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Nonprofits playing role in economic development


I applaud the political focus this year on economic development in Mississippi, including efforts to increase business incentives, to improve state agencies, and to build

stronger partnerships between government and private business. Nonprofit organizations are also an essential part of any comprehensive economic development plan,

but I find that their role is stated less explicitly and is less well understood in public debates, both here and nationally.

Most people think favorably of charitable, educational and religious nonprofits, but what do they have to do with economic development? National economic

discussions often consider government and business exclusively, forgetting that there is a third sector of the economy which touches nearly every person’s life and

through which almost a trillion dollars flow each year. Here are five ways that the nonprofit sector plays a distinctive role in economic development:

1. In direct work on economic development. Economic development is a central purpose of many nonprofits, from those making micro-enterprise loans to nonprofits

set up for Empowerment Zones and Enterprise Communities. Many government programs relating to economic development, from child care to housing, rely on

nonprofits to carry out much of the work. Nonprofits help train the workforce, through schools, GED programs and special training. Community Development

Corporations (CDCs) address economic development needs in dozens of communities. Chambers of Commerce and trade associations are also nonprofit, although

not able to receive tax-deductible charitable contributions.

2. By enhancing quality of life. The ultimate goal of economic development is to enhance the quality of life, and most nonprofits address quality of life issues as their

central purpose. Nonprofits maintain the social fabric and community vitality which are essential to most business development. Businesses seeking to locate want

communities with good education, artistic and cultural opportunities, low crime, good health care, good housing and employees active in churches and civic

organizations. Nonprofits make a difference – sometimes the central difference – in all of these areas. We may assume that the streets will not be teeming with cats

and dogs, that youth will have good places to go after school, and that someone is taking care of people who are sick, homeless, hungry or unemployed, but it is easy

to forget about the Mississippi Animal Rescue League, the Boys and Girls Clubs, the health clinics, shelters, Mississippi Food Network, Community Action Agencies

and many other nonprofits that do the work.

3. Through employment and economic impact. Nationally, the nonprofit sector accounts for 6% to 8% of all employment. Mississippi is likely at the lower end of that

range, because our state has the second lowest density of nonprofit organizations. At least half of this employment is in health care, but all of it generates income taxes

and secondary business. Over a million nonprofits nationally expend well over half a trillion dollars each year, perhaps a trillion. By calls to the Mississippi Center for

Nonprofits, I know many vendors and suppliers see the nonprofit sector as a significant market for their businesses. The Mississippi Arts Commission has calculated

the economic impact of nonprofit arts organizations at over $55 million per year in Mississippi, and that represents less than 8% of the organizations and 2% of the

expenditures of Mississippi’s nonprofit sector.

4. By mobilizing volunteers. Nonprofits mobilize volunteer labor for public and community purposes that is conservatively estimated by Independent Sector as worth

more than $225 billion per year nationally. The majority of the population volunteers at least occasionally, making up the equivalent of nine million full-time employees.

These volunteers often do work that otherwise would not happen, and they extend the impact of both public and private investments in nonprofit organizations.

5. As a watchdog and social conscience. Nonprofits make democracy and our economy work better, by watching the big picture and by speaking out on causes of

public interest. There are nonprofits that serve as watchdogs on government waste, as monitors of business environmental practices, or as voices for people who

otherwise might be ignored in public policy. Nonprofits often know the most about needs and strengths in the communities they serve, and they have much to

contribute to discussions about how to build better, more prosperous communities.

Nathan Woodliff-Stanley is executive director of the Mississippi Center for Nonprofits in Jackson. His column appears monthly in the Mississippi Business Journal.


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