NONPROFITS PAY OFF.

Byline: Susan Palmer The Register-Guard

CORRECTION (ran 2/09/05): PeaceHealth's Lane County operations, including Sacred Heart Medical Center in Eugene, hospitals in Cottage Grove and Florence, and other medical ventures, in 2003 had gross revenues of $403 million, with 4,162 fulltime employes, and annual wages and benefits of $204 million. A chart accompanying a Sunday article about nonprofit corporations in Lane County incorrectly described the nonprofit organization.

Art Taylor's and Dan Lauer's jobs couldn't be more different.

Taylor works in a drafty warehouse in north Eugene supervising workers making mattresses and cobbling together wood furniture to sell in secondhand stores. Across town in a modest yet comfortable office just off West 11th Avenue, Lauer manages programs that help orphaned and abandoned children in five countries.

Taylor wears coveralls and works surrounded by pallets of donated wood, rolls of fabric and bags of cotton and Dacron. Lauer's blue shirt and gray slacks are more suitable in his milieu, communicating via phone and computer with his far-flung staff.

Lauer is college-educated, while Taylor came up through the school of hard knocks. But the two men are linked, working in the same arena that employed 12.2 percent of Lane County's private work force in 2002.

In Oregon, as in the rest of the nation, nonprofits represent a thriving sector of the economy. In 2002, the most recent year for which such figures are available, nonprofit corporations employed 139,000 in Oregon - that's 10 percent of the private-sector work force with a payroll of $4 billion and an average wage of $29,000.

While it's significantly less than the state's manufacturing sector, which employed 200,000 with a payroll of $8.8 billion and an average wage of $43,600, it's much more than the leisure/hospitality industry, which employed 149,000 people with a $2 billion payroll and an average wage of $14,000.

"They're an important part of the fabric of the economy," state labor economist Art Ayre said. "They're granted tax-favored status and doing activities determined to be desirable."

Labor economists usually don't categorize nonprofit corporations as a separate industry because they cover too broad a swath. But if they did, out of 11 categories, nonprofits would rank as the sixth-largest private employer in the state.

Attracting more such groups to headquarter in Eugene could be a viable economic development strategy, according to one expert. Many offer living-wage jobs unlikely to be exported, and bring in grant money that has a ripple effect on the economy. Others provide social services to those struggling at the bottom end of the income spectrum - services that might otherwise fall to local governments.

Nonprofit groups span a broad spectrum. They encompass children's clubs such as the Girl Scouts and Kidsports; helping agencies such as the Relief Nursery and FOOD for Lane County; hospitals such as Sacred Heart Medical Center; and research organizations such as the Oregon Research Institute. There are public interest law firms, private schools and foundations, parent-teacher associations and service clubs.

Taylor works for the St. Vincent de Paul Society of Lane County managing its manufacturing warehouse. Lauer works at Holt International, most famous for its adoption program, but also known for its efforts to keep families in foreign countries together whenever possible.

About 14,000 Lane County residents work for nonprofits, and while the majority of the county's 1,100 charities run on the sweat equity of volunteers and a few paid staff, there are at least 10 with annual budgets topping $10 million and more than 100 employees.

Holt International's gross revenue for 2003 was $17.3 million. St. Vincent's was $11.7 million.

Several dozen more operate on budgets of between $1 million and $10 million.

Such groups are dwarfed by the county's largest nonprofit employer, PeaceHealth. The Bellevue-based corporation, owner of Sacred Heart, employs more than 4,000 people in the county and had gross receipts of more than $400 million in 2003.

But the smaller agencies often bring a disproportionately large chunk of money into the community in the form of government and private foundation grants that cover the salaries of the people they employ. It's an aspect of their work that doesn't always register with the public.

"People tend to think of the nonprofit sector as a drag on the economy," said University of Oregon assistant professor Renee Irvin, who directs the UO graduate certificate program in nonprofit management. In fact, they represent a net gain, she said.

Oregon Research Institute, for example, recently received a $4.3 million federal grant from the Department of Education that will support its staff studying the effectiveness of an early intervention program for at-risk children.

The Environmental Law Alliance Worldwide recently announced a grant for $285,000 from the Catherine T. MacArthur Foundation that will help pay the salaries of its lawyers.

"Much of our money comes from outside the community," E-LAW Executive Director Bern Johnson said. Among its national donors: the Charles Stewart Mott and Rockefeller foundations. The public interest law firm employs nine people full time, and while some of its funds support programs in the 60 countries that comprise its network, about 60 percent of it remains in Eugene.

At St. Vincent de Paul, which operates homeless shelters, low-income housing, a food pantry, and other support programs for struggling residents, 28 percent of its 2003 revenue came from government grants.

Like for-profit entities, such as the computer-chip maker Hynix or the recreational vehicle manufacturers, this outside money comes in as wages that ripple out into the community when workers spend money on homes, food, clothes, other essentials and recreation.

Nonprofit-sector jobs are often less vulnerable to the market forces that for-profit companies face, Irvin said.

"It's a very labor-intensive sector. It's a service profession, so jobs really aren't exportable overseas," she said.

That fact presents intriguing economic development opportunities, Irvin said. Just as Colorado Springs, Colo., has become an important center for conservative organizations, Eugene could become a haven for nonprofit organizations.

"I see nonprofits headquartered here in Lane County as an economic development strategy," Irvin said. "These are decent, white-collar nonpolluting kinds of jobs."

That's not to suggest that nonprofits are invulnerable to economic forces, she said.

In the recession that began in 2000 and was exacerbated by the terrorist attacks of 2001, public charities lost government funding at the same time donors were cutting back because of the stock market decline. Many struggled with less financial support at a time when more people needed their services, Irvin said.

And nonprofits often find themselves in competition with each other for the same pool of available money. Many are waiting to see whether the recent outpouring of support to tsunami-stricken countries will affect donations here.

"They can't just sit back and say, 'Well, we're the only nonprofit in town that provides such and such a service.' That may be true, but they're getting support from the same source that other deserving organizations are getting funding from," she said.

While Lane County has a slightly higher percentage of nonprofits compared to the state and the nation, what's more compelling is the uniqueness of the organizations that do thrive here, St. Vincent de Paul executive director Terry McDonald said.

He cites groups such as the Relief Nursery, White Bird, BRING Recycling, and Aprovecho in Cottage Grove.

Those small groups have a huge impact, McDonald said, often overshadowing better-known national nonprofit organizations such as the Salvation Army.

"The big-player nonprofits are small players in this marketplace," he said.

Irvin agreed. "There are nonprofits that seem to spring from the humus in the earth here."

The university has taken note, adding a new certification program for students interested in nonprofit management. The UO program began in the winter of 2002 with 16 students. Now there are 60 students enrolled, Irvin said.

"What defines a nonprofit isn't that there's no profit, it's that it has no owners. There are no shareholders or partners," Irvin said.

But there are stakeholders: donors, clients, the board of directors, the staff. The decision-making process can be more challenging than it is at the for-profit level because it needs to involve the stakeholders, she said.

"The general public tends to think of the nonprofit sector as being really inefficient. In fact, all I've seen is them wringing that last dollar out of the turnip. They're so good at existing on fumes, I would rank them against any business," she said.

Nonprofits also provide a level of job satisfaction that keeps employees on board for longer periods.

Taylor, who works for St. Vincent de Paul, has been there since 1989. He knows he could make more money driving a truck, but the rewards wouldn't be as great.

Most recently, he and his woodworking crew came up with a new bookshelf model and a small table for children that includes a storage space drawer and a blackboard top. The products will sell in St. Vincent stores across Oregon at a price that cash-strapped families can afford, he said. The revenue will go to help one of St. Vincent's many programs.

"It's a lot of hard work. That's the God's honest truth, and it never stops, but I wouldn't have the satisfaction somewhere else," he said.

That's what keeps Lauer working at Holt.

"I believe in Holt's mission. It's not necessarily easy work. There are frustrations, but I'm passionate about adoption," he said.

THRIVING SECTOR OF THE ECONOMY

Many nonprofits are supported by grants and other outside funds, which helps them employ 14,000 Lane County workers, many with living-wage jobs.

NONPROFITS BY CATEGORY

The Internal Revenue Service classifies the range of organizations exempted from paying taxes. Here's the number of exempt Oregon nonprofits reporting earnings exceeding $25,000 in 2003 in each category and their gross receipts.

Arts, culture, humanities: 554, $309 million

Education: 875, $1.9 billion

Environmental quality, protection and beautification: 232, $119 million

Animal related: 95, $44 million

Health: 277, $14.3 billion

Mental health crisis intervention: 128, $254 million

Diseases, disorders, medical disciplines: 64, $60.6 million

Medical research: 34, $44.5 million

Crime, legal-related: 123, $77 million

Employment, job-related: 77, $257.8 million

Food, agriculture and nutrition: 51, $92.5 million

Housing, shelter: 236, $116.4 million

Public safety: 45, $2.2 million

Recreation, sports, leisure, athletics: 394, $86 million

Youth development: 151, $82 million

Human services: 673, $957.6 million

International, foreign affairs and national security: 39, $112.6 million

Civil rights, social action, advocacy: 39, $15 million

Community improvement, capacity building: 197, $66.4 million

Philanthropy, volunteerism, grant-making foundations: 250, $912.7 million

Science and technology research: 27, $25.1 million

Social science research: 14, $20 million

Public, society benefit: 33, $9.9 million

Religion, spiritual development: 266, $92 million

Unknown: 229, $13.1 million

CAPTION(S):

Art Taylor, manager of St. Vincent de Paul's mattress recycling facility, pulls batting off the line. Taylor says that even with a heavy workload, he's satisfied with the job. E c o n o m y "I see nonprofits headquartered here in Lane County as an economic development strategy." - RENEE IRVIN, UNIVERSITY OF OREGON ASSISTANT PROFESSOR Chris Pietsch / The Register-Guard Dan Lauer of Holt International manages programs that help orphaned and abandoned children in five countries.