Nonprofit sector wages up 20% since 2013
More than half a million people earn more than $36 billion in annual wages while working for non-profit organizations in Massachusetts, claiming a larger share of the state's workforce than the manufacturing and financial services sectors combined, a new study reported Wednesday.
The latest edition of Commonwealth Insights from the Massachusetts Nonprofit Network said 551,117 people worked in the non-profit sector in 2017, accounting for 18 percent of the state workforce. From 2013 to 2017, jobs in the nonprofit realm grew by 8.2 percent, the report said.
Those jobs generated more than $36 billion in wages in 2017, an increase of $6 billion or 20 percent over the total non-profit sector wages in 2013, the report said.
The sector features scores of small organizations with locally driven charitable missions as well as some of the state's largest health care and higher education institutions that have significant payrolls.
Almost half of the state's nonprofit employees -- 267,000 of 551,117 or about 48.5 percent -- work in hospitals or universities, the network said. Another 60,805 people work for a nonprofit in the social assistance field, 34,500 work for individual or family services nonprofits and 15,807 people work for nonprofit civic or social organizations, according to U.S. Department of Labor's Bureau of Labor Statistics data.
"The nonprofit sector in Massachusetts is a major economic engine, generating widespread benefits through jobs, direct economic activity, and tax revenue. It does so consistently, during both challenging economic times and periods of growth," the report authors wrote. "It is in the Commonwealth's best interest to support and strengthen nonprofits in their unique role as employers, in addition to their role as service providers."
The Mass. Nonprofit Network made three recommendations for ways the state can help support nonprofits, including streamlining state reporting requirements, "optimizing" mandates on employers "so they work for nonprofits as well as for for-profits," and preserving and growing charitable giving.
The recommendations around charitable giving come on the heels of a report released by Giving USA in late June that showed the impact of the 2017 federal tax law that struck the charitable contributions tax deduction.
The report concluded that giving decreased by 1.7 percent in 2018 and that individual giving fell by $10.4 billion nationwide that year. The network said there is a "real risk" that giving in 2019 will drop by more than $10 billion, even though the economy is still growing. The tax reform law of 2017 "raised the cost of giving by 28 percent for tens of millions of people across the country," the network said.
The Massachusetts Nonprofit Network has been pushing for the restoration of the federal tax deduction and has made re-establishing the state charitable deduction part of its 2019 policy agenda.
"The nationwide drop in charitable giving resulting from the change in the federal tax code is a concerning trend. The recommendations outlined in this new report will preserve and strengthen the nonprofit sector's role as cornerstones of our communities," Mass. Nonprofit Network CEO James Klocke said in a statement Wednesday.
Massachusetts established a tax deduction for charitable giving at the statewide ballot in 2000, with 72 percent of voters casting a ballot in support of the initiative petition. The Democrat-controlled Legislature later delayed its implementation under a 2002 law that raised taxes by more than $1 billion.
That law established a schedule of annual tax cuts to be triggered if economic growth benchmarks were met. Based on that schedule, the tax deduction for charitable donations is poised to be restored in 2021 unless the Legislature intervenes.
If the state income tax rate drops to 5 percent in January 2020 -- as anticipated by the Department of Revenue and legislative leaders -- then the state charitable deduction "would be activated automatically the following year as a result of the trigger established in 2002," the Massachusetts Budget and Policy Center wrote in a February report.
MassBudget said that adding a charitable donation deduction to the state tax code is estimated to "reduce state revenues by about $300 million annually" and would "reduce income taxes disproportionately for those with the highest incomes."
At an advocacy day and awards ceremony hosted by the Mass. Nonprofit Network at the State House last month, House Speaker Robert DeLeo and Senate President Karen Spilka were largely unaware that the deduction was on track to take effect. Asked if there was any reason the deduction would not take effect, each leader declined to answer directly.
DeLeo said he had not yet had a chance to talk with Klocke about MNN's priorities and said he would want to talk it over with his leadership team.
"I would probably want to take a look at the pros and cons and hear from the folks who are interested in it," he said.
Spilka said the issue was a good thing for the Senate's revenue working group to take a closer look at.
"They're looking at the wide spectrum of personal and corporate taxes, so I look forward to hearing from them on their recommendations on everything," she said.
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