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Last modified: Wednesday, October 24, 2007

IU report details importance of nonprofits in Hoosier economy

OCT. 24, 2007

BLOOMINGTON, Ind. -- The nonprofit sector has remained a strong and growing segment of the Indiana economy, according to a new report from Indiana University. In 2005, the last year for which data are available, nonprofits employed at least 235,000 Hoosiers -- about 1 of every 12 employees in the state -- and had a payroll of $7.4 billion.

Kirsten Grønbjerg

Kirsten Grønbjerg

Print-Quality Photo

The report, titled Indiana Nonprofit Employment: 2007 Report, helps make clear the role of charities and other nonprofit organizations in the economic life of the state, said lead author Kirsten A. Grønbjerg, a professor in the IU School of Public and Environmental Affairs and the Efroymson Chair in Philanthropy at the Center on Philanthropy at IU.

"Not only do they provide a large share of services that are key to the quality of life in local communities, but their many employees pay income taxes and buy food and restaurant meals in the local communities," she said. "They are an important part of the state's economy in more ways than one."

The report is a joint product of SPEA at IU Bloomington, the Center on Philanthropy, which is headquartered at Indiana University Purdue University Indianapolis, and the Johns Hopkins Nonprofit Economic Data Project. It is part of a series called Indiana Nonprofits: Scope and Community Dimensions.

It updates and builds on a previous report on nonprofit employment that was issued in 2005, adding two more years of data, detailed regional analysis and more specific information on types of nonprofits. Findings include:

  • The nonprofit sector grew every year from 2001 to 2005. During that time, nonprofit employment grew by 5 percent while government employment increased by 3 percent and for-profit employment declined by almost 1 percent.
  • Payroll in the nonprofit sector grew 22 percent during the period and accounted for 7.3 percent of the state's payroll in 2005. Government payroll increased by 14 percent and for-profit payroll by just 10 percent in the same time.
  • Overall, employees in the nonprofit sector continued to earn less than those in other sectors, but the gap narrowed. Average weekly wages increased $84 for nonprofit employees between 2001 and 2005; increases were $70 for employees of for-profit establishments and $64 for government employees.
  • In some regions of the state, average weekly wages were higher in the nonprofit sector than in the for-profit and government sectors. And in industries where nonprofit employment is concentrated -- health care, for example -- nonprofit wages were often higher than for-profit and government wages.

The report points out that the nonprofit sector employs: about as many people as the state's entire accommodation and food sector; about 60 percent more people than construction; and almost twice as many people as the state and federal government combined in Indiana. Nonprofits provide much of the employment in fields that contribute significantly to the quality of life in Indiana, including social assistance and health services.

Included in the report are analysis of nonprofit employment in Indiana's metropolitan statistical areas and separate sections on each of the 11 Economic Growth Regions as defined by the Indiana Department of Workforce Development. Those analyses show considerable geographic variation. For example, the South Bend metropolitan area, with the presence of several nonprofit hospitals and the University of Notre Dame, has approximately twice the rate of nonprofit employment as the state. (Employees of public colleges and universities, like those of K-12 public schools, are counted as government employees, not nonprofit employees).

An analysis of nonprofit employment by industry found some surprises: for example, 15 percent of employment in the utility sector is by nonprofits.

Grønbjerg said the report almost certainly undercounts nonprofit employment because certain organizations, including religious congregations and charities with fewer than four employees, are not required to file reports with the national Covered Employment and Wages program, the source of data for the report.

Reporters may contact Grønbjerg for interviews at 812-855-5971 or Web links to the report are available at Note: Local and regional news media may find ideas for stories in analyses of Economic Growth Regions, starting on page 33 of the full report.

The IU School of Public and Environmental Affairs (SPEA) is a global leader in public policy and management, environmental science, and managing the relationship between the two. The school is committed to teaching, research and service in public and non-profit management, public policy, environmental science, arts administration and health administration. SPEA has earned national distinction for innovative educational programs and was ranked in the top three graduate programs in its field in U.S. News and World Report.

The Center on Philanthropy at Indiana University is a leading academic center dedicated to increasing the understanding of philanthropy, improving its practice, and enhancing participation in philanthropy through research, teaching, public service and public affairs programs in philanthropy, fundraising, and management of nonprofit organizations. The Center operates programs on the IUPUI and IU Bloomington campuses.