7.4% Of World Workforce In Nonprofits

March 21, 2013       Mark Hrywna      

The nonprofit workforce makes up on average 7.4 percent of the total workforce in some parts of the world — more than 10 percent in at least six countries. And, the sector has outpaced the overall economy in eight countries, including the United States, according to a new report.

“The State of Global Civil Society and Volunteering: Latest findings from the implementation of the UN Nonprofit Handbook,” was released this month by the Johns Hopkins Center for Civil Society. Developed in cooperation with the UN Statistics Division and an International Technical Experts Group, it examines data about nonprofit institution employees and volunteers and their contribution to Gross Domestic Product (GPDP).

The GDP contribution of nonprofit institutions in eight countries outpaced the growth of the overall economy, led by Australia (11 percent v. 7.5 percent), and Norway (8.7 percent v. 7.8 percent). The average was 5.8 percent compared with 5.3 percent. In the U.S., it was 5.5 percent for the nonprofit sector versus 4.4 percent GDP.

Including the value of volunteer work, NPIs account for 4.5 percent of GDP in 15 countries for which data are available, equivalent to the share of GDP accounted for by the construction industry in these countries.

Contributions by NPIs account for more than 5 percent of GDP in six of 16 nations. The highest is found in Canada at 8.1 percent (including 1 percent volunteers) while the United States ranked fourth with 6.6 percent (1 percent volunteers), also behind Mozambique (6.7 percent) and Israel (7.1 percent). Norway had the highest percentage of GDP contribution from volunteers at 2.7 percent, coupled with 1.9 percent paid workers for a total 4.6 percent that ranked 10th.

The total average workforce at nonprofit institutions (NPIs) — 5.2 percent paid workers and 2.2 percent volunteers — is more than the transportation (5.8 percent), hotel and restaurants (4.6 percent) sectors and financial institutions (2.6 percent) in those nations, and nearly as much as construction (7.9 percent).

In six of the 13 nations where data are available, nonprofits account for 10 percent or more of the workforce, led by Israel at 12.7 percent (11.2 percent workers, 1.6 percent volunteers). In the U.S., the figure was 10.2 percent — 7.7 percent paid workforce, 2.5 percent volunteers. Belgium had the highest percentage of paid workforce (11.5 percent) while New Zealand had the highest percentage of volunteers (6.2 percent, compared with 4.4 percent paid workers).

On average, NPIs derived 43 percent of revenue from fees for services, 32 percent from government sources and 23 percent from philanthropic giving.

The report indicated that estimates could understate the government share of NPI funding and overstate the philanthropic share due to the difficulty of identifying the government portion of market sales and “transfers.” Philanthropy accounted for the largest revenue source in Mozambique (84 percent) and the smallest in Belgium and Japan (4 percent). The largest proportion of fees was found in Kyrgyzstan (85 percent) and the largest portion of government funding was Belgium (68 percent). Data for the U.S. was not available.

Among 14 countries where data are available, the percentage of gross value added (GVA) by nonprofits is through service activities (housing, social services, education, healthcare), some 73 percent, compared with 22 percent of express activities (arts and culture, sports and recreation, advocacy). Japan had the highest percentage (95 percent) of service activities while Norway had the highest percentage (40 percent) of expressive activities. U.S. data were not available.

On average, nonprofit institutions devote 54 percent of expenditures to labor costs and 45 percent to “intermediate consumption” (purchase of goods and services from other sectors of the economy).

The highest percentage of labor costs (71 percent) was found in Australia and the U.S. The lowest was Brazil (39 percent), which was among five nations that saw wages and benefits account for less than 50 percent of expenditures: Japan, 49 percent; Portugal, 46 percent; Israel, 47 percent, and New Zealand, 41 percent. Among those five, all but Japan saw intermediate consumption take up more than half of expenditures, which could be the result of higher costs associated with goods and services purchased by nonprofits to deliver services, a greater reliance on independent contractors or volunteers, or exceptionally low wages paid to nonprofit employees.