7 percent to the Gross State, Product and create over 42,000 jobs.

The research, conducted by the UVM Center for Rural Studies, looked at the charitable sector through tax forms, a survey, of 531 charitable organizations statewide, the annual "Vermonter Poll," and a property tax data obtained through officials in 72 Vermont towns. According to primary researcher Garrett Kimberly, MS, "This report marks the first attempt to empirically document the impact of charitable organizations throughout Vermont. The findings demonstrate that charitable organizations play a significant role in Vermont's economic and community life."

Vermont is home to approximately 2,682 registered 501(c)3 charitable nonprofit organizations, The state ranks first among states in charitable nonprofit organizations per capita. 501(c)3 designation makes the organization income taxexempt and allows its donors to deduct contributions from their taxable income.

Most arts, cultural, humanitarian, health care, educational, environmental, animal-related, legal, and civil rights organizations fall into this category. Religious organizations are also considered 501(c)3, but they are not required to register or file tax forms with the IRS.

Kimberly notes that, as a result, religious organizations are underrepresented in the results of this research.

Vermont's charities generate $2.8 billion in revenues, $2.5 billion in expenses, and have fund balances totaling $3.1 billion. Charitable organizations directly contribute about $1.9 billion to the Gross State Product (GSP), or 10.7 percent of the GSP The charitable sector contributes more to the Vermont GSP than the entire retail sector ($1.8 billion).

The charitable sector in Vermont provides approximately 19,980 fulltime, 14,308 part-time and 8,085 contract (non-permanent, paid) jobs. Together, these 42,373 jobs constitute about 12 percent of the total number of jobs in the state.

Kimberly compares this to the business sector: "It would take the combined workforce of Vermont's 75 largest noncharitable employers (including IBM) to equal the jobs provided by the charitable sector."

The charitable sector operates with a combination of public dollars, private contributions and fee-for-service. On average, Vermont charitable organizations receive 36 percent of their revenues from private contributions, grants, and special events, 45 percent from government (local, state, or federal) sources, and 19 percent from feefor-service.

The funding mix of any individual organization may be very different depending on its size and its mission. Typically, larger organizations access more of their funds through the government, and rely less on private sources of revenue. In Vermont, many services, such as community mental health, home health care, affordable housing, and land conservation, are provided by contract or grant-making arrangement between the government and charitable nonprofit organizations.

By supporting charities to achieve public purposes, the State of Vermont limits the growth of government and provides more flexible, community-based services. When public dollars are invested in charitable organizations, they also leverage additional dollars from individual donors, private or corporate foundations, or fees.

VANPO Executive Director Jane Van Buren notes, "A dollar invested in the Charitable sector brings more than a dollar of value to Vermont communities."

Eighty-five percent of Vermonters make financial contributions to charitable organizations, with a total value of at least $218 million, amounting to almost 8 percent of all revenues received by charitable organizations in Vermont. Individual contributions are important because Vermont has a small number of private foundations, and these have limited assets. Still, Vermont charities have been quite successful in leveraging foundation support from national or regional grant-makers such as the Freeman Foundation.

While this study looked at the direct economic impact of the charitable sector in Vermont, it also highlights the importance of services provided by the sector and their ancillary benefits. By providing childcare, elder care, and home health care, charitable organizations help productive employees remain in the workforce.

Arts organizations in many communities entice visitors and, in towns such as Bellows Falls, have been critical to the creation of vital downtowns, Charitable nonprofits contribute to workforce development through job training and traditional education.

Based on Kimberly's research, VANPO is publishing several booklets detailing different dimensions of the charitable sector in Vermont, including the facts and fallacies about the sector, its economic impact, wages and benefits in the sector, information technology capacity, and property ownership and taxation patterns.

Van Buren hopes these publications will be used widely as a reference for policy-makers, the media, and nonprofit leaders themselves.

She explains, "While charitable nonprofits do important work in every community in Vermont, we have not had access before to comprehensive information about the sector. We're very excited to share this data with the broader community!"

Copyright Boutin-McQuiston, Inc. Mar 01, 2003
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