New England's overlooked nonprofit workforce

New England Journal of Higher Education, The, Fall 2003 by Garvey, David, Pratt, Stephen

An Economic Driver Ignored

New England's nonprofit organizations sustain our quality of life and provide valued, often life-critical, products and services. The nonprofit sector is also a driver of innovation and economic development in New England. Nationally, the nonprofit sector manages $1.2 trillion in assets. Yet the workforce development needs of this sector are often overlooked.

New England's nonprofits serve as economic catalysts in four ways:

They create jobs. Nationally, nonprofit organizations employ nearly 11 million Americans-more than 7 percent of the U.S. workforce. The sector's impact is greater in New England, accounting for 9 percent to 12 percent of the workforce in each New England state, according to research conducted at Johns Hopkins University.

"Nonprofits are a vital sector of our economy," Massachusetts state Sen. Jack Hart of South Boston recently said at a Beacon Hill hearing. "They are the sustainable employment factor we can count on. They are not going to pack up and leave for another state at the drop of a hat (or tax rate)."

In fact, a University of Rhode Island study found that the stability of employment of Rhode Island's nonprofit sector actually helped mitigate business cycle fluctuations related to retail trade, tourism and durable goods production, and helped lessen the severity of the 2001 recession in the state.

They pave the way for private entrepreneurship. Nonprofits are usually the first in and the last out in distressed areas where commercial businesses could not survive. The Codman Square Health Center, for example, has been a dramatic economic catalyst for the Dorchester section of Boston. Founded as a grassroots provider of health care services in the 1970s, by 2000, the center employed 252 people, took in $13 million in income and was the anchor for the revitalization of Codman Square.

In Connecticut, MicroCredit Bridgeport organized 30 inner-city entrepreneurs into peer lending groups and funded 10 small business loans in its first year, enabling these entrepreneurs to begin creating jobs and wealth in Bridgeport-and that with only one full-time employee.

They create an environment that attracts employers. The nonprofit sector sustains the quality of life that attracts new commercial employers. Employers choose to locate in New England for its higher education system, cultural offerings, recreation, health care, public safety and other barometers of quality of life. As James Brett, CEO of the New England Council, explains: "A business that is looking to relocate will ask: Do you have a theater in your town? A symphony? An art gallery?" Businesses tell us the quality of life is why they locate where they do.

They reinvest 90 percent of earnings in the local economy. New England nonprofits spend more than $56 billion annually on goods and services. A University of Massachusetts study found that 90 percent of operating expenditures of Lowell, Mass., human service agencies were spent in the Lowell region! That suggests that New England nonprofits on the whole reinvest as much as $50 billion annually into the local New England economy.

Overlooked workforce

Despite the size and impact of the nonprofit sector, state and federal workforce development programs have historically overlooked the needs of the nonprofit workforce.

Connecticut, for example, has focused workforce development efforts on nine important industry clusters; bioscience, aerospace, software/information technology, tourism, metal manufacturing, maritime, plastics, agriculture and insurance and financial services. Yet the nonprofit sector accounts for more than 156,000 Connecticut jobs-more than tourism, software/information technology, metal manufacturing, maritime, plastics, insurance and financial clusters combined-and it's growing.

To be sure, it has only been in the last decade that the philanthropic world itself has placed a stronger focus on the workforce and professional development needs of the nonprofit managers and organizations through initiatives such as Grantmakers for Effective Organizations. Even the recent New England Board of Higher Education series on human capital development did not identify nonprofits as a sectoral workforce priority.

Burnout at ground zero

National studies such as San Francisco-based CompassPoint's 2001 "Daring to Lead," are finally focusing on executive burnout and other workforce challenges facing nonprofit organizations. CompassPoint reports that nearly two-thirds of nonprofit CEOs are in the job for the first time. Only one-third of executive directors are recruited from inside their organizations-suggesting a lack of organizational leadership development. And fewer than half of nonprofit CEOs say they plan to take on a nonprofit CEO role again.

These figures hint at a neglected management class within the nonprofit sector. This lack of attention to workforce development needs, management capacity building and succession/leadership planning reduces the social and economic return on New England's annual $68 billion investment in the nonprofit sector.