Nonprofits are often referred to as the "third economy” because of their financial prominence. In addition to the enormous contribution that Michigan’s charitable organizations make in assisting citizens in need and tackling some of our most challenging societal issues, nonprofits provide vital economic support to the state’s economy.
According to a report commissioned by the Michigan Nonprofit Association, one out of every 10 employees in the state works for a nonprofit servicing every sub-sector of our economy. The report documents that Michigan’s nonprofit organizations: • Number over 47,000; • Directly employ more than 440,000 people; • Pay their employees more than $4 billion per quarter; • Generate an additional 161,000 jobs as a result of spending by their employees; • Generate more than $108 billion each year in overall economic activity.
In the Ingham, Eaton and Clinton County region, there are more than 37,000 people employed by a nonprofit organization, with total wages paid to those employees in excess of $418 million. The stability of the jobs base created by nonprofits might best be reflected during challenging economic times - such as Michigan’s recent recession - a period during which the state lost a total of one million jobs. While virtually every industry in the private sector experienced a net loss of jobs during that period, not so with the nonprofit sector."The last couple of times Michigan has gone through a deep recession, the nonprofit sector has had an increase in employment,” said Ken Dail, executive director of the East Lansing-based Prevention Network, which helps communities prevent underage alcohol use, youthful tobacco use, and other substance abuse.
The economic impact generated as a result of the work done by nonprofits is also evidenced in the end results of the services provided to hundreds of thousands of Michigan citizens that depend on assistance from these charitable organizations. The mission of Habitat for Humanity Lansing is to eliminate substandard housing in Lansing and improve neighborhoods by partnering with the economically disadvantaged to achieve and maintain home ownership. Habitat homeowners are actually working partners who must have a certain income, a good credit rating, and the ability to make mortgage payments.
"What we provide is a hand-up, not a handout,” said Dena Vatalaro, development director for Habitat Lansing.
Since 1987, the work performed by Habitat Lansing and its partners has pumped $5 million into the local economy. Many unemployed skilled trades’ workers in the region were hired to work on Habitat homes during the recession. Most notably, homeowner partners have paid more than $190,000 in property taxes.
"Not only do we improve the economic well-being of individuals, homeowners also have an increase in income which helps them contribute to the economy,” said Vatalaro.
The past decade hasn’t been without its challenges for nonprofits. The loss of jobs in the state has impacted charitable giving across the board. Drastic reductions in government spending have placed added pressure on already challenged budgets.
"As federal and state funding for social causes decreased, nonprofits have been expected to fill the financial void,” said Teresa Kmetz, president of the Capital Area United Way (CAUW).
The economic squeeze has caused many nonprofits to refocus their mission in recent years. CAUW conducted a thorough evaluation process which resulted in a defined focus on making grants to partner agencies in three community areas: encouraging student achievement; providing emergency assistance; and supporting secure families. One of the positive fallouts from that process has been a more coordinated effort with partner corporations and their employees that now have the opportunity to more effectively give and support causes in which they believe.
"One company cannot solve homelessness,” said Kmetz. "However, when we all come together, we can move the needle on issues like student achievement and homelessness.”
Nonprofits offer socially responsible businesses and their employees an opportunity to build a stronger region through volunteer efforts. The Prevention Network was formed 30 years ago and focused on the volunteer sector, helping equip Michigan citizens in the battle against underage drinking and substance abuse.
"There are moms, dads and business owners from all walks of life and backgrounds who don’t want kids to drink or use drugs,” said Dail. "We train them to be more effective on the frontlines of the battle.”
The volunteer efforts contributed by businesses and their employees make a major impact on the quality of life in the region. Those volunteer efforts also often have some unexpected benefits in building a more cohesive workforce.
"Volunteering allows for employees to work together in teams,” said Kmetz. "Employees who often don’t know each other well learn to work together in serving their communities.”
"If we can make things a little smoother at your business and make your employees lives better, it may not always be obvious on the bottom line, however it will be obvious in the quality of life at work,” said Dail.
The nonprofit sector is one of Greater Lansing’s most important assets. The contributions made by thousands of employees, volunteers and donors are making an impact in helping those in need and improving the quality of life in the region.
As the economy continues to strengthen, so does the optimism about the future.
"I don’t think there has ever been a better time to be in this region,” said Kmetz. "The work of nonprofits is really beginning to jell. It is truthfully moving in a direction where we are going to see a collective impact on key social issues.”