Nonprofits as an economic force

Study outlines impact on Montana economy

In this season of charitable giving, Brian Magee hopes to highlight the contributions Montana's nonprofit organizations make to the state's economy and quality of life.

Magee is executive director of the Montana Nonprofit Association, which recently completed a detailed study of the scale and effect of the state's nonprofit sector.

Historically, nonprofits have never been tracked as a separate segment of the economy, such as agriculture or construction. Consequently, it's been difficult to pinpoint their overall significance.

"Nonprofits have always been the 'invisible' sector," Magee said. "They've generally been buried in other categories."

The association's report found that Montana was home to more than 5,600 charitable nonprofit organizations and private foundations. Most of those were small, volunteer-based groups with limited revenue.

However, 1,520 had more than $25,000 in gross revenue per year, meaning they had to file reports with the Internal Revenue Service.

Based on those filings, the report concluded that the 1,520 nonprofits had combined annual expenditures of $2.5 billion, or roughly 11 percent of Montana's gross state product.

"In Montana, the nonprofit sector is an economic force," Magee said.

The report did not look at total work force or wages, he said. However, the association hopes to conduct a wage and benefit survey this year.

Health and human services organizations made up more than half of the 1,520 charities that filed reports with the IRS. Arts, culture and education groups made up another 24 percent, with the remainder religious, community improvement and other groups.

Hospitals and health-care organizations accounted for two-thirds of the annual expenditures and half the total assets of the 1,520 nonprofits.

The basic requirement for becoming a nonprofit isn't that an entity earns no profit, Magee said. It's that any profits stay with the organization to meet the public good.

Nonprofits also have to register with the IRS and be approved by the Montana Department of Revenue before they earn tax-exempt status, he said.

"When we get calls about starting a nonprofit, we ask a few basic questions," Magee said. "First, is there a need, is there a 'market' for whatever service is being considered? If so, are there other ways to meet that need without starting a new organization? Are other organizations already serving that market, or could they expand their mission to do so? Finally, we want to make sure people realize that running a nonprofit isn't easy."

That's one of the fundamental reasons the Montana Nonprofit Association was started four years ago, he said. It helps provide a united voice for the state's nonprofit sector, as well as training and professional development opportunities, discounted services and other services to help these organizations run better.

On a more local level, the Non-Profit Development Partnership is doing something similar.

The partnership, which is affiliated with Flathead Valley Community College, offers monthly brown-bag lunches and periodic seminars to help nonprofits fulfill their mission.

"We're trying to create networking opportunities where people can come and ask questions, learn from their peers and share resources," said Ned Cooney, a member of the partnership's steering committee.

The group also is trying to reach

out to the Flathead's many newcomers to attract additional financial contributions, volunteers and board members.

"The overarching challenge in this area is how, as new people move in, to make them aware of the nonprofit efforts here," Cooney said.

Despite the challenges facing Montana's nonprofit sector, Magee said these organizations always will play a critical role in supporting a community's quality of life.

"Nonprofits are part of our culture and ethic," he said. "There is a history in this country of neighbors coming together to address issues they see in their communities, and it spawned a sector of the society that's independent of government and business and that's organized around the public good."

-For more information about the Non-Profit Development Partnership, send an e-mail to flatheadlincolnnpdp@hotmail.com.

-For information about the Montana Nonprofit Association or to download a copy of the association's report on the state's nonprofit sector, visit www.mtnonprofit.org.

Reporter Bill Spence may be reached at 758-4459 or by e-mail at bspence@dailyinterlake.com