Indiana nonprofit sector grew during Great Recession, outpacing state's for-profits and government

Indiana University study finds impact on nonprofits was mixed; social assistance, arts and membership organizations were more vulnerable

  • Feb. 10, 2014

FOR IMMEDIATE RELEASE

BLOOMINGTON, Ind. -- Despite two recessions that hit the state’s for-profit sector hard, a new Indiana University report shows that the state’s nonprofit sector grew every year from 1995 through 2011. However, this growth was uneven and driven mainly by the nonprofit health care and education industries.

Three smaller industries -- arts, entertainment and recreation; social assistance; and membership and related organizations -- proved to be much more vulnerable to recessions and other external pressures. In each case, employment and payroll grew during the early years of the 1995-2011 period, but then stalled and declined.

Arts, entertainment and recreation peaked in 2001, social assistance in 2004, and membership and related organizations in 2006. All three industries lost employment and payroll during the Great Recession of 2008-09 and continued to falter through the subsequent recovery.

Overall, however, Indiana's nonprofit sector continued to grow through the recessions of March to November 2001 and December 2007 to June 2009.

"Recessions and Indiana’s Nonprofit Employment" focuses on how Indiana’s nonprofit and for-profit sectors reacted to the economic recessions of 2001 and 2008-09. In the height of the Great Recession, nonprofit employment grew an average of nearly 2 percent annually and payroll grew an average of 4 percent annually, while for-profit employment and payroll decreased an average of 5 percent and 6 percent per year, respectively. Although government experienced very slight overall growth during the Great Recession, government employment and payroll decreased from 2009 to 2011.

Nonprofits in the health and education industries drove nonprofit-sector growth from 1995 to 2011. These sectors, the authors note, “appear to have benefitted from the high and growing demand for these types of services and have helped bring significant levels of federal tax dollars to Indiana.”

Education increased the most of all nonprofit industries in employment (56 percent) and payroll (77 percent). Health care was not far behind, with employment growing 36 percent and payroll increasing 65 percent. In both industries, nonprofit growth in employment and payroll was led by a dominant sub-industry: colleges and universities, and hospitals, respectively. However, closer analysis reveals a much more complicated pattern of divergent trends within the nonprofit sector itself.

“While education and health care nonprofits were quite resilient during recession periods, organizations in social assistance, membership, and arts, entertainment and recreation did not fare as well,” said Kirsten Grønbjerg, the Efroymson Chair in Philanthropy at the Indiana University Lilly Family School of Philanthropy in Indianapolis and a professor at the Indiana University Bloomington School of Public and Environmental Affairs. “These nonprofits, which provide vital social services and opportunities for cultural and community engagement, have faced significance challenges and may need particular attention in times of economic crises.”

Grønbjerg is the project director and lead author of “Recessions and Indiana’s Nonprofit Employment.” The report is a joint project of SPEA, the Indiana Business Research Center at IU's Kelley School of Business, the Indiana University Lilly Family School of Philanthropy and the Johns Hopkins Center for Civil Society Studies.

Diverging patterns were seen even within the two major nonprofit industries that experienced overall growth. For example, while nonprofit colleges and universities grew in both employment and payroll from 2007 to 2011, nonprofit junior colleges saw losses of about 40 percent in both categories over the same time period. Similarly, while nonprofit hospitals grew almost every year, nonprofit nursing and residen­tial care grew rapidly in the early years of the study (except for 1997 to 1998), but later slowed and even decreased.

"Historically, the Indiana nonprofit sector has shown remarkable resilience, has been an effective partner for government service provision in times of crisis, and has been a strong contributor to high living standards in our state," Grønbjerg said. "Findings in this report, however, suggest that such resilience is becoming uneven among the nonprofit industries and sub-industries. Shifting government funding priorities and changing population characteristics will likely continue to have an impact on the composition of the nonprofit sector, as will the state’s slow climb to recovery from the Great Recession. 

More about the report:

The report is the ninth nonprofit employment report in the Indiana Nonprofits: Scope and Community Dimensions project, which Grønbjerg directs. The full report and a four-page summary are available online.

The study’s co-author is IU Master of Public Affairs student Alexandra Toledo, with additional assistance from MPA student Deb Seltzer.

For more information or to speak with Grønbjerg, contact Jim Hanchett at the School of Public and Environmental Affairs, 812-856-5490 or jimhanch@indiana.edu; Adriene Davis Kalugyer at the Lilly Family School of Philanthropy, 317-278-8972 or adrldavi@iupui.edu; or Steve Hinnefeld at IU Communications, 812-856-3488 or slhinnef@iu.edu.

About the School of Public and Environmental Affairs

SPEA is a world leader in public and environmental affairs and is the largest school of public administration and public policy in the United States. In the 2012 "Best Graduate Schools" by U.S. News & World Report, SPEA ranks second and is the nation's highest-ranked professional graduate program in public affairs at a public institution. Four of its specialty programs are ranked in the top-five listings, including nonprofit management, ranked first. SPEA's doctoral programs in public affairs and public policy are ranked by the National Academy of Science as the best in the country.

About the Lilly Family School of Philanthropy

The Indiana University Lilly Family School of Philanthropy is dedicated to improving philanthropy to improve the world by training and empowering students and professionals to be innovators and leaders who create positive and lasting change. The school offers a comprehensive approach to philanthropy -- voluntary action for the public good -- through its academic, research and international programs and through The Fund Raising School, Lake Institute on Faith & Giving and the Women’s Philanthropy Institute. 

About the Indiana Business Research Center

The Indiana Business Research Center, an integral part of Indiana University's Kelley School of Business since 1925, collects, transforms and interprets vast amounts of data for and about Indiana and the nation. The center's work product includes multiple websites, including STATS Indiana, STATS America, The Stats House and, in partnership with the Indiana Department of Workforce Development, the Hoosiers by the Numbers workforce data site. Its keystone publications are the Indiana Business Review and IN Context.

About the Johns Hopkins Center for Civil Society Studies

The Johns Hopkins Center for Civil Society Studies is a leading source of research and knowledge about the nonprofit sector, social investing and the tools of government. The center's research and educational programs seek to improve current understanding, analyze emerging trends and promote promising innovations in the ways that government, civil society and business can collaborate to address social and environmental challenges. The center is directed by Lester Salamon and is part of the Johns Hopkins Institute for Health and Social Policy.

Kirsten Grønbjerg

Kirsten Grønbjerg

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Adriene Davis Kalugyer
Steve Hinnefeld