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During the recession, reports began to appear of non-profit organizations cutting staff or even closing their doors as they grappled with dwindling revenue. These sad tales seemed to make sense, given how poorly non-profit funding sources were faring. Government agencies were struggling, especially at the state and local levels, and foundation endowments were shrinking. Many individuals were less able to make charitable donations than ever before.
But the picture is more complex, and non-profits have proved more resilient than many imagined, according to "Holding the Fort: Non-profit Employment During a Decade of Turmoil," a new report from the Center for Civil Society Studies at Johns Hopkins University.
Released in January 2012, the report chronicles non-profit hiring between January 2000 and June 2010. It found that during that period -- which included two recessions -- non-profit employment grew steadily, at an average annual rate of 2.1 percent. That's much better than the for-profit sector, which lost more jobs each year, with an average annual growth rate of minus 0.6 percent.
Even during the toughest stretch of the recent recession -- between 2007 and 2009 -- non-profit hiring stayed surprisingly strong. It grew 2.6 percent during the first year and 1.9 percent during the second year. For-profit hiring plummeted during that period: falling 1.1 percent during the first year and 6 percent during the second year, for a total loss of 7.1 million jobs.
So what was behind the unexpected strength in non-profit hiring? The report's authors argue that government spending, including the major wave of public funds awarded under the American Recovery and Reinvestment Act, favored many of the fields in which non-profits operate.
But to an even greater degree, they contend, non-profits stayed healthy because they tend to work in growing areas such as health care, social services and education (these three fields account for 87 percent of non-profit employment). For-profits, by contrast, include already-struggling sectors like construction and manufacturing that were even harder hit in the downturn.
Of course, for-profits operate in service fields too, and these saw better employment growth than their non-profit counterparts. For example, in education, non-profit employment grew at an average annual rate of 2.6 percent. For-profit employment in the same field grew 4.4 percent. The gap was even broader in social assistance, where non-profits grew 2.2 percent and for-profits grew 5.4 percent.
That disparity was less evident in other health care fields, where non-profits grew 2 percent and for-profits grew 2.8 percent. And non-profits dominated in the arts with 2.7 percent employment growth, whereas for-profit arts hiring grew just 0.1 percent.
It may seem remarkable that for-profit companies gained market share over non-profits in service fields. Social assistance and education don't seem like areas where companies would expect to turn a profit. The report's authors speculate that for-profits can generate capital more quickly, and that they are better positioned to land contracts with state and local governments.
Overall, the report sounds an optimistic note about the past strength of non-profits, even in the toughest economic circumstances. But the outlook going forward may not be as bright. "With public funding under siege and private resources strained, the non-profit job engine has clearly begun to falter," the report's authors conclude. "Whether it will follow the for-profit job engine into reverse remains unclear, but for the first time in a long time the answer to this question is uncertain."
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