The Economic Value of Nonprofit Organizations: Just How "Profitable" Are Nonprofits?

Article excerpt

The nonprofit sector contributes twice as much to a nation's gross domestic product as utilities do, and about as much as the construction and finance industries, according to a report by the Johns Hopkins University Center for Civil Society Studies.

The civil society sector embraces a wide variety of private, nonprofit organizations, including hospitals, schools, social service agencies, symphonies, environmental groups, and many others. Much of the services these groups perform is through volunteer workers--be it picking up trash along a river bank, registering voters, or driving elderly patients to a doctor's appointment.

According to the report, this work accounts for an average of 5% of the GDP in the eight countries covered (Australia, Belgium, Canada, Czech Republic, France, Japan, New Zealand, and the United States), and as much as 7% in the United States and Canada.

The civil sector is also growing faster (by 8.1% a year, on average) than overall GDP (4.1%) in the countries studied.

The study used data generated by official statistical agencies in eight countries using guidelines from the United Nations; until recently, such data was scattered, making it difficult for economists to estimate the value of volunteer work. In philanthropy, gifts of time (volunteering) are nearly double gifts of cash and account for about a quarter of the economic contribution of nonprofit institutions, according to the report.

Providing critical human services in health and education accounts for an average of 60% of nonprofits' economic contribution to GDP, though the amount varies widely by country. …