Fast Facts: The Economic Power of Vermont’s Nonprofit Sector

Eco Power snapshotThe information provided in this report is for anyone who shares an interest in the nature and impact of Vermont’s nonprofit sector in other words, all of us. Special thanks to the Vermont Community Foundation for supporting the interactive version of this report. Please contact us at Coordinator@CommonGoodVT.org with questions or comments on this report.

Explore the interactive version!

The data presented in this summary report was collected in 2015 by Common Good Vermont to update the 2010 Vermont Community Foundation Report, The Vermont Nonprofit Sector: A Vital Community in a Time of Change, with the support and assistance of the Vermont Community Foundation, the Center for Rural Studies at the University of Vermont, Public Assets Institute, and the A.D. Henderson Foundation.

SHORT STORY

  • More than 4100 Vermont nonprofits serve all corners of the state. With healthcare and education driving sector revenue, public charities generates $5.9 billion in revenue in 2014.
  • Vermont nonprofits paid over $1.9 billion in wages, which translates into an estimated $33.7 million of personal income tax revenue for Vermont’s state and local governments and over $333.8 million in federal tax revenues.
  • Nonprofits employ 1 in 7 Vermont workers, making the nonprofit sector the largest industry in the state after the government.
  • Vermont nonprofits contribute  $5.7 billion per year to the economy through wages paid, retail and wholesale purchases, and professional service contracts. This contribution is equivalent to nearly 20% of the State’s gross state product–greater than the manufacturing and construction industries combined.

SECTOR SNAPSHOT

Scope of Sector: There are 5619 nonprofits serving Vermonters (defined as 501(c) organizations). Of these, 4386 are classified as 501(c)(3)s, the most common type of tax-exempt nonprofit organization. Of these, 4109 are Public Charities and 277 are Private Foundations. The following numbers reflect an analysis of Vermont Public Charities.

Serving All Corners of Vermont: Vermont public charities can be found in every county except Essex.  More than a quarter of Vermont nonprofits are found in Chittenden County (24%) with nearly 1000 reporting to the IRS as of October 2014. Central Vermont/ Washington County represents 13% of the sector (550+). Windham (10%) and Windsor County (11%) report more than 400 nonprofits in each of their counties. Just over 350 operate in Rutland County (8% of the state’s total). Their distribution tracks closely to county population in most counties–with the notable exception of Franklin County.

> See Interactive Chart 1: Vermont Nonprofits by County (2014)

Revenue Distribution: Nearly 40% of Vermont nonprofit revenue is centered in Chittenden County, with the balance dispersed across every county but Essex and Grand Isle. (The organizations that serve these regions are based in adjacent counties.)

> See Interactive Chart 2: Vermont Nonprofit Revenue by County (2014)

Mostly Small Businesses: Vermont’s public charities tend to be small and operate with modest revenues. Of those filing with the IRS, 81% reported less than $500,000 in revenue and 19% reported more. Looking at revenue categories,  51% reported no income at all (2098). The next largest revenue group, those reporting less than $100,000, represent 17% of the sector (718). Just over 12% of Vermont’s public charities report revenue between $100K and $500K.

As revenue categories increase the number of nonprofits decline. These larger organizations tend to be hospitals, colleges, major arts and cultural institutions, and those that serve statewide or substantial areas of the state. Of these, 6% report between $500K and $1 million in revenue (252), 8% report $1 to 5 million (330), and 5% report more than $5 million (212).

> See Interactive Chart 3: Vermont Nonprofit Revenue (2014)

Delivery of Vital Community Services: Every person in Vermont is served, in some way, by state and local nonprofit organizations. As noted above, health care and education constitute the largest number of nonprofits, the largest nonprofits and the largest portion of Vermont nonprofit revenue. Educational Institutions account for 12% of Vermont nonprofits and 19% of total sector revenue. We’ve combined Health and Human Services (Diseases/ DIsorders, Health, Human Services, Medical Research, Mental Health) which add up to 14% of state nonprofits and 61% of statewide revenue. It is worthwhile to note that the break out of the unique categories of Health (4% of nonprofits and 48% of state revenue) and Human Services (8% of nonprofits and 7% of revenue).

Arts and Culture make up 11% of the nonprofits, but only 2% of overall revenue. Community and Economic Development (which for the purposes of simplicity include: community improvement, capacity building, public safety/ disaster preparedness, public/ society benefit, employment/job related, recreation/ sports/ leisure, youth development and mutual/ membership benefit organizations) include 13% of Vermont nonprofit organizations and yield 3.5% of sector revenue. Environmental organizations account for 5% of organizations and 2% of statewide revenue. Affordable Housing/ Homelessness rank at 2% of nonprofits and sector revenue. Food Security and Agriculture have been combined at 1.34% of nonprofits and .38% of revenue. Vermont is noted for its relatively small number of Religious/ Spiritual organizations, combined with the absence of revenue reporting requirements, ranking them at 2.7% of organizations and .15% of revenue. A substantial number of pubic charities have “no code” (29%), leaving 6% of revenue unidentified.

> See Interactive Chart 4: Vermont Nonprofit Sectors (2014)

ECONOMIC SCOPE

Value of Sector: Vermont’s 4109 public charities generate $5.74 billion in annual Revenue and represent $10 billion in Assets. Large organizations, especially hospitals and colleges dominate the financial activity of Vermont’s charitable sector. These organizations receive the majority of their revenue from program services, while smaller organizations rely on contributions, gifts, and grants as their primary source of revenue.

Hospitals account for less than 1% of the total number of Vermont public charities (27) but they add up to 40% of sector revenue ($2.3 billion). Colleges listed by the IRS (not including the University of Vermont) total only 18, but contribute 14% of Vermont revenue to the public charity/ nonprofit sector ($832 million).

The balance of Vermont public charities that are not hospitals or colleges (4064) contribute $2.6 billion in revenue, or 45% of the total sector. In 2014, 406 churches and religious organizations filed tax returns, but because they are not obliged to report financial data, only five organizations reported what amounts to $6.5 million in revenue. (Source: IRS Nonprofit Organizations Business Master File, October 2014).

> See Interactive Chart 5: Vermont Nonprofit Revenue 2014 (Including Hospitals & Colleges)

Contributor to Gross State Product: Vermont’s Gross State Product (GSP) totalled $29.05 billion in 2013. Taken as a whole, charitable organizations account for 19.96% of Vermont’s State Product (GSP). Their share of the GSP is larger than these key Vermont industries Manufacturing, or Durable Goods, Retail Trade, Finance/ Insurance, Construction, Utilities, Transportation or Agriculture. In 2013,  Manufacturing accounted for $3.2 billion in revenue (11% of GSP) and Retail Trade generated $2.2 billion (8% of GSP). By comparison, in 2014, Vermont nonprofit Hospital revenue constitutes 8% and Colleges account for 3% of the GSP. (Source: Vermont 2014: Economic Demographic Profile Series, VT Department of Labor). We’ve combined data across the two years to show the relative scale of contribution to Vermont’s economic output in the Chart above.

> See Interactive Chart 6: Vermont Industry as % of Gross State Product

MAJOR EMPLOYER

Major Employer: In 2012, Vermont employed 44,131 people. This represents 14.8% of the State’s total workforce or 1 in 7 Vermont workers. Nationally, approximately 10% of workers are employed by a nonprofit organization.This workforce makes Vermont’s nonprofit sector the largest industry in the state, after state and local government. In fact, Vermont’s nonprofits employ more than three times as many workers as the construction industry and sixteen times as many workers as the state’s natural resources industry (which includes agriculture, forest products, fishing and hunting). Distribution of Vermont nonprofit employment is not available at this time.

> See Interactive Chart 7: Vermont Employment by Industry

Payroll: In 2012, Vermont’s nonprofits paid their employees $1.9 Billion in wages, or more than 16% of the state’s total payroll. The average wage was $44,882 or $21.75/ hour, compared with the State average of $19.85/ hour. Learn more on Vermont’s nonprofit wages and compensation in the 2014 Vermont Nonprofit Wage & Salary Survey.

Taxes: Despite being exempt from corporate income tax, nonprofits generated $394 Million in federal, state and local taxes.These wages translated into an estimated $33.7 million in personal income tax revenue for Vermont’s state and local governments and over $333.8 in federal tax revenue.  (Source: IMPLAN Analysis, based on 2012 payroll data from the Vermont Department of Labor).

Growth Industry: The nonprofit sector is a growth industry. Between 2000 and 2010 nonprofit employment increased by 1.9% while Vermont’s for-profit sector employment decreased by 1.7%  (Source: U.S. Department of Labor, Bureau of Labor Statistics, Research Data on the Nonprofit Sector).

> See Interactive Chart 8: Vermont Job Growth Rate

Value of Volunteer Labor: A recent report indicates that 33.7% of Vermont residents volunteered 19.2 million hours of service, adding up to $431.6 million in value. (Source: National Corporation on Community Service, 2014).

DIRECT & INDIRECT EFFECTS OF NONPROFIT ECONOMIC POWER

Like all businesses, nonprofits purchase and produce goods and services and pay taxable wages to employees. These transactions have an economic ripple effect as monies spent by nonprofits and their employees are circulated throughout the larger economy.

Using IMPLAN economic modelling software, the Vermont Center for Rural Studies used Vermont nonprofit employment and wage data to create an input-output model. The resulting model describes the economic activity associated with Vermont nonprofits and provides a baseline from which to estimate their potential economic impact.

In addition to the 44,131 jobs directly produced by the nonprofit sector, the economic model indicates that the nonprofit sector supports an additional 8,584 jobs through both induced and indirect effects. The total effect is that 57,715 jobs in Vermont result from nonprofit activity, adding up to $2.3 billion in labor income, a multiplier effect of 1.2

The dollars spent on labor plus the sale of services generated by Vermont’s nonprofit sector equals $1.6 billion. In turn, this generates more than $515 million in additional purchase of goods and services (indirect effect) and $1 billion spent by the beneficiaries of those businesses (employees, employers) in the economy at large (induced effect). The total economic impact of Vermont’s nonprofit sector is $3.2 billion. That multiplier effect equals 1.9, Every dollar spent by nonprofits generates additional 90 cents in economic activity.

Impact Type

Employment

Labor Income

Value Added

Output

Direct Effect

44,131.00

$1,983,673,000

$1,983,673,000

$1,651,327,000

Indirect Effect

2,242.70

$99,539,872

$261,276,603

$515,296,455

Induced Effect

6,342.10

$232,467,037

$546,812,424

$1,010,411,068

Total Effect

52,715.80

$2,315,679,909

$2,791,762,027

$3,177,034,523

Type II Multiplier*

1.2

1.2

1.4

1.9


Sources
: IRS Master File for Nonprofit Business 10/14, Vermont Department of Labor Demographic Profile Series 2012, Vermont Joint Fiscal Office Fiscal Facts 2014, Johns Hopkins Economic Data Project: “Holding the Fort: Nonprofit Employment During a Decade of Turmoil 2000-2010″, US Department of Labor Bureau of Labor Statistics: “Research Data on the Nonprofit Sector”, Center for Rural Studies/ University of Vermont IMPLAN Analysis (Upon Request), Corporation for National & Community Service: “Volunteering in America” 12/14

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