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Nonprofits play major economic role

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The nonprofit sector in several industrialized countries represents a major and growing economic engine, outpacing traditional industries like utilities, a new report says.

The report was released by the Johns Hopkins Center for Civil Society Studies, which examines data from the nonprofit sectors of eight countries collected in the UN Handbook on Nonprofit Institutions.

On average, the nonprofit sector in those countries accounts for 5 percent of Gross Domestic Product, or GDP.

But in the U.S. and Canada, that share rises above 7 percent, the study says.

That’s higher than the utilities sector’s average contribution to GDP of 2.3 percent, construction’s 5.1 percent and the combined 5.6 percent posted by banks, insurance companies and financial services firms.

And for the five countries in the study with historical data, the average growth rate of the nonprofit sector is 8.1 percent annually, compared to a 4.1 percent annual growth rate for GDP.

Three fifth’s of the overall sector’s contribution to GDP comes from nonprofits’ work in the areas of education and human services, the study says, although that varies widely among countries.

Volunteer work is a major contributor to the sector’s strength, accounting on average for about a quarter of nonprofits’ contribution to GDP, the study says, and outpacing donations of cash by almost two to one.

The UN Handbook includes data from Australia, Belgium, Canada, the Czech Republic, France, Japan, New Zealand and the U.S.

The nonprofit sector is defined by the report to include private nonprofit hospitals, schools, social service agencies, symphonies, environmental groups and other such organizations.

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