I’d Call That A Bargain

Last week, I wrote about the essential nature of the work done by Imagine!, other Community Centered Boards, and service providers across Colorado and the nation – essential not only because of the needs of those we serve, but essential to the economic development of our communities.

A reader of my blog, Robin Bolduc, made a comment about that essential nature of what we do which clarified my point far better than I was able to:

My husband's disability-related needs provide employment for 6 people directly as personal attendants - total support for a family of 3 and a single mother; allows a father to go to college so he can support his family; supplements the income of a young man who works in human services; supplements the income of a senior citizen; gives job experience for a displaced construction worker; and supports a college student.

Well said, Robin.

Let me take that a step further and demonstrate Imagine!’s impact on our community. Imagine!’s operating budget is $32.2 million. The large majority of that funding comes from government sources – Federal, state, and local. That money is then put back into the community in the form of jobs (last month Imagine! had 642 employees, included in that number are close to 100 people with one or more developmental disabilities) and small business development (Imagine! contracts with more than 180 providers in Boulder and Broomfield counties). Furthermore, the people we employ and the people we contract with are paying taxes and spending their hard earned money every day at local grocery stores, restaurants, and shopping centers. So not only is the money that Imagine! receives spent on behalf of our community, it is also spent in our community.

Spending the funds we receive in the community is a key distinction between not-for-profit organizations and for-profit organizations, and illustrates how not-for-profits are key drivers of any community’s economic engine, even if that fact is not always recognized by those in the for-profit world, or even the government sector.

About five years ago, I read an article in the Stanford Social Innovation Review that really impacted my thinking on this subject. The title of the article was “What Business Execs Don’t Know – But Should – About Nonprofits,” and it was written by Les Silverman and Lynn Taliento. One quote from the article, from Judy Vredenburgh, former CEO of Big Brothers Big Sisters and former Senior Vice President of March of Dimes, really struck me:

Every time we in non-profits satisfy customers, we drain resources, and every time for-profits satisfy a customer, they get resources back. That sounds very simple, but it has huge implications.

Although I wish she has used a different word than “drain” for resources, because I think it has some unintended negative connotations, I think her overall point is very powerful. Success in the not-for-profit world is measured by how well we spend our dollars to meet our mission, not by how much money we take in. If not-for-profits are successful at meeting their mission, then the community benefits economically in addition to benefitting from improvements to the community’s health and well being. In other words, if not-for-profits are successful, they play a vital role in the economic structure of their communities.

Statistics confirm this. Look at some of the data from a report prepared for Congress in 2009 by the Congressional Research Service demonstrating the not-for-profit sector’s magnitude and impact. (I got this information from this blog post written by Todd Cohen on the Stanford Social Innovation Review’s website).

• In 2005, the nonprofit sector overall employed 12.9 million people, or 10 percent of the workforce

• From 1998 to 2005, nonprofit employment overall grew 16.4 percent, compared to 6.2 percent for overall employment in the U.S.

• In 2004, the charitable sector alone employed an estimated 9.4 million people, or over 7 percent of the U.S. workforce, plus the equivalent of 4.7 million full-time volunteer workers

• Based on employment, the charitable sector is larger than the construction sector and larger than the finance, insurance and real-estate sectors combined, and it has nearly half as many employees as federal, state and local government combined

• In 2008, a broad category of nonprofits known as “nonprofit institutions serving households,” a subset of the overall nonprofit sector, generated 5.2 percent of U.S. gross domestic product, or GDP, representing $751.2 billion worth of output

• Nonprofits’ share of GDP grew 0.4 percentage points from 1998 to 2008, consisting of wages paid to nonprofit employees, the rental value of assets owned and used by nonprofits while providing services, and rental income from tenant-occupied housing nonprofits own

Historically, not-for-profits have taken on societal issues that the government or for-profit sectors have either been unable or unwilling to tackle. We’ve figured out ways to address community needs efficiently and effectively, all the while under a big microscope (what the article mentioned above describes as “the public and press’s unblinking scrutiny of nonprofits”) that has made us transparent and extremely responsive to our local region’s wishes.

Not-for-profits do all that, and bring economic value to communities?

I’d call that a bargain.

Then again, what do I know?