New Study Shows Arizona Nonprofits Have Huge Economic Impact

A new statewide study reveals some impressive numbers about the impact of Arizona's nonprofits on the statewide economy. According to the research:

The findings debunk the perception that nonprofit organizations are a small component of the state economy, instead revealing a thriving and diverse network of social-purpose organizations—some 21,000 strong—that are a powerful economic driver.

At Local First Arizona, many of our members in our local business coalition are actually nonprofit organizations. We've known for a long time about the important work that they all are doing for the state, but now it's great to fully understand their the full scope of their overall economic impact. Here are some of the key findings:

Nonprofit Impact Study Finding 1
Nonprofit Impact Study Finding 1

According to the study, "Arizona’s nonprofit sector is directly and indirectly responsible for an estimated $22.4 billion Gross State Product (GSP) in Arizona. This total amount accounts for 8% of Arizona’s GSP—positioning nonprofits on a par with the state’s retail trade."

Nonprofit Impact Study Graph
Nonprofit Impact Study Graph

This figure is calculated from a nonprofit's direct effect (employees, supplies, taxes), indirect effect (hiring of local firms, upstream demand), and induced effect (spending from employees, spending from employees of hired firms).  We can only imagine how much more this figure could be if we helped local nonprofits source even more of their goods and services from other local organizations and businesses!

RELATED: Arizona Gives Day is Tuesday, April 5, 2016

Nonprofit Impact Study Finding 2
Nonprofit Impact Study Finding 2

The study found that Arizona nonprofits account for 325,000 jobs. They employ 167,000 paid staff directly and are also responsible for an additional 158,000 indirect/induced jobs. To put that in perspective, 1 of every 16 jobs in Arizona is in a nonprofit. This makes Arizona's nonprofit industry the 5th largest non-government employer in the state. The nonprofit industry beats out manufacturing, finance and insurance, construction, transportation, and education as a top job industry in Arizona.

The study also noted that employment at Arizona nonprofits is growing. Direct employment at nonprofits grew by 12% during the 2009-2014 five-year time horizon.

Nonprofit Impact Study Finding 3
Nonprofit Impact Study Finding 3

Many may believe that nonprofits operate solely on philanthropic contributions, but that is not the case. The study estimates that contributions and gifts from individuals, foundations, trusts, and private companies are estimated to generate only 27% of Arizona nonprofits’ annual revenue. Instead, "program service funds and contracts, investment income, special events income, members’ dues, and net sales are estimated to account for $4 out of every $10 dollars of revenue generated by Arizona’s nonprofits. In addition, the statewide survey estimates that federal, state, and local government contribute nearly one-third of Arizona nonprofits’ annual revenue. Together, these two revenue sources account for more than 72% of nonprofit revenue."

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The study ultimately concludes that Arizona nonprofits are a force to be reckoned with, and that they contribute a great deal to our communities and local economies. The study finishes with some key questions to think about the possible hidden potential of the nonprofit sector and how this potential could be realized:

IMAGINE WHAT POWERFUL RESULTS THERE WOULD BE: • If elected officials and candidates for public office solicited input from nonprofits in achieving common goals. • If business leaders sought nonprofit partnerships to add value to local and regional economic development. • If grant makers identified ways of maximizing their investments in the community. • If leaders in all sectors looked for ways to collaborate.

We'd like to add another thought: Imagine what powerful results there would be if we increased the amount of services and goods purchased by local nonprofits through other local organizations and businesses? By keeping even more money circulating in the local economy with as little as a 10% shift to local businesses, the direct, indirect and induced economic impact of nonprofits could be even greater.

The research for this study was conducted by ASU's Seidman Research Institute in partnership with the Alliance of Arizona Nonprofits, ASU Lodestar Center for Philanthropy & Nonprofit Innovation, and The Phoenix Philanthropy Group. Funding was provided by the Arizona Community Foundation, APS and the Industrial Development Authority of Maricopa County. To read the full study, click here.