Public Policy Forum Blog

Is the nonprofit sector really a policy issue?

As the Norman N. Gill fellow, my research exploring nonprofit revenue trends is a bit outside of the Public Policy Forum’s traditional focus, and so it’s worthwhile to explain why we feel this issue deserves some attention.

Most clearly, governments and nonprofit entities share the same goal of creating a more prosperous, equitable society. So, even on the surface, there is a reason for governments to be aware of the state of the nonprofit sector. But, if that alone is not enough to convince you, let me outline a few more reasons:

1) The nonprofit sector is a major employer. The Donors Forum of Wisconsin reports that in 2012, Wisconsin nonprofits employed nearly 273,000 people and had revenues of $41 billion. That’s 11% of our state’s workforce.

2) Governments frequently turn to nonprofit organizations to administer critical services, such as homeless shelters, public transit, or job training. In some cases, it has been shown that nonprofits can administer these programs more cost-effectively than government agencies. And when public funding for vital services is reduced or unavailable, is there a place for nonprofits to pick up the slack? For example, if we reduce public sector expenditures on mental health services, are local nonprofit providers in a position to make up some of the difference?

3) Nonprofit organizations help to raise awareness about community issues and bring people together. Not only does this elevate the level of debate and promote creativity, but it also serves as an impetus for improvement. The activities of nonprofit organizations serve to improve education, income, or property values either directly or indirectly. Among other benefits, this can make an area more attractive to business, increase the tax base, and promote sustainable economic development.

Considering all of this, we find that the health and stability of the nonprofit sector is a very relevant policy issue. Understanding nonprofit revenue trends and charitable giving behaviors can help us to ensure that the organizations we rely on are there to serve our communities when we need them most.

Look for our full report on this topic early this summer.  In the meantime, check out our recent report, Pulling Back the Curtain, to learn more about the financial state of some of Greater Milwaukee’s most iconic nonprofit institutions.

Phillip Laper