Economic Impact of the Nonprofit Sector – Empirical Work• Framing the economic influences and economic costs• Benefits: Contribution to social welfare

• Programs may complement or replace those of the government, saving tax dollars

• If complementary, referred to as “crowding in” (as previously noted)• If a replacement, saves tax dollars

• Employment – Third Sector is major employer, particularly in states like Connecticut

• Supports activities (arts) that market may not.

Costs• Loss in tax revenue (only from portion of public that itemizes)• Waste of money if charity is one of the “bad apples”• Creates no material or social value

Literature• Takes two forms:• Overall analysis of the nonprofit sector AND geographic analysis

of specific states, etc.• Examples:• General: (Grooters, Case Western Reserve)

• In 1996, nearly 11 million workers in nonprofit sector (Salamon)• 1999, over 1.5 million full-time volunteers• Could quantify the value of that work

• $1.65 Trillion in total revenue in 2012• 2012, over 6.5 million nonprofits – accounted for 9.2% of all wages,

5.3% of GDP• Valuing total economic contribution difficult (part of it is in kind)

• Sector very large(National Center for Charitable Statistics)

Very difficult to place value on culture returns (arts, humanities, etc.) that would not be supported in the absence of a nonprofit sector

• One other method of valuing contribution would be to come up with a figure that the government would have to spend to replace the services of nonprofits

Other form of Analysis - Regional• Example:• State Studies

• “Return on Investment” (study by Johns Hopkins on the impact of nonprofits on Colorado)

• Key findings:• Combined paid and unpaid (volunteer) workforce makes the sector the

third largest employer in the state• 5.6% of the labor force

• $13.1 billion in revenues• Spent $11.9 billion• $240 million in income and sales taxes• >5% of gross state product• Between 1995 and 2005, nonprofit employment grew by 39%

• Other impacts:• Attracts out-of-state dollars ($900 million/year)• Significant federal funding• Almost 50% of benefits are produced by mid-sized nonprofits• Impact is greatest in human services and education• Economic impacts are spread out over state

Also, can analyze individual nonprofits – As you will be doing

Economic Effects of Fairfield• Includes:• Money spent by students and staff in community• Large number of employees, who live and work locally

• Employment effects

• Give backs to the community through volunteerism, access to facilities (library), etc.

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Designing Nonprofits that “Work”• Considerations:• Must be impactful (as laid out above)• Must utilize contributions in a meaningful and effective way• Should complement government spending

• Or concentrate on issues government does not address

• Must address needs of all stakeholders• Donors, government (if grants involved), employees, recipients (if

long-term), benefactors (bequests)• In some circumstances – others (At Fairfield, alumni also need to be

considered)

Details of Workshop• Tonight:• Choose an area (category) of the Third Sector that your group

wants to focus on (e.g. environmental, health)• Determine a focus for your nonprofit (e.g. preservation of inland

water systems, childhood illnesses in Central America)• Identify all stakeholders• Determine how each stakeholder will be involved, and how the

organization will address the needs/wants of those stakeholders• Assume your organization will eventually apply for government grants

• Determine the mechanism by which funds will be raised• Address any concerns about efficiency (don’t want to end up on the Donor

Advisory list)• Particularly if “events” are used to raise money

• How will your organization dispense funds?• Will it partner with other nonprofits?

Next Steps…………..• Create a 15-minute promotional presentation aimed at your

fundraising base (foundations, individual donors, corporations, or all of the above)• Presentation must include:

• Goals of the nonprofit, methods, efficiency metrics, uniqueness of what the nonprofit does, links to other nonprofits

• Must address stakeholders’ roles, expectations and how your organization will address those roles

• Address potential role of government funding

• If you decide to pursue an SME (B corps, Fair Trade Organization, etc.)

• Must completely detail the mechanism through which the SME accomplishes its social goal• +customer base, product, etc.• Prior slides may help sort out all these issues

Expectation• Powerpoint presentation with appropriate graphics