2 min read
The teaser line on the Michigan-based Charles Stewart Mott Foundation’s press release reads: "Nonprofit Sector Is Asset to Michigan's Economic Recovery."

It should read: “Government Bailout Boosts Michigan Nonprofits."

That would be more accurate. Indeed, the report’s press releases and many of the articles referencing the study seem to be purposefully misleading, peddling a partial truth as the whole truth.

The C.S. Mott Foundation has teamed up with the U.S. Bureau of Labor Statistics and the Johns Hopkins Center for Civil Society Studies to track nonprofit sector employment. The foundation’s multi-year grant allows the Center to track fluctuations in nonprofit employment.

So far, the Center for Civil Society Studies has issued a number of reports illustrating how nonprofit job growth in various states has outstripped private sector job growth in recent years. The reports show how, to use their language, the nonprofit sector is a “major economic force.”

Some statistics in the Michigan report are eye-opening. For example, the nonprofit sector is the fourth largest employer in the state, employing nearly 1 in 10 workers. 87 percent of nonprofit jobs in Michigan are in the state’s health, social service, and education sectors. Healthcare alone accounts for 68 percent of all nonprofit jobs in Michigan.

The central argument of the Michigan report is that nonprofit growth is expanding even as private sector jobs decline. As Johns Hopkins’ Lester M. Salmon puts it:  “Our findings indicate that the nonprofit sector stays the course even when the going gets tough. Nonprofit employers – hospitals, nursing homes, human service agencies, colleges, cultural institutions – don’t pull out of the field just because they don’t make a profit. They serve as reliable, durable protectors of the public’s interest."

The reports detail all manner of areas in which nonprofit job growth continues apace even during recessionary years. The accompanying press releases and news articles naively suggest that somehow the nonprofit sector is immune to the economic realities of a down economy.

That, however, is not the whole story. The rest of the story comes in a paragraph on page 9 of the Michigan study – in the paragraph never cited in the press releases and news stories.

The paragraph explains how growth in Michigan nonprofit employment during the recessionary years of 2007-2009 likely came as a result of “the impact of the national Economic Recovery and Reinvestment Act, which channeled important assistance to the Medicaid program, which has become an important source of nonprofit revenue.” Indeed, in Michigan health care nonprofit employment accounts for 68 percent of all nonprofit jobs!

The report continues: “In the case of social assistance, by the second year of the recession, i.e., Q2 2008 to Q2 2009, employment gains gave way to employment losses as the Economic Recovery Program support was exhausted.” In other words, as federal bailout dollars dried up, nonprofit employment shriveled.

That’s the narrative that didn’t make it into the C.S. Mott Foundation’s headline or press release. But it is an important part of the story of how the nonprofit sector, which some still call the independent sector, is increasingly becoming a dependent sector. The growth of nonprofit jobs in recessionary times is as fleeting as the government bailout dollars that supported them.

Nobody benefits from puffing up the nonprofit sector with partial truths.

1 thought on “Growing the dependent sector in recessionary times”

Leave a Reply

Your email address will not be published. Required fields are marked *