Nonprofits build local influence

Compassion International’s reach extends from here to programs in Africa and worldwide.

Compassion International’s reach extends from here to programs in Africa and worldwide.

Compassion International helps feed kids around the globe; the U.S. Olympic Committee oversees the nation’s Olympic and Paralympic movement; and Penrose-St. Francis Health Services provides health care and hospitalization to people around the state.

And all three are part of something bigger — a group of about 2,000 local nonprofits (including about 800 churches) that have an estimated $1.7 billion economic benefit to the Colorado Springs economy.

“Really, nonprofits are primary employers, and they should be looked at that way,” said Dave Somers, executive director of the Center for Nonprofit Excellence, which conducted the first in-depth study of the nonprofit sector in Colorado Springs. “They get more than 80 percent of their money from outside the region — that’s new dollars coming into the city.”

The Center for Nonprofit Excellence launched the study earlier this year to find out the economic impact, the number of jobs and amount of money that the nonprofit sector brings to the Colorado Springs metro area.

“This is the first time we’ve conducted the survey this comprehensively, the first time we’ve looked at nonprofits as a separate industry,” Somers said. “The city’s studied the military and tourism separately, but nonprofits reach across all the segments.”

The study provided a heady number for the nonprofit industry: $3.1 billion in revenue.

“That’s the revenue in terms of employment, something we have never measured before,” Somers said. “It turns out, one out of every 14 workers in the area works for a nonprofit organization.”

The sector provides 16,808 direct jobs and 10,000 indirect jobs, according to the study.

Economic development opportunity

The sector is an important one for the Colorado Springs Regional Business Alliance, which has identified nonprofits separately as one of its key industry sectors and routinely works to bring more nonprofits into the region.

“Nonprofits are twice the size of tourism (in terms of employment,” said Business Alliance CEO Joe Raso. “Everybody pays attention to tourism, but it’s less than 5 percent of the economy. Nonprofits are 6.7 percent — so they’re something we focus on. But they also stretch across sectors. We have the business of sports as an industry cluster, and many of the government bodies that are here are nonprofits as well.”

Raso said the Business Alliances has been looking for more headquarters that might move here, to increase the number of very large nonprofits like Compassion International or Focus on the Family.

“We’re targeting the areas we want to see grow, and this is a real opportunity for us,” Raso said. “The management of nonprofits, since they have boards of directors, is very different from a typical business. The nonprofits with their headquarters here bring a very different set of skills and management strategies.”

But UCCS economist Fred Crowley says there is a downside to having many nonprofits in the area: no taxes.

“They don’t pay taxes, so the local government loses the property taxes, the sales-and-use taxes from the nonprofits,” Crowley said. “Services are paid for indirectly by the employees of the nonprofits, but they don’t pay into the local government funds themselves.”

Myths debunked

But the Springs doesn’t have too many nonprofits, Somers says. Despite a prevailing sense that the city is home to more nonprofits than other cities its size, Somers says that simply isn’t the case.

“I think that’s the first myth this study debunked,” he said. “When you look at the figures, you find out that Colorado Springs nonprofits employ about 7 percent of the labor force, which is higher than the state at 6.5 percent, but not as high as the country as a whole, which is 8.4 percent. That, to me, says we don’t have as many as people think we do.”

And the 15 biggest nonprofits aside, most area nonprofits count as small businesses. According to the study, 84 percent of nonprofits are small, with annual budgets under $1 million. Of that group, 47.3 percent were classified as very small, with annual budgets under $100,000.

“That tells me that we have a lot of nonprofits with a single paid employee, or maybe no paid employees,” he said. “That’s a significant portion of our nonprofits here.”

Conversely, about 0.5 percent of the nonprofits in Colorado Springs have budgets of more than $50 million.

But nonprofits offer more than just their social services to the community, Somers said. The average wage is higher than the average for the rest of El Paso County, he said.

“And that’s something that people should understand — those business leaders who complain about nonprofits being downtown and bringing homeless downtown,” Somers said. “But what they don’t understand is that nonprofits are businesses that add to the vibrancy downtown. The employees shop there; go to restaurants, spend money. They complain about the homeless that the nonprofits bring downtown — they should think about the economic impact of these nonprofits, too.”

Nonprofits aren’t takers, he said. They provide resources and cash to the local community.

“Most people think that nonprofits take resources out of a community,” he said, “through donations and charitable giving. That’s not true. This study shows that better than 80 percent of the $3.1 billion is new money that comes into the community. Much of it is Medicare or Medicaid dollars, but the myth that nonprofits cost a community has been dispelled.”

But nonprofits do more than just pay employees, buy items locally and sell a product. As a sector, nonprofits also have a social return-on-investment.

“That’ll be part of the next study,” Somers said. “We want to know the social impact — the things that nonprofits do to remove some of the burden of caring for people. That’s something that isn’t often considered — but we’re going to let people know what the nonprofits add to the community.”

One Response to Nonprofits build local influence

  1. Thank you for this very valuable information, and for the efforts to educate our community on the value of nonprofit organizations! Keep it up, please!

    Jan
    September 5, 2013 at 2:14 pm