ANNAPOLIS – Demand for Maryland nonprofit services is ballooning even as private charitable giving in the state lags behind national rates, according to a report released Wednesday at the annual meeting of the Maryland Association of Nonprofit Organizations.
Nonprofit employment accounted for half the net new jobs created in Maryland from 1989 to 1996, said Johns Hopkins University Professor Lester M. Salamon, author of the report. The sector added 35,000 jobs to the state’s economy over the seven years. By comparison, the manufacturing and construction industries during the same period lost 30,175 and 26,228 jobs, respectively, Salamon said.
The nonprofit sector includes companies such as health care institutions, private social services and universities. Unlike for-profit entities, they are not owned by any specific person or group (like stockholders), and therefore are not required to pay any portion of their income in stock dividends.
Demand for nonprofit services is increasing in part because of expansion of the industry from its historic center in Baltimore City into suburban and rural areas, Salamon said.
“Nonprofit employment has been decentralizing, with the greatest growth in the outlying regions” of the state, he said.
Salamon also said federal welfare reform legislation may have fueled growth, particularly in non-urban areas with little in the way of public social services.
Despite its fast growth, the Maryland nonprofit sector receives only 4 percent of total operating revenue through charitable donations, compared with the national average of 10 percent, the report said.
The vast majority of financial support for these agencies comes from government subsidies and earned income from fees and charges, unrelated businesses and profits on investment, according to the report.
Michael Conte, director of the Regional Economic Studies Institute at Towson State University, said Salamon’s report quantifies a growth trend that has been the subject of informal discussion by researchers for some time.
“The report documents the importance and magnitude of this sector in Maryland,” Conte said. Experts suspected when a period of rapid growth swept through the Baltimore nonprofit services industry that the trend was statewide, he added.
Because of rising demand, agencies are scrambling to expand their staffs without sacrificing quality, Salamon found. Nonprofit organizations in Maryland currently employ 185,000 people statewide, more than any other single state sector.
“Most nonprofits are also reporting problems recruiting and retaining staff, as well as volunteers,” he explained.
Specifically, he found, two-thirds of nonprofit organizations had trouble offering competitive salary and benefits packages to prospective hires. In addition, 60 percent said the workload per existing staffer had increased over the past two years, and nearly three-quarters had trouble finding and keeping dependable, qualified volunteers.
Still, nonprofits are trying new techniques to raise more money and make better use of existing funds, the report found. Two-thirds of agencies have tried new fund-raising techniques, especially those targeting deep-pocketed institutional and corporate donors, Salamon said. Nearly half of Maryland’s nonprofit agencies also have shuffled their management, seeking greater efficiency.
To alleviate the financial and personnel pressures bearing down on the industry, Salamon recommends setting up:
* A “Maryland Civil Society Commission” to evaluate the state of the nonprofit sector.
* A governmental entity to monitor and collect data on the industry.
* Tax incentives and publicity campaigns to encourage private donations.
* Training programs and restructuring assistance to improve the agencies’ operating efficiency.
* Statewide managerial standards to re-establishing public confidence in the nonprofit sector. The Maryland Association of Nonprofit Organizations, located in Baltimore, is an association of more than 700 nonprofit groups statewide, representing a $13 billion Maryland nonprofit industry. -30-