Two thriving economies with divergent futures

Two thriving nonprofit economies with divergent stories to tell

Over the past two months I couldn’’t help but notice the convergence of several articles reporting positively about the nonprofit sector in both Indiana and Maryland.  Each state has acknowledged the significant impact the sector has on their employment rate, the local economy and their respective abilities to meet growing social needs of their residents. Despite the good news they share in common, Indiana and Maryland face different outcomes.

For example, the ““Indiana Nonprofits: Scope and Community Dimensions“” report featured the following highlights:

  • •The gap between nonprofit and for-profit payrolls narrowed as did the difference between nonprofit and government payrolls.
  • •From 2001 to 2005, nonprofit payrolls were up 22 percent, while government and for-profit payrolls were up respectively 13 percent and 10 percent.
  • The nonprofit sector continues to be a major economic force in Indiana, accounting for nearly one out of every 12 paid workers overall.

Indiana appears to flourish in this climate of good metrics by developing local assets and leveraging collaborative partnerships. For example, the state boasts a community foundation in Porter County with assets surpassing $30 million to focus on homelessness, substance abuse and literacy. The Foundation has formed coalitions with other organizations to tackle these substantial challenges. Another community foundation based in Merrillville, managing assets of $44 million, reports one in eight businesses in the county are nonprofits. In fact, while some businesses flounder, nonprofits like hospitals have seen growth. The nonprofit sector clearly has become an essential part of the economic fabric of Indiana if these two counties are any indication.

Additionally, The Maryland Budget & Tax Policy Institute points out why nonprofits remain so important in their state:
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  • Nonprofit employment grew 9 percent from 2007 to 2011 (during recession years) in Montgomery County, even as overall county employment declined 2.5 percent.
  • This trend in Montgomery County mirrors statewide nonprofit job growth, which saw a 10 percent increase from 2005 to 2010. Overall employment dropped by 5 percent in that same time.
  • The nonprofit sector represents 10 percent of the total workforce in Maryland.

Despite these promising statistics, Maryland’s legislature is setting its priorities around budget cuts that will eliminate nonprofit jobs and directly affect the social programs currently supported by the sector. Greg Cantori, CEO of Maryland Nonprofits was quoted in the The Wall Street Journal as saying, “We call it the human cliff. It’s not just the money, it’s what the money does.” Among the federal grants Maryland received in 2012 were $4.5 billion for health, $932 million for education and $247 million for housing and community development. In short, federal cuts mean less money flowing from the state to human service organizations in spite of the sector’s positive impact on job growth and Maryland’s employment rate. Furthermore, in Maryland’s Gazette.net, an article last week reported businesses are increasingly dependent upon nonprofits to help them find qualified employees for their hard-to-fill positions. A healthy social sector and job-related collaboration between businesses and nonprofits hardly seem deserving of budget cuts that will only undermine the positive economic story Maryland has to tell.

How do two states with thriving nonprofit economies have such divergent futures?  What trends are you seeing in your state? Are you prepared for the human cliff?

by Erica McGeachy Crenshaw, CEO of Execute Now!

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