Not-for-profits function as charitable businesses

I’m giving back to my church that has helped me find a place of spiritual meaning and support. I’m giving back to the graduate school that helped prepare me for my profession. I’m giving back to a home for children with disabilities that improved the quality of life for my nephew. The list goes on.

Giving back is a great phrase and a great concept, one I’m proud to affirm.

The other side of that phrase is that it often means those of us who give back view the organizations that we give to as beggars. Not-for-profits are often seen as charities that take resources from one portion of the economy and redistribute them to other parts of the economy. I want to share another perspective.

Not-for-profit organizations are businesses. Many are charitable in mission. Not-for-profits exist to fulfill charitable purposes, meeting human needs that the community has asked us to address. Our business is helping people.

Not-for-profit business is significant in Missouri. According to the Nonprofit Service Consortium, the not-for-profit sector in Missouri was a $19 billion business in 2003. That number represented approximately 10 percent of the state’s gross domestic product. And the not-for-profit sector continues to grow. The consortium reports that not-for-profit revenue grew by 77 percent from 1995 to 2005. In 2004, reporting public charities directly produced more than 150,000 jobs and supported more than 105,000 additional jobs in the state. That represents more than 7 percent of the state’s total employment, according to February 2007 data from the Metropolitan Information and Data Analysis Services Public Policy Research Center.

Springfield Business Journal’s Economic Impact Awards in July recognized three local not-for-profit businesses for their economic impact.

The Council of Churches of the Ozarks provides services to more than 100,000 people annually through operations in 53 Missouri counties. The Ozarks Area Community Action Corp. serves approximately 54,000 in 10 counties, and The United Way of the Ozarks, through its member agencies, serves nearly 300,000 in 13 counties.

Collectively, these agencies provide nearly 2 million hours of volunteer service. At minimum wage, this represents an economic contribution to the community of more than $11 million annually. Some studies of the volunteer industry estimate the cost of replacing volunteer service with compensated employees at more than $18 per hour. Using that figure, the value of local volunteer labor jumps to more than $35 million annually.

And that is for just those three agencies. The actual economic impact of these volunteer services likely lies between the extremes.

Also of interest is the “multiplier” effect of not-for-profit business budgets. The combined annual budgets of the Council of Churches, OACAC and United Way are nearly $33 million. While there is no “official” economic impact multiplier, trusted business and financial professionals suggested using a multiplier from three to seven. Thus, the true economic impact of the budgets of our three organizations is between $98 million and $228 million annually.

And remember, there are more than 600 not-for-profit businesses in Greene County.

Of course not-for-profit businesses do not exist for business’ sake. They are organized as businesses for the purpose of providing the services for which they were created.

Since giving a talk at Rotary that sparked the request for this article, I have been asked a lot of questions: “What would it cost the taxpayer if the services provided by these agencies were transferred to government? Would taxpayers be willing to pay for such services? If not, what would be the effect on our community’s quality of life? What is the effect of rising gas prices on giving to support nonprofit work? With food and other prices following petroleum prices upward, how will giving patterns change? Will they change?” We will know the moods and the hearts of our donors come Dec. 31. What will 2008 look like? Wise professionals ponder such questions. But I am not foolhardy enough to attempt answers.

Not-for-profit executives, including this one, are by nature optimistic. We have seen the good hearts of our neighbors come through so many times that we believe in basic goodness of our supporters. The not-for-profit businesses in our community make a significant contribution to the economic vitality of our community even as we help meet the most significant human needs. We, too, participate in the spirit of giving back.

David Hockensmith is the executive director of the Council of Churches of the Ozarks. He may be reached at david.hockensmith@ccozarks.org.