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Area Nonprofits Play Large Economic Role

Charitable Groups Generate Billions, Employ Hundreds of Thousands

By Jacqueline L. Salmon
Washington Post Staff Writer
Wednesday, February 23, 2005; Page B03

The Washington area's charitable organizations -- its universities, nonprofit hospitals, homeless shelters, think tanks, theaters and national nonprofits -- are a potent economic force employing more than one of every 10 non-government workers in the area and generating about $33 billion in annual revenue, according to a study to be released today.

The study, by the Nonprofit Roundtable of Greater Washington, found that nonprofit employment grew nearly twice as fast as other business employment from 1995 to 2003, and that the average nonprofit worker made almost as much as the average commercial employee.

Robert Egger, shown in 2002, is launching an effort to organize the first National Congress of Non-Profits in the fall to develop a united voice. (Dayna Smith -- The Washington Post)

A Look at Nonprofits

Nonprofits say they hope that the report will demolish the stereotype of charitable organizations as "beggars," said Ed Orzechowski, chief executive of Catholic Community Services, a nonprofit social services organization that employs 1,000 and took in $50 million last year.

"We're saying that no, we really are a major player . . . and what we do and the impact we have needs to be understood," Orzechowski said.

The study represents the first systematic look at the size of the charitable sector in the Washington area -- groups known as 501(c)(3)s because of their classification as tax-exempt organizations in the IRS tax code.

For the roundtable, which represents 100 social service organizations, foundations and advocacy groups, it also is the opening salvo in a campaign to make public officials, business leaders and the public more aware of nonprofits' clout.

"By definition, nonprofits are not in the business of financial gain. We're in the business of doing good," said Chuck Bean, executive director of the two-year-old roundtable. "However, nonprofits are still businesses in every other sense -- they employ people, they take in revenues, they produce goods and services and contribute in significant ways to our region's economic stability and growth."

The report comes as many nonprofit social service groups brace for government budget cutbacks, particularly at the federal level.

"A huge number of people who were getting federal dollars will come pouring into the private sector," said Robert Egger, a founder of D.C. Central Kitchen.

Egger is launching an effort to galvanize nonprofits, teaming with the National Council of Non-Profit Associations to organize what they bill as the first National Congress of Non-Profits in the fall to develop a united voice.

The nonprofit sector has a larger presence in the District than in other U.S. cities, largely because of the federal government's proximity, the study found. More than 7,600 active charitable groups are based in the Washington area -- about 1.8 nonprofits for every 1,000 residents -- more than double the number in urban areas of similar size. Nearly half are national or international, such as the Nature Conservancy in Arlington and Refugees International in the District.

The rest -- 4,100 -- are locally oriented, ranging from tiny groups such as Means for Dreams, which helps D.C. schoolteachers, to multimillion-dollar organizations such as the John F. Kennedy Center for Performing Arts and Inova Health System, a nonprofit hospital chain.

The entire sector brought in $33 billion in 2000, the most recent year for which revenue figures are available, and spent about $29 billion. Its 218,000 workers received almost $10 billion in wages in 2003, about 10 percent of the region's total, according to the roundtable study. They took home paychecks averaging $850 a week, versus $926 week earned by for-profit workers, the study shows.

Employment in the sector was two-thirds the size of the federal workforce and the professional services field, but 25 percent more than in the construction trade and more than twice as much as the restaurant industry.

Economist Stephen S. Fuller, director of the Center for Regional Analysis at George Mason University, cautioned against overstating the sector's economic muscle.

Though nonprofits provide jobs, he said, "I wouldn't call them an engine."

Still, Fuller said, nonprofit expenditures have a bigger effect on the local economy than hotels, legal services or restaurants, because most of their spending is for wages and rents, which stay in the Washington area.

In addition, he said, nonprofits generally reduce the tax burden on individuals and businesses by providing charitable services that would otherwise be provided by government. But some public officials counter that the ballooning charitable sector uses public services without paying taxes to fund them.

The study, based on tax and employment data, was conducted by Johns Hopkins University's Center for Civil Society Studies and the Urban Institute's Center on Nonprofits and Philanthropy. It did not include nonprofit business and trade associations or most religious organizations, which generally do not file tax returns.

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