Foundation investments in innovative efforts like DePaul Industries have a deeper and farther-reaching economic impact in the Pacific Northwest and throughout America than previously understood. According to a first-of-its kind, independent analysis released today by The Philanthropic Collaborative, the economic impacts of foundation grantmaking in the U.S. are huge. Grants supports millions of jobs, as well as billions of dollars in wages, GDP and tax revenues that extend for generations.
DePaul Industries provides employment opportunities for people with disabilities through staffing, security, and food and consumer goods packaging services. An analysis of $527,000 in grants from the M.J. Murdock Charitable Trust provided to DePaul Industries for equipment purchases reveals that the grants directly support at least 60 jobs. But the long-term economic impact is much greater. An analysis of the “ripple effect” of foundation investments and the nonprofit’s impact shows that DePaul contributes $195 million to the annual GDP and is responsible for nearly 4,000 additional jobs in its community in the long-term. Since its inception in 1971, DePaul Industries has trained or employed more than 15,000 employees and paid more than $150 million in wages and benefits.
The report, “Economic Impacts of 2010 Foundation Grantmaking on the U.S. Economy,” comes at a critical time. Congress and the White House are debating the role of the sector and considering caps or limits on incentives that encourage charitable giving. The report examines the present and future impact on the U.S. economy of foundation grantmaking, which supports diverse areas such as health care, scientific research, educational opportunities, safer neighborhoods and more.
“DePaul Industries is an extraordinary entrepreneurial not-for-profit organization in our community,” says Jeff Cogen, Multnomah County Chairman for the state of Oregon, where DePaul Industries is headquartered. “Their demand-driven employment model has made a huge impact for thousands of people with disabilities and, as they scale their efforts, is steadily closing the gap of employment between people with and without disabilities.”
The study examines how foundation grants within the U.S. in 2010 ($37.85 billion) contribute to immediate and short-term job creation and wages, GDP and tax revenues. But the study goes a step farther to reveal the longer-term, more substantial impacts that are difficult to measure. Using return on investment data and the well-established IMPLAN economic model, the study examines the broader impact and benefits that these investments are likely to have for grantees and in communities for decades to come. The report reveals that the impacts of foundation grantmaking in America are vast:
Millions of jobs created:
- Nearly 500,000 jobs are created immediately following disbursement of foundation grants, expanding within about a year to nearly 1 million jobs once the grants flow through the economy.
- At least 8.8 million jobs are created over the long-term. In the subsequent years after foundation investments are made, impacts build that span a generation and beyond. For example, a foundation grant to support an early childhood education initiative increases the likelihood that more young people will go to college, improve their lifetime earnings and improve their quality of life.
Billions of dollars in long-term economic activity:
- Nearly $970 billion in goods and services transactions are generated, and more than $570 billion to America’s GDP based on long-term return on investment and economic multipliers.
“Although public and elected officials may be familiar with specific foundation-supported charitable organizations, the broader importance of the sector to our society and the size of its impact are less well known,” said John Tyler, chair of The Philanthropic Collaborative and general counsel and secretary of the Ewing Marion Kauffman Foundation. “Fortunately, appreciation is growing for the far-reaching effect that foundations and charitable giving have in our communities. That is a good trend, but there is more to be done.”
The study also examines the impact of foundation investments broken down by foundation giving, impacted nonprofit organizations and each economic sector across time. Including DePaul Industries, the report analyzes the economic impact of eight diverse community-level initiatives supported through foundation grantmaking, based on available data for specific grants or programs.
Foundations support almost nine million jobs in America, and the nonprofit community as a whole employs more than 13.5 million people, or approximately 10 percent of the workforce. Nonprofits pay nearly $670 billion annually in wages and benefits, and employ more people than the finance, insurance and real estate sectors combined.
