This week the Chronicle of Philanthropy reported that new data from the Bureau of Labor Statistics showed an incline in nonprofit growth from the 2007 – 2012 period, despite the lackluster economy and a stagnant for-profit sector.
Over that period, which spanned the Great Recession, charitable organizations increased 8.6 percent, from 10.5-million to 11.4-million as registered with the IRS. And it wasn’t just one big boost, it was a steady incline year over year even while the unemployment rate rose across America.
In a deeper review of the data, one can see that much of the growth was driven by education and health care. Reports the Chronicle, “Among nonprofits, 67.5 percent of all employees work in health care and social services, according to the 2012 figures.”
At the Unemployment Services Trust, we saw a similar positive trend. Nonprofit members weathered the recession much better than their for-profit counter parts. While there were, no doubt, higher levels of unemployment claims across the board in 2009/2010, the turnaround was quicker than anyone could have anticipated.
While the news continued to report a growing national unemployment rate and a difficult economy, UST member nonprofits were largely back on their feet showing nearly normalized, leveled-out unemployment claims at their organizations within a short period. UST’s policy is that a nonprofit’s money in their UST account is their asset. Unlike unemployment insurance through the state or a third party, UST returns money to organizations if their unemployment claims are lower than anticipated. With such a strong turnaround in claims so quickly, UST was able to refund over $15 million to nonprofits over the next two years, which they could put directly into their missions.
Harvesters will utilize this refund in support of our mission: To feed hungry people today and work to end hunger tomorrow. This refund will help us distribute food to the more than 60,000 people in western Missouri and eastern Kansas who receive food from Harvesters in any given week. Thank you!” – Director of Finance, Harvesters—The Community Food Network, Kansas City MO
Ever since, things have only improved for the 2,000 nonprofit organizations that are members of UST. From 2012 to present, the employer win rate on the protest of improper unemployment claims has increased from 78 percent to 83 percent. That change has generated more than $1.9 million in additional unemployment savings for UST nonprofit members.
In addition, despite the economic downturn, UST’s conservative asset investment continued to perform. UST uses its return on investment to offset the cost of administration of our nonprofit members’ accounts, like providing customer service, claims administration, actuarial analysis of accounts, investment management, a live HR hotline, and more. In 2013, operations and investment were so effective that 76.7% of UST members paid no operating costs after their proportion of investment income was applied. In fact, over the past 5 years it has never dipped below 50% of members receiving an effectively “no-cost” participation.
Overall the Bureau of Labor Statistics findings simply don’t shock us. Nonprofits continue to show their strength and ability to support the community as well as the economy. And with the right support systems and services, they’ll continue to grow.