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Adriene Davis
Center on Philanthropy
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Last modified: Tuesday, July 22, 2003

Nonprofits are major economic force in Indiana

222,000 Hoosiers work in nonprofits, study finds

NOTE TO EDITORS: Detailed data and graphics are available upon request, including selected information by county, region, type of nonprofit and industry comparisons. The new report is available on the project Web site at http://www.indiana.edu/~nonprof/results/inemploy/indianaempl03.pdf.

INDIANAPOLIS -- Nearly one in 13 paid employees in Indiana -- about 8 percent of the total workforce -- works in a nonprofit organization, according to a new report on the role nonprofits play in the state's economy.

More Hoosiers are employed in the nonprofit sector than in construction, non-durable manufacturing or the state's entire finance, banking, insurance and real estate industry. The study, released today (July 22) by Indiana University's Center on Philanthropy and School of Public and Environmental Affairs, is believed to be the first to assess the impact of nonprofits on Indiana employment.

Indiana's 222,000 nonprofit employees earned about $6 billion in wages in 2001, the latest year for which data are available, accounting for 6.6 percent of the state's total payroll.

"Nonprofits are a significant presence in Indiana's workforce. Until now that has gone largely unrecognized," said Kirsten Gronbjerg, project director for the study. "We hope this new data will aid policy makers and the public in understanding the nonprofit sector's impact and the stake that Indiana's citizens have in its continued health."

Gronbjerg holds the Efroymson Chair in Philanthropy at the Center on Philanthropy headquartered at Indiana University Purdue University Indianapolis (IUPUI) and is a professor in nonprofit management in the School of Public and Environmental Affairs at IU Bloomington.

The report provides new information on the size, composition and distribution of paid nonprofit employment in 1995, 2000 and 2001. Gronbjerg believes it may underestimate nonprofits' presence, because most religious congregations are not included in the data available to researchers, while nonprofits that are not registered with the Internal Revenue Service cannot be identified as nonprofits in the employment data analyzed.

Additional key findings include:

-- Approximately half (49 percent) of Indiana's nonprofit employees work in health services. Nonprofit hospitals account for almost 88 percent of all private hospital employment in the state, compared to 66 percent nationally.

-- 17 percent of nonprofit workers are in social services; 12 percent are in education.

-- Nonprofit employment pervades the state but is concentrated in the major metropolitan regions of the state such as Indianapolis, Gary and northwest Indiana, South Bend, Fort Wayne and Evansville.

-- In South Bend, nonprofits account for nearly 17 percent of all employment, versus about 10 percent for most other Indiana metropolitan areas. Nonprofits' share of total employment varies widely by metropolitan region and by county.

-- Between 2000 and 2001, job growth in the nonprofit sector (2.1 percent) outpaced growth in the for-profit (minus 3.1 percent) and government sectors (0.5 percent). This was consistent with the pattern the researchers found from 1995 to 2000.

-- In fields with comparable nonprofit and for-profit jobs, such as health care, social services and day care, nonprofit wages more than held their own compared to wages at for-profit organizations. Overall, however, the average weekly wage for nonprofit employees was lower than those in the for-profit and government sectors.

The study focuses on more than 5,000 nonprofits registered as tax-exempt under Section 501(c) of the Internal Revenue Code, such as private, not-for-profit hospitals, day care centers, universities, homeless shelters, museums, theaters, trade associations, and civic and membership groups. Portions of the report separate out charities -- nonprofits eligible to receive tax-deductible contributions as 501(c)(3)s -- to allow comparisons between Indiana and analyses for other states completed by the Center for Civil Society Studies at the Johns Hopkins University. For example, Indiana charity employees' wages are slightly (3 percent) below the average wages among the nine states compared.

Overall, 6.8 percent of employed Hoosiers work for a charity, compared to 7.2 percent of workers nationally. About 55 percent of Indiana nonprofits are charities; they employ about 88 percent of the state's nonprofit employees.

"Nonprofits also are an invaluable part of stopping the brain drain and recruiting new for-profit jobs to Indiana," said Gronbjerg. "The high quality of life they provide for our state in education, health care, arts and culture, and other ways helps attract and retain talented employees and new business ventures."

The study draws on data generated by the Indiana Department of Workforce Development. The data were prepared by the Indiana Business Research Center at IU's Kelley School of Business and analyzed by Gronbjerg and a team of researchers.

The employment report is part of an ongoing Indiana Nonprofit Sector: Scope and Community Dimensions project begun in 1999 to examine the size and composition of the Indiana nonprofit sector and the critical role Indiana nonprofits play in communities. The project is funded through support from the Efroymson Chair in Philanthropy by The Indianapolis Foundation, an affiliate of the Central Indiana Community Foundation, and the Center on Philanthropy's Indiana Research Fund, supported in part by Lilly Endowment Inc. The new report is available on the project Web site at http://www.indiana.edu/~nonprof.