Nonprofits Adding Jobs While Businesses Lose Them, Study Finds

Nonprofit groups added jobs during the recession, according to an analysis of government data from 21 states by the Johns Hopkins University Center for Civil Society Studies.

Nonprofit employment in those states grew by an average of 2.5 percent a year from the second quarter of 2007 to the second quarter of 2009, the study found. By contrast, for-profit employers in the same 21 states shed jobs by an average of 3.3 percent a year.

Even more surprising was that nonprofit job growth in that period was stronger than it had been from 2001 to 2007, when nonprofit employment grew by an average of 2.3 percent.

Lester M. Salamon, director of the Center for Civil Society Studies, attributed the growth in large part to federal grants made in response to the recession.

“The stimulus put significant new funding into Medicaid and into the community-development field,” he said, enabling such charities to expand their work forces.

With the economic stimulus money running out, he said, “there is an enormous risk” of future cuts.

More Jobs in Arts

But even charities that didn’t receive a significant share of stimulus money, such as arts groups, saw job growth. Employment at arts and entertainment groups grew by an average of 4.6 percent from 2007 to 2009, according to the study.

Other parts of the nonprofit world grew less quickly. Employment at nonprofit membership groups, for example, grew by only 0.4 percent a year, on average. Social-service groups added jobs at only 1.4 percent a year, on average, even though those organizations saw vast increases in demand for aid.

The job growth may also have been due to the nature of the fields in which nonprofits work, which tended to be faster-growing areas than some other parts of the economy, the study said. In some cases, for-profit groups working in the same fields as charities added jobs more quickly than their nonprofit counterparts, at least before the recession.

For example, for-profit social-service organizations added jobs at an average rate of 7 percent a year from 2000 to 2007, compared with 2.4 percent at nonprofits. Employment at for-profit nursing homes grew by an average of 2 percent during that same period, compared with 1.4 percent at nonprofit nursing homes.

“The service area has been growing, historically, pretty fast, much more so than manufacturing,” said Mr. Salamon. He said for-profit social-service groups may be expanding more quickly because they have greater access to capital that enables them to invest in new buildings and hire workers more quickly than nonprofit groups.