Local Impact:$1.9B: Health, education had biggest job effect in 2006
The study, which was conducted by Williams College Economics Professor Stephen Sheppard, reveals the broad impact nonprofits have in terms of money and jobs in the Berkshire County economy. It is the first time that the economic scale of local nonprofits has been quantified.
The $1.9 billion represents a sizable chunk of the $5.2 billion in goods and services produced in the Berkshires in 2006, according to the federal Bureau of Economic Analysis.
“It’s fair to say that this sector is comfortably responsible for more than 35 to 40 percent of the entire economy of Berkshire County,” Sheppard said.
The full report will be released to the public this morning at the chamber’s Good News Breakfast at the Crowne Plaza Hotel. Sheppard is the event’s featured speaker.
The report analyzed 10 nonprofit sectors in five-year increments for the years 1996, 2001 and 2006.
The $1.9 billion impact and the 25,000 jobs was based off 2006, the latest year for which data on the area’s nonprofits was available through IRS filings. Because the latest tax returns used in the study are 3 years old, the data does not take into account the current economic recession, the recent financial struggles by such high-profile nonprofits as The Mount in 2008, and Shakespeare & Co. this year, or a $500 million drop in the Williams College endowment since 2007.”We don’t directly address in this report the troubled nonprofits,” Sheppard said in a recent interview with The Eagle’s editorial board. “Any changes that have happened over the last 12 to 14 months are not reflected in these numbers.”
Despite the absence of those figures, Sheppard said the report still presents an accurate portrayal of the county’s nonprofit sector.
Berkshire Health Systems, the county’s largest employer, is included in the health sector.
“It covers, with a couple of exceptions, all of the big nonprofits that are still active,” he said. “It covers the [private] colleges and universities, the health systems and hospitals. It covers the same set of organizations that are active today and important players in the local economy.”
The study also found that Berkshire County had 25 nonprofits for every 10,000 people in 2006, compared to 16 for every 10,000 in Massachusetts, and 11 for every 10,000 in the United States.
The chamber commissioned the study to determine the parameters of the county’s nonprofit industry, including its size and scope, said President and CEO Michael Supranowicz.
Hillcrest Educational Centers’ President Gerard Burke helped the chamber form a task force to study the matter.
“We’ve been talking about this for a number of years,” Burke said. “We wanted to demonstrate what we as a nonprofit industry represent to the economy. I think it’s very clear [that] nonprofits are a business. Sometimes people outside the nonprofit world don’t look at it that way.”
Supranowicz said the chamber was surprised that the nonprofit sector generated such a high level of economic activity.
“That $1.9 billion as part of a $5 billion economy is a huge impact,” Supranowicz said. “When you think about the sector, what happens is that many times people look at the numbers, especially on the tourism side, and say those jobs aren’t any good.
“But when you look at this and look at the education and health care jobs, and a lot of the human service jobs, those are well-paying jobs,” he said. “It’s not 25,000 minimum wage or $10-an-hour jobs. It’s some big paying positions.”
Berkshire County had 1,026 certified nonprofit organizations in 2006, but the 327 whose annual revenue exceeded the tax filing threshold of $25,000 represent 98 percent of the assets in the local nonprofit sector, Sheppard said.
The 327 nonprofits also generated a total of $1.1 billion in expenditures in 2006, a significant increase over the $817.2 million provided by the 258 nonprofits that met the filing threshold in 2001, and the $740 million generated by 226 organizations in 1996. The $1.1 billion in expenditures represented 21 percent of the goods and services purchased in the county three years ago.
The human services sector had the highest number of reporting nonprofits with 86 in 2006, but the arts, culture and humanities sector experienced the largest amount of growth. The number of reporting nonprofits in arts, culture and humanities increased to 68 in the decade that ended in 2006, a rise of 80 percent. The health sector had 59 reporting nonprofits, the third highest among the 10 sectors, but it had the highest number of total revenues with $638.4 million in 2006.
“Around half of the total impact is coming from the health care sector,” Sheppard said.
