The pandemic took a toll on nonprofit jobs according to a new Indiana University report that focuses on nonprofits during 2020, with Indiana nonprofits showing a job loss for the first time since 1995.
The losses, which amounted to 5 percent in total, were most pronounced between the first and second quarter of 2020 (down 8 percent), reflecting the impact of the arrival of COVID-19 in early March. Nonprofit jobs then recovered slowly but incompletely over the remaining year.
The report, COVID-19, Indiana Nonprofit Paid Employment, and the Payroll Protection Program, 2020, tracks how the pandemic impacted paid nonprofit employment in Indiana in key industries over the course of 2020 and the extent to which the massive Payroll Protection Program (PPP) of the Coronavirus Aid, Relief, and Economic Securities (CARES) Act appears to have cushioned the impact.
The study uses comprehensive quarterly employment and wage data to track Indiana nonprofit employment by quarter in 2020 for five key industries: health care; social assistance; education; membership associations; and arts entertainment and recreation (AER). These five industries account for more than 90 percent of all paid nonprofit employment in Indiana. Additional analysis is based on micro-level data on 82,414 PPP loan payments of $9.5 billion processed and approved by the U.S. Small Business Administration (SBA) for establishments with Indiana addresses during 2020.
The percent of nonprofit jobs lost varied considerably across nonprofit industries. Using jobs in the first quarter (Q1) as the base line, the health care industry saw a much smaller percentage loss in nonprofit jobs (loss of 1 percent) by Q4 than social assistance and education (each down 7 percent). Membership associations (down 12 percent) and the very small arts, entertainment, and recreation (AER) industry (down 14 percent) both saw much larger losses.
However, despite the loss of jobs, total annual nonprofit payroll increased by 3 percent between 2019-2020, continuing an unbroken pattern of annual increases since 1995. Payroll declined between Q1 and Q2, but only by 2 percent, and remained below the Q1 level through Q3 before increasing enough by Q4 to more than offset losses in prior quarters.
Payroll gains varied considerably across nonprofit industries. Using payroll in Q1 as the baseline, total nonprofit payroll was 10 percent higher in Q4 than in Q1. The health care industry saw the largest gain in payroll (up 13 percent) with social assistance close behind (11 percent). Payroll gains were notably lower in education (up 6 percent) and membership associations (up 4 percent). Arts, entertainment, and recreation was the only nonprofit industry to show lower payroll in Q4 than in Q1, and the loss was considerable–down 14 percent.
“The gains in total nonprofit payroll during 2020 are remarkable, given declines in total nonprofit employment,” notes Kirsten Grønbjerg, Director of the Indiana Nonprofits Project and Distinguished Professor at Indiana University. “However, the Payroll Protection Program (PPP), along with smaller philanthropic initiatives, likely softened the impact of COVID-19 on Indiana nonprofit employers.”
The report finds that the influx of cash provided by the PPP loans appears to have impacted nonprofit employers differently than for-profit ones. In some ways, (share of loans and total loan dollars), nonprofits appear to have benefitted less than for-profits. In other dimensions, (average dollar value of PPP loans per number of employees), nonprofits appear to have benefitted more than for-profits. However, these patterns differ notably across nonprofit industries.
About the briefing
This briefing is the seventeenth in a series of reports from Indiana Nonprofit Employment, produced by the Indiana Nonprofit Sector: Scope and Community Dimensions project, designed to inform local community leaders and policymakers. The analysis is a joint effort of the O’Neill School of Public and Environmental Affairs, the Lilly Family School of Philanthropy and the Indiana Business Research Center, all part of Indiana University. The briefing’s co-authors are the director of the project, Kirsten Grønbjerg and research assistant and IU MPA graduate David Kovarik.
About the O’Neill School of Public and Environmental Affairs
The O’Neill School is a world leader in public and environmental affairs and is the largest school of public administration and public policy in the United States. In the 2021, “Best Graduate Public Affairs Programs” by U.S. News & World Report, the O’Neill School ranks first in the country. Four of its specialty programs are ranked in the top-five listings, including nonprofit management, ranked first.
About the Lilly Family School of Philanthropy
The Indiana University Lilly Family School of Philanthropy is dedicated to improving philanthropy to improve the world by training and empowering students and professionals to be innovators and leaders who create positive and lasting change. The school offers a comprehensive approach to philanthropy through its undergraduate, graduate, certificate and professional development programs, its research and international programs and through The Fund Raising School, Lake Institute on Faith & Giving, the Mays Family Institute on Diverse Philanthropy and the Women’s Philanthropy Institute.
About the Indiana Business Research Center
The Indiana Business Research Center is an integral unit in the Kelley School of Business at Indiana University. Established in 1925, the IBRC provides and interprets the economic information needed by the state’s business, government and nonprofit organizations, as well as users of such information throughout the nation. The IBRC powers its research (and others) with its vast databases on numerous topics including income, employment, taxes, and a host of other economic indicators for the nation, the state and local areas. In addition, the Center conducts original research to generate needed information when existing data are not available or sufficient.