Nonprofit organizations in Tucson, Arizona MSA

Nonprofit organizations play a crucial role in society and the economy. A recent report from George Mason University’s Nonprofit Employment Data Project ranks the nonprofit sector as the third-largest workforce in the U.S., surpassing all but two employment industries. Only retail trade and accommodation and food services have more employees.

Nonprofit establishments comprise about 10% of total private sector employment, both nationally and in the Tucson Metropolitan Statistical Area (MSA). Nonprofit enterprises are found in all sectors of the economy, although they are most prevalent in healthcare and social assistance followed by education services. This is true for all areas of the country, including Arizona and the Tucson MSA. While the share of jobs in nonprofits has improved over the past two years, it has not regained pre-pandemic employment levels in many areas, including the U.S. and Tucson. Arizona, however, has eclipsed 2019 levels of nonprofit employment. For-profit employment displayed greater gains than nonprofit employment in most MAP states between 2019 and 2022.

Determining the number of nonprofit employees and establishments can be challenging, as nonprofit entities exist across all industry sectors. Recently released data for 2022 from the U.S. Bureau of Labor Statistics (BLS) sheds light on the nonprofit sector. This article will focus on providing an overview of nonprofit employment and establishments on a national level and add perspectives on regional, state, and metropolitan areas where available.

Share of Nonprofit Employment in States, Regions, and Metropolitan Areas

Nonprofit establishments in the U.S. employed over 12 million people in 2022, accounting for 9.9% of total private sector employment. The District of Columbia had the highest share of total nonprofit employment in 2022, at 25.2%, followed by Vermont at 19.8% and Massachusetts at 17.6%. Within MAP states, the share of all private sector jobs held by nonprofits ranged from 12.4% in Oregon to a low of 2.8% in Nevada (which also ranked last nationally). The state of Washington ranked just below the national average at 9.7%, while Arizona and New Mexico tied for third among MAP states with 8.0%. With the exceptions of Oregon and Washington, MAP states were among the lower third of all states for nonprofit employment in 2022, as noted in Figure 1. A recent BLS report focusing on state and regional nonprofit employment indicated the West and South had the lowest percentage of employment in nonprofit organizations compared to the Northeast and Midwest when divided by U.S. Census Bureau regions. MAP states, with the exception of Texas, are part of the West region. Texas is considered part of the South in U.S. Census regions. A report by Johns Hopkins suggests that the lower share of private nonprofit employment in the West is due to a larger prevalence of for-profit health systems and a robust public college system, thanks to land-grant universities. Public university employees are included in government employment rather than private employment.

Figure 1: Percent of Total Private Employment That Is Nonprofit (2022)

At 10.4%, Tucson MSA had a higher share of nonprofit employment than Arizona or the nation. Portland was the only area to have a higher percentage than Tucson, at 11.5% (Figure 2). All other metropolitan areas tracked on the MAP had smaller shares of nonprofit employment than the nation, with Las Vegas having the smallest at 2.0%.

Figure 2: Percent of Total Private Employment That Is Nonprofit (2022)

Top Industry Sectors for Nonprofit Employment

According to the U.S. Bureau of Labor Statistics, nonprofit organizations are found in all portions of the economy. The highest concentration of nonprofit employment occurs in the following four industries: healthcare and social assistance; educational services; other services; and arts, entertainment, and recreation. More than two-thirds of all nonprofit employment in the U.S. is in healthcare and social assistance, making it the most prominent industry for nonprofit jobs. Educational services was the second largest contributor to nonprofit employment. It is important to note that educational services refers to private education. State universities such as the University of Arizona are considered government employment. Other services contain categories for religious, grantmaking, civic, professional, and similar organizations, which are primarily nonprofit enterprises. While healthcare and social assistance was the largest sector for nonprofit employment across all 50 states, educational services provided the largest share of nonprofit employment in the District of Columbia.

In 2022, health care and social assistance accounted for 20.4 million private sector jobs in the U.S. Within this sector, those employed in nonprofit establishments made up 41.6%. Only two MAP states had a higher share of health care and social assistance employment that was nonprofit: Oregon, at 50.4%, and Washington, at 42.9% (see Figure 3). Arizona ranked third among MAP states, with a share of 37.3%. Healthcare and social assistance was the sector employing the largest number of nonprofit jobs in both Tucson and Phoenix. The states of Texas and Nevada had the lowest share of nonprofit employment in health care and social assistance in the nation, at 23.1% and 16.6%, respectively.

Figure 3: Percent of Health Care and Social Assistance Employment That Is Nonprofit (2022)

Growth in Nonprofit Employment

When exploring how nonprofit employment and establishments fared between 2019, before the pandemic, and the latest data for 2022, the results are mixed. Nationally, employment decreased by 1.4%, while the number of establishments increased by 11.5%. Every state in the nation experienced an increase in the number of nonprofit establishments between 2019 and 2022, but not always a corresponding increase in employment. The same is true for the MAP metropolitan areas. The Tucson MSA experienced a 4.0% increase in nonprofit establishments between 2019 and 2022, though employment decreased slightly by -0.4%. Arizona, on the other hand, had increases in both establishments (14.3%) and employment (3.2%) in that time frame.

For-profit employment growth exceeded that of nonprofit employment in most areas of the country between 2019 and 2022. Nationally, nonprofit employment decreased by 1.4%, while for-profit employment grew by 2.2%. Arizona experienced growth in both nonprofit and for-profit employment, although for-profit employment grew faster, at 7.4% versus 3.2% for nonprofits (Figure 4). Most states experienced the same growth patterns as the U.S., with a few notable exceptions for MAP states. Nevada had faster growth in nonprofit employment as it posted an increase of 7.7%, while for-profit increased by 5.1%. Growth in nonprofit and for-profit employment was nearly even in Texas. Idaho posted the fastest growth of any state in the nation in nonprofit employment between 2019 and 2022 at 8.7%.

Figure 4: Percent Change in Nonprofit and For-profit Employment (2019-2022)

When comparing the U.S., Arizona, and Tucson in the years preceding the pandemic, all reported steady growth between 2017 and 2019, with Arizona and Tucson outpacing the nation in 2019. In 2020, all three regions experienced a decline in nonprofit employment due to the pandemic. That was followed by a slight increase in 2021 and an even larger increase in 2022 as employment levels recovered from the losses posted during the pandemic (see Figure 5). By 2022, only Arizona had managed to replace the level of nonprofit employment it had before the pandemic. The state had faster growth than the nation or Tucson in the years leading up to 2020 and in 2022. The pandemic hurt both nonprofit and for-profit employment; however, nonprofit employment has taken longer to rebound compared to for-profit employment, which exceeded pre-pandemic employment in the U.S., Arizona, and Tucson by 2022.

Figure 5: Annual Growth in Nonprofit Employment (2017-2022)

Nonprofit Wages

Tucson had one of the largest shares of nonprofit employment in 2022 compared to peer MSAs, yet the annual wages per employee for nonprofit establishments in Tucson were among the lowest. El Paso wages ranked the lowest in 2022 at $43,854, followed by Tucson at $52,443. The highest wages for nonprofit establishments was in Denver at $72,368. Among MAP states, Arizona was in the middle of the pack with wages per employee reported at $65,468. The highest was California at $78,352, and the lowest was New Mexico at $58,110. Nationally, annual wages per employee for nonprofit establishments in 2022 were $68,394. Interestingly, Arizona nonprofit wages per employee were higher than wages for all establishments (at $64,669). That was not the case for the nation or Tucson (Figure 6).

Figure 6: Annual Wages per Employee (2022)

Taking a deeper dive into the sub-sector data for the Tucson MSA, the industry with the highest concentration of nonprofit employment also garnered the highest pay. The grantmaking and giving services industry, which is a sub-sector of other services, had the largest share of nonprofit employment at 94.0% and an annual wage per employee of $89,621. That was higher than the national wage of $83,864 for grantmaking and giving services, which at 88.7% ranked third nationally for the share of nonprofit employment. Not all industry data was available for the Tucson MSA. Of the detailed industry-level data reported on nonprofits by the BLS, the five sub-sector industries highlighted in the table below had the highest concentration of nonprofit employment. Figure 7 shows the five detailed industry classifications, their share of total private employment that was nonprofit, and the annual wages per employee as compared to the nation. Three of the five sub-sectors fall within other services (NAICS 81), which is a broad category encompassing numerous different types of businesses. The other two are within the main sectors mentioned earlier in the article that represent the largest share of nonprofit employment in Tucson: health care and social services (NAICS 62), and educational services (NAICS 61).

Figure 7: Detailed Industries With Highest Concentration of Nonprofit Employment in Tucson (2022)

How This Is Measured

The U.S. Bureau of Labor Statistics (BLS) provides annual data sets every five years. A 2024 Monthly Labor Review article published by the BLS about nonprofit employment reported that they use information on business establishments from its BLS Business Register, which relies on data from the Quarterly Census of Employment and Wages (QCEW) program, combined with publicly available data from the Internal Revenue Service (IRS) to identify 501(c)(3) establishments. With that, it provides annual nonprofit estimates at the national, state, metropolitan statistical area, and county levels, with the most recent available data being for 2022.The Bureau of Labor Statistics updates these datasets every five years.