By Paul Clolery

More than one in five nonprofit employees (22%) struggle financially, even though the rate of financial hardship is less for nonprofit workers than in the for-profit sector (27%). 

Among nonprofit workers in 2022, 5% were below the official U.S. poverty level, and another 17% qualified in the category of ALICE® (Asset Limited, Income Constrained, Employed). ALICE nonprofit employees live in households that earn more than the federal poverty level, but less than what it costs to survive in the counties where they live. They can’t afford the basics: housing, childcare, food, transportation, healthcare, technology and taxes.

ALICE households include those employed by nonprofits and otherwise. Those in poverty represented 42% of all households across the United States in 2022. For example, the federal definition for poverty is $18,310. The ALICE Household Survival Budget gives three distinct examples of costs for a two-person household (a single adult and a school-age child) in three counties. These examples illustrate the cost of basics below the national average (El Paso County, Texas, $40,032), near the average (Franklin County, Ohio, which includes Columbus, $46,932), and above the average (Alexandria City, Virginia ($71,436).

To determine a nonprofit worker’s financial status, the Household Survival Budget for that worker’s county is compared to the worker’s total household income as reported in the U.S. Census Bureau’s American Community Survey’s Public Use Microdata Sample.  

The data is part of a study, “ALICE in the Nonprofit Workforce: A Study of Financial Hardship,” conducted by United For ALICE and Independent Sector. United for ALICE was developed by United Way of Northern New Jersey and data is now tracked in 33 states and the District of Columbia.

“The nonprofit sector is fundamental to American society, delivering vital services and resources to those who need them most. Yet it is deeply troubling that so many of our own nonprofit workers – those who dedicate their lives to supporting others – are themselves facing financial hardship,” said Independent Sector President and CEO Akilah Watkins, Ph.D. “This groundbreaking study gives us both a starting point and a call to action. We must find data-informed solutions, whether through policy or practice, to meet the needs of nonprofit workers who are struggling financially. Investing in the health of our workforce is essential, because it takes a thriving and well-equipped workforce to drive meaningful and sustained change in our communities and our nation.”

Among the 13.9 million nonprofit workers, there were substantial differences in financial hardship by industry sector. The largest industry sector in 2022 was healthcare, with 4.9 million nonprofit employees. Most industry sectors had fewer than 400,000 nonprofit employees. Among the nine largest industry sectors, rates of financial hardship for nonprofit employees varied from 16% in both the healthcare and the finance and insurance industry sectors to 42% in retail trade.

“Nonprofit workers in the social services sector take care of our most vulnerable citizens, including seniors and children. Yet, one-third (32%) of social service workers cannot make ends meet and take care of their families. That stress and uncertainty impacts the health and well-being of our communities and economy overall,” said Kiran Handa Gaudioso, CEO of the United Way of Northern New Jersey and president of United for ALICE.

Almost half (45%) of the nonprofit workforce was age 25 to 44 in 2022, followed by 38% age 45 to 64. These two groups, in their prime working years, had the lowest rates of hardship: 23% of workers age 25 to 44 lived in households with income below the ALICE threshold, as did 17% of workers age 45 to 64. The youngest nonprofit workers, younger than age 25, had the highest rate of financial hardship at 37%. Nonprofit workers age 65 and older made up 9% of the workforce with 22% below the ALICE threshold.

Of those 65 and older, 2% were considered in poverty based on salary and benefits and 19% were within the ALICE threshold. “The ALICE analysis is only of current workers; volunteers are not included. The lower percent of 65+ workers (5% for the overall population) below the ALICE threshold is likely because they are receiving social security, said Stephanie Hoopes, Ph.D., national director, United For ALICE and chief research and impact officer of United Way of Northern New Jersey. “But interestingly, even with their nonprofit salary it was not enough not to get 19% above the ALICE threshold (reasons may include they are supporting many family members),” she said.

The majority of nonprofit workers were female (65%, versus 47% in the total workforce). Female nonprofit employees fared better than female employees overall, with a higher median wage for full-time work and a lower rate of financial hardship. 

In addition, the rate of household-level financial hardship was the same for male and female nonprofit workers at 22%. These findings differ from what one might expect based on the widely studied wage gap by sex in the overall workforce. 

“For instance, women are earning more in nonprofit than for-profit organizations, and sectors like healthcare are showing that nonprofits can achieve their mission while providing greater financial stability for their workers,” said Hoopes.

Other data points include:

* Nearly one-third of workers at social assistance and at arts, entertainment and recreation nonprofits faced financial hardship: The nonprofits with the highest rates of financial hardship included social assistance (32%); arts, entertainment and recreation (32%); and religious organizations (29%). Those with the lowest rates included healthcare (16%) and educational services (18%).

* Systemic inequalities continued to impact financial stability: Black and Hispanic nonprofit workers were twice as likely as White workers to experience financial hardship, and one-third of nonprofit workers with disabilities struggled financially.

* Nonprofit workers with children were at higher risk: 30% of nonprofit workers with children and 53% of single parents working at nonprofits experienced financial hardship.

* Wages lagged behind inflation for many nonprofit workers: For example, rehabilitation counselors working at nonprofits saw a 24% median wage increase from 2010 to 2022, while the median cost of household necessities rose by 46%.

“We were surprised that the overall rate of financial hardship was not higher for workers in nonprofit organizations (22% vs. 20% in government organizations and 27% in for profit businesses),” said Handa Gaudioso. “But as we dug into the data, we found huge variation across industry subsectors – from 13% below the ALICE threshold in medical and surgical hospitals to 33% in residential care facilities to 35% in child day care. We were also surprised at the extent disparities by race/ethnicity mirror those in the overall population: 17% for White nonprofit workers to 34% for Hispanic and 35% for Black nonprofit workers.”

The nonprofit workforce includes workers of all races and ethnicities, with varying rates of workforce representation and financial hardship Black nonprofit workers had a slightly higher representation in the nonprofit workforce (12%) than in the total workforce (11%) and had the highest rate of financial hardship (35%).

Hispanic nonprofit workers had a lower representation in the nonprofit workforce (13%) than in the total workforce (19%) and had the second-highest rate of financial hardship (34%). 

White nonprofit workers had a higher representation in the nonprofit workforce (63%) than in the total workforce (59%) and had the lowest rate of financial hardship (17%). 

Handa Gaudioso said the next step is to get more state level data. She said that several states will soon be added to the 33 states and District of Columbia contributing data. The national data will be tracked over time. 

Read the full ALICE in the Nonprofit Workforce: A Study of Financial Hardship report at: https://independentsector.org/nonprofit-workforce

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