A Look Ahead with The Economist: Economic benefits of Texas nonprofits
Nonprofit establishments improve lives, communities, and society as a whole. These entities offer a variety of services and include hospitals and other health care providers, schools and universities, art museums, social services organizations, and many other types of operations. Not only do nonprofits provide important services that enhance quality of life and societal wellbeing; they also generate substantial economic benefits through their operations and the associated multiple rounds of activity through the economy.
Using an extensive set of information related to nonprofit employment, payrolls, and other information maintained by public and private sources, we recently measured the overall effects of nonprofit operations on the economies of Texas and its metropolitan areas and regions. The full report, including results by county and industry and a methodology discussion, is available for free download.
Texas nonprofit entities directly employed more than 540,000 persons as of 2018. They also purchase needed supplies, pay for services, and otherwise provide stimulus to various communities. These benefits ripple through the economy and generate activity across a spectrum of industries.
We estimate that the total current economic benefits of ongoing operations of Texas nonprofit entities include $110 billion in annual gross product and nearly 1.4 million jobs — about one-eighth of all private sector jobs in the state. All major industry groups are positively affected, with services industries and wholesale and retail trade experiencing particularly strong gains.
These economic impacts span the entire state. Benefits generally follow population patterns, with the largest positive effects realized in the state’s most populous metropolitan areas. In the greater Houston area, nonprofits generate an estimated 340,000 jobs, with almost 245,000 in the Dallas area, 139,000 in the San Antonio area, 130,000 in the Fort Worth area, and 104,000 in the Austin area. Smaller population centers and rural regions of the state also see substantial gains, as described in our full report.
The economic stimulus associated with nonprofit entitles is likely to expand over time. We estimate that by 2023, the overall economic benefits of Texas nonprofit entities will rise to $135.7 billion in gross product and more than 1.6 million jobs when multiplier effects are considered. In 2028, these benefits are projected to reach $163.8 billion in gross product and over 1.8 million jobs.
These effects only capture the operations of these organizations. In addition, the monetary contributions from philanthropic organizations generate an additional $7.4 billion in annual gross product and more than 100,000 jobs.
Nonprofit entities serve the needs of the state’s most vulnerable populations, improve living conditions for all residents, provide education and health care, and enhance quality of life. As they fulfill these roles, they also generate substantial economic activity across the state.
Dr. M. Ray Perryman is President and Chief Executive Officer of The Perryman Group. He also serves as Institute Distinguished Professor of Economic Theory and Method at the International Institute for Advanced Studies.