The number of non-profit organizations in Rhode Island multiplied by 70 percent between 1990 and 2000, according to a new study released by the Rhode Island Foundation.
“Nonprofits provide a social conscience to the state – they point out injustices that would probably be swept under the rug,” said Scott Wolf, executive director of Grow Smart Rhode Island, a nonprofit. “They also provide a more comfortable place to go for services and advice (rather) than a government agency.”
The report’s findings are surprising to members of state officials as well as the foundation, which announced the findings with the NonProfit Resources of Southern New England on May 28.
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“In a state that has really seen an increase in the services sector, who would have thought that a single sector would increase 70 percent and represent almost 15 percent of the state’s gross product,” said Rick Schwartz, vice president of communications for the Rhode Island Foundation. “I don’t think many people expected it to be a major part of the economic engine of Rhode Island.”
The report states that the number of nonprofits reporting to the IRS grew from 842 in 1990 to 1,443 in 2000. Those reporting nonprofits (the groups with a minimum of $25,000 in receipts) employed 63,288 people in 2001, in a close second to the manufacturing industry’s 72,700 employees.
The state’s nonprofits are also paying well, the study says. Local groups paid $1.77 billion in wages in 2000; manufacturing spent $2.76 billion in wages the same year. Total expenditures by non-profit organizations were $5.1 billion in 2000, which accounts for 14 percent of Rhode Island’s gross state product.
Schwartz said that initially one might get excited that Rhode Island has such a strong non-profit sector. “But the non-profit sector, by-and-large, is a lower paying sector,” he said. “Is Rhode Island having its second-largest component a nonprofit a good thing? We don’t know.”
The study, “Rhode Island’s Non-Profit Sector: More than Charity,” estimates that Rhode Island actually has a total of 4,156 non-profit organizations, including 648 charitable foundations. Some were not included in the study because of their small size.
Wolf sees the results as proof that the state needs property tax reform. With an expanding non-profit sector, there will be less taxable land. Those communities in Providence County with the heaviest concentration will be hardest hit with property taxes to make up for it, he said.
“Nonprofits are good for the state economy but not necessarily for urban budgets,” Wolf said. Options, he said, might be to reduce local property tax and increase a state tax to balance it; have a statewide property tax or have a regional property tax sharing.
The largest areas of industry for nonprofits in the state are in human services, which make up more than 30 percent of the charities. The largest expenditures are by hospitals, with 35.3 percent of the nonprofits’ total expenditures. Higher education holds the largest amount of assets, with 41.5 percent of the total.
“Health care is becoming a bigger slice in this country and it’s handled mostly by nonprofits,” Wolf said, explaining the large chunk of human services and health care make up most of the non-profit sector. “In some areas of social services, the federal and state governments have (become) entrenched,” also leading to an increase in nonprofits.
Providence County has the largest contingency of nonprofits in the state, with 1,017; Washington, Newport and Kent counties have 155, 115 and 113, respectively, and Bristol County has 43.
Rhode Island has more per capita than Massachusetts, the state with the highest number of nonprofits, Schwartz said. The state’s large concentration of nonprofits might be a sign of the state’s need, or it might simply be a logical response to social, economic and environmental factors and changes, he added.
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