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Driven by Purpose: Oregon's Nonprofits
by Dallas Fridley
Published Sep-19-2012

 
A nonprofit corporation, commonly referred to as a "nonprofit," is one that is organized to achieve a purpose other than generate a profit. These corporations qualify for federal tax exempt status and must reinvest any surplus revenues into efforts that further the mission of the organization. They are prohibited from passing profits on to those who control the organization. These organizations range from trade unions and religious groups to food banks and private schools. Many hospitals are also organized as nonprofit corporations.

The economic impact of services provided by nonprofits can be measured in a variety of ways. In 2012, with 10 percent of Oregon's children living in a household where at least one parent was unemployed, nonprofit services are a lifeline.

The services are essential. Wages earned by employees at nonprofits are too. For the purposes of this article, the impact presented is limited to employment and wages.

Oregon's 2011 Nonprofit Stats:

  • 8,644 nonprofit businesses
  • 168,156 nonprofit jobs
  • 48% of all nonprofits were in the other services industry
  • 62% of nonprofit employment was in health care
  • $41,145 was the annual average pay

How Large is Oregon's Nonprofit Sector?
 
In 2011, there were 8,644 nonprofits in Oregon. These organizations played an integral role in Oregon's economy. They made up nearly 7 percent of all businesses in the state and had 168,156 jobs. These 168,000 jobs accounted for nearly 13 percent of Oregon's private-sector employment, up from about 11 percent in 2002. As a share of Oregon's total (private and public) employment, nonprofits made up more than 10 percent in 2011, the same amount as manufacturing.

Beyond employment, the organizations make available essential human and education services that for-profit private companies do not provide. The services offered by nonprofits often complement those provided by the public sector. Unlike the public sector, which is often required by law to provide human and education services, nonprofits are beholden to a mission, not a state or federal statute. The organizations are compelled to extend their hand to every community member who walks through their doors.

Intentional and Improvised Employment Training
 
Educational services had 11 percent of Oregon's nonprofit employment in 2011 (18,968 jobs). The organizations in this industry range from preschools and tutoring services to colleges and employment training places. The classes and training offered by these organizations are typically in high demand due to their relatively low costs. For the last three years, as Oregon's unemployment rate stubbornly remained above the national average, the need for education and training services has been overwhelming.

Due to the economic downturn, thousands of Oregonians found themselves not only without jobs but with surplus time during the day when they would normally be at work. Many turned to nonprofits as valuable places to learn essential job skills or to seek out opportunities for work experience that would plug a resume gap. This is demonstrated by both the increase in the number of volunteers and the increase in the number of volunteer hours per capita in Oregon between 2008 and 2009 reported by the Corporation for National and Community Service. The experience obtained through volunteer hours could be the difference between obtaining future employment and staying unemployed. It can be invaluable experience at a time when 40 percent (July 2012) of the unemployed have been out of work for more than six months.

This trend of volunteerism buoyed nonprofit service provision. Nonprofit organizations' actions mirrored those of for-profit employers. Radical staffing cuts were made at nonprofits to stay afloat as financial resources dwindled. Unlike for-profit businesses, nonprofits have the ability to use volunteers to backfill positions vacated by laid off workers. However, employing the skills of volunteers can be difficult. Nonprofits cannot always spare the staff time required to supervise and assist volunteers. More volunteers, although good in theory, do not replace highly qualified employees committed to providing the highest level of service to clients.

More Than Résumé Workshops and Private Schools
 
Educational services is one leg of Oregon's nonprofit stool accounting for one out of nine nonprofit jobs. Two other legs - other services, and health care and social assistance - account for 76 percent of nonprofit jobs in Oregon.

As shown in Graph 1, other services had 14 percent of the state's nonprofit employment (23,894 jobs). The correlation between other services and nonprofits makes sense. It is the industry that includes religious, grant making, civic,

professional and similar organizations. Places of worship, the Boys & Girls Club, The United Way and local chambers of commerce are some of the most widely recognized nonprofits in Oregon. And there are a lot of these organizations across the state. As shown in Graph 2, the industry had just about half of Oregon's nonprofits (4,146 organizations).

Health care and social assistance employs the largest number of nonprofit employees (104,270); 62 percent of Oregon's nonprofit employment. Like other services, there is diversity in the industry: from assisted living facilities to mental health services. However those organizations' impact in this industry is completely overshadowed by hospital employment. In Oregon, roughly 90 percent of hospitals are nonprofits. There are 51 hospitals in the state that have nonprofit status. Those 51 units employed 51,769 people. Almost half of the health care and social assistance industry's total employment was at Oregon's 51 nonprofit hospitals.

Graph 1
Oregon nonprofit employment by industry 2011
Graph 2
Oregon nonprofit firms by industry sector 2011
Pay at Nonprofits Follows Industry Standards
 
Annual average pay in Oregon's private sector was $42,421. Annual average pay for Oregon nonprofits was $41,145. A mere $1,276 separates the two. The perception that drastically lower wages are paid at nonprofits does not appear to be true. The 2011 data show that annual average wages in Oregon have more to do with the industry than for-profit or not-for-profit status.

In 2011, nine industries reported higher annual average wages for nonprofits compared with all businesses in the industry (Table 1). The industry with the largest difference was finance and insurance. Annual average pay at nonprofits in this industry was more than $10,000 higher than for the industry as a whole. Administrative and support and waste management and remediation services had the next largest difference. Nonprofits in that industry paid nearly $7,200 more than the industry as a whole.

In two of the three industries that dominate nonprofits, annual average wages at nonprofits are nearly equal to wages in the whole industry. The annual average wage for all firms in the education services industry was $31,853 in 2011. The nonprofits in that industry reported an annual average wage of $32,846, about $1,000 higher. In health care and social assistance, the annual average pay in 2011 was $44,874 for all firms and $45,706 for nonprofit entities.

The fact that Oregon's highest paying industries have little or no nonprofit employment is likely the most significant factor in lower nonprofit wages. This runs counter to the perception that nonprofit wages are always lower than wages paid at for-profit businesses.

Of industries that employ more than 1 percent of Oregon's nonprofit employment, other services nonprofit annual average pay was noticeably lower than the industry as a whole and management of companies and enterprises also fell short. The other services industry, as a whole, pays approximately $3,600 more annually than nonprofits in that industry do. However, as its name states, this industry groups together services that don't fit elsewhere - so this difference in pay may actually point to a significant difference in the types of work being done by nonprofits versus for-profit businesses. For instance, a recreational vehicle service technician earned an annual wage of $42,123 in Oregon in 2012. A director of religious activities and education earned an annual wage of $34,562. A nonfarm animal caretaker earned an annual wage of $23,316 and heavy equipment mechanics earned $47,316. Social and human services assistants earned $30,021. Nonprofit wages in management of companies and enterprises was more than $18,000 lower than wages for the industry as a whole.

Table 1
Annual Average Pay by Industry in Oregon Nonprofits and All Firms, 2011
Industry Name Nonprofits All Firms
Finance and Insurance* $72,127 $61,863
Professional, Scientific, and Technical Services $64,482 $62,115
Management of Companies and Enterprises $59,582 $78,076
Health Care and Social Assistance $45,706 $44,874
Private Non-Classified* $41,835 $53,247
Total $41,145 $43,092
Information* $38,998 $66,172
Construction* $38,862 $49,109
Wholesale Trade* $36,707 $67,948
Admin. and Support and Waste Mgt. and Remediation Services $36,578 $29,394
Agriculture, Forestry, Fishing, and Hunting* $33,077 $27,382
Educational Services $32,846 $31,853
Real Estate and Rental and Leasing* $32,318 $33,024
Retail Trade $29,282 $26,299
Arts, Entertainment, and Recreation $24,488 $22,714
Other Services (exc. public admin.) $23,845 $27,462
Transportation and Warehousing* $23,154 $40,979
Utilities* $18,305 $83,582
Manufacturing* $17,668 $60,273
Accommodation and Food Services* $16,943 $16,402
Mining, Quarrying, and Oil and Gas Extraction* N/A $47,433
*These industries employ less than 1 percent of Oregon's nonprofit employees.
Rural Versus Urban
 
In Oregon's 25 rural counties, there are 2,152 nonprofit employers. They make up about 8 percent of the counties' employers. There are more than 26,300 employees at nonprofit organizations, which is 9 percent of the counties' employment. The annual average pay at the rural nonprofits exceeds average pay for all employers by about $2,400.

In urban Oregon, nonprofit pay is not higher than for all employers. Annual average pay at nonprofit employers is around $2,800 less than all employer average pay. There are more than 6,300 nonprofit employers in Oregon's 11 urban counties. Metro area nonprofits employ nearly 140,500 people, or close to 11 percent of urban Oregon's total employment in 2011.

In areas of the state where there is a higher concentration of Oregonians there is a higher concentration of nonprofit organizations. More accurately, in counties where there is more employment there is more nonprofit employment. There were 16 counties that, in 2011, had less than 1 percent of the state's total nonprofit organizations.

To show the real impact of nonprofit employment across the state, nonprofit employment was calculated as a percent of a county's total employment in Figure 1. There were 14 counties where nonprofit employment made up more than 10 percent of the counties' total employment.

Figure 1
Nonprofit employment as a percent of total county employment 2011
The Future of Nonprofit Employment
 
From Baker to Benton County, nonprofits not only serve distinct human needs - they also provide jobs, incomes, and serve as employment training sites. The recession had its impact. Like their for-profit brethren, nonprofits faced declining cash flows. Their lines of credit were called in or dramatically reduced. The organizations dealt with smaller donations and government funding cuts.

Oregon nonprofits report that they have emerged from the recession with leaner budgets and smaller staffs. Overall, the reports from the nonprofit community tell us the organizations learned how to be more efficient, more accountable and more clever.

The future of nonprofit employment in Oregon is inextricably linked to the future of health care employment. The industry increased employment in Oregon over the last three years and continues to dominate nonprofit employment.