This commentary is by Don Keelan of Arlington, a retired certified public accountant.
We usually think of nonprofit organizations as the local food shelf, summer stock theater, libraries and the local hospital.
I intended to take a sabbatical from writing about the Vermont nonprofit sector until I came across Vermont Business Magazine’s recent issue, the 2021-22 Giving Guide. The guide had a plethora of data on the largest, by revenue, of 117 Vermont nonprofit corporations.
The combined total revenue of the 117 was reported to be approximately $6.497 billion. The revenue cutoff for these 117 organizations is less than $7.4 million.
By way of reference, using the nonprofit Common Good Vermont’s data from earlier in 2021, Vermont has approximately 6,175 nonprofit organizations. Assuming that the average annual revenue from the remaining 6,058 organizations is $500,000, the total annual revenue from the nonprofit industry would be close to $10 billion. Vermont’s gross state product is about $20 billion.
Common Good Vermont notes that the annual revenue of the nonprofit sector exceeds the combined income of Vermont’s construction and manufacturing industries. The former far outpaces the income from the tourism and agricultural sectors, estimated at $4 billion and $1.5 billion.
The 10th-largest Vermont-based manufacturing company had 2021 revenues of $34.4 million (Vermont Precision Tools Inc.), whereas the 10th-largest nonprofit’s revenue was $114 million (Howard Center).
The above data on nonprofits does not account for the revenue generated by Vermont state government, municipalities, public schools, or religious organizations.
So why is all this data relevant, and who cares? We should all be concerned about the trend. Nonprofits have become the dominant industry in Vermont. With the billion dollars recently received from Washington and billions more to come, the nonprofits’ role will become more significant and powerful, with greater influence over our lives.
This columnist previously noted that much of state government operations are delegated to nonprofit organizations located within Vermont. The state does not have the staff or expertise to operate many traditional state agencies.
For example, Vermont state agencies are in no position to execute most of the suggested 225 mandates of the Vermont Climate Council; the role will be delegated to nonprofits.
There are three issues with this that are deeply troubling.
First, what is taking place in Vermont is no longer tied to the business sector, which has lost its influence within the past several decades.
Second, decisions by nonprofit executives are channeled to the organization’s board of trustees, not to government agencies or the Legislature. Appointed or elected government officials are not making critical decisions.
Third, and most troubling, there is little or no oversight regarding the Vermont nonprofit sector. However, the health care sector, which makes up approximately 20% of the total annual revenue, does have some oversight, mainly of a budgetary formality.
Don’t discount that three areas currently under crisis in the state — mental health, food insecurity, and housing — fall under the 14 regional mental health nonprofits, the five regional nonprofit councils on aging, the Food Bank, Hunger-Free Vermont, and the nonprofit Vermont Housing and Finance Agency in Burlington.
By state statute, the Office of the Vermont Attorney General is responsible for overseeing the operations and function of the Vermont nonprofits. These sectors have grown exponentially; it is impossible to expect real AG office oversight.
I agree with Common Good’s assessment of the Vermont nonprofit sector: It is “a vital community partner.” With that noted, the sector has become the dominant industry in Vermont and vital to the state’s economy, employment and operations. Because of its massive size, the nonprofit sector should not be ignored and should have some oversight.
And insofar as manufacturing’s future in Vermont, writer C.B. Hall in the January 2022 issue of Vermont Business Magazine noted, “You can actually outgrow your local labor force. … Twenty years ago, I think we lost a whole generation of people who didn’t go into manufacturing. I don’t think Americans looked at manufacturing as a career.”
This does not bode well for Vermont.
Editor’s note: VTDigger.org is a project of the Vermont Journalism Trust, a nonprofit organization.
Correction: The name of the organization Common Good Vermont has been corrected.
