Friday, October 31, 2014
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Growth sector: Nonprofits in Philadelphia

One of Philadelphia's biggest philanthropic groups is backing a study to determine the impact of nonprofit organizations on the region. Who's healthy and who's not?

Growth sector: Nonprofits in Philadelphia

If the business of America is business, could the business of Philadelphia be nonprofit organizations?

Sometimes it seems like that. There’s the University of Pennsylvania remaking its section of West Philadelphia. Independence Blue Cross has been trying to combine with Highmark Inc. to form an even bigger nonprofit insurer.

Look at the list of the top employers in the Philadelphia area and you’ll see six of the 10 biggest are nonprofits. Together, they employ more than 118,000 people.

But that’s just the top of the nonprofit food chain. There are thousands of small groups providing a “whole slew of services,” said R. Andrew Swinney, president of the Philadelphia Foundation, which provides $20 million in funding to about 1,100 of them each year.

And there are more nonprofits every year, reaching out to the homeless and the elderly, providing live theater performances, addressing addiction, you name it.

A 2005 study by Johns Hopkins found that nonprofits account for 27 percent of all private-sector employment in the city. Swinney calls that a dramatic number.

It’s also alarming because we don’t know much about the collective financial health of the sector.

“If the nonprofits are not healthy, the employment picture for Philadelphia going forward is in trouble,” he said.

So the Philadelphia Foundation wants to find out and is commissioning a study to benchmark the state of nonprofits in Philadelphia and its four neighboring Pennsylvania counties.

It has tapped the Economy League of Greater Philadelphia to catalog and group the members of our nonprofit world, examine their finances and funding sources, and compare them with their peers. The foundation will spend $100,000 on the first phase of the study.

Steven Wray, executive director of the Economy League, said that in times of austere budgets, governments often look to nonprofits to step in to deliver services that municipalities cut. But that won’t happen if, for example, some of those nonprofits are overly dependent on government funding.

Those who fund nonprofits - foundations, corporations and individuals - also would probably like to know the financial condition of the cultural community or the human-services sector, Wray said.

Swinney certainly would, because while all of us may pay attention to the handful of nonprofits we donate to, no one is looking at the big picture. “It’s so diverse you can’t get your arms around it,” he said.

In trying to do just that, the Philadelphia Foundation is hoping that the data generated by the study will help the community at large understand the important role played by nonprofits and the challenges they face in becoming self-sustaining organizations.

Wray views many of those challenges as the same as those faced by small businesses. Payroll and health-care costs go up every year. There are management succession issues.

I look forward to any effort that might provide better tools to help analyze trends in a nonprofit sector that can’t keep expanding forever.

The foundation expects to get the initial results of the overview in December, with a full report to be released publicly during the first quarter of 2009.

Mike Armstrong Inquirer Columnist
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Mike Armstrong Inquirer Columnist
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