Can Regions Profit From Nonprofits?

According to the Albany, NY region, nonprofits can be growth generators. That is the conclusion of a new study released by nonprofit leaders in the area. The report says nonprofits are a $4 billion growth industry that cares. Nonprofit organizations are seen as a growth engine driving the regional economy, accounting for $7.8 billion annually in direct and indirect economic activity. Equally important, nonprofits were found to play a crucial role in health care, education, cultural activities, and other services.

How does this report strike you? It does not sit too well with me. Maybe I am missing something here. I'm not so sure I would be touting the nonprofit sector as my leading target industry. Is the nonprofit sector important to local economies? Of course it is, but does it make sense to actively promote it as your leading growth engine? Hardly. By the way, I would say the same about the role of government in local economies. Government plays an important role as a strategic service provider, but it should not be your leading growth industry.

Is there a better way to look at the role of nonprofit organizations in local economies? Yes. I think a better way would be to explain why the nonprofit sector is growing and how this growth fosters growth in the private industries located in the region. One could argue the economic importance of a region's educational sector. One could argue that nonprofit science and technology centers are catalysts for technology-based economic growth. These are reasonable claims.

One issue to watch for is allowing the nonprofit sector to crowd out private enterprise from developing. The nonprofit should not be a subsidized version of what the marketplace can and should provide. After a while, all this begins to sound strangely like state-owned enterprise, which is becoming a dying race in many parts of the world.

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