More than one in five nonprofit workers in the United States is struggling to make ends meet, even as many dedicate their careers to helping others facing financial hardship, according to a new report released Tuesday.
The study, conducted by Independent Sector and United for ALICE, found that 22 percent of nonprofit employees in the United States live in households that cannot cover the cost of essentials like housing, food, and health care, despite having steady full- or part-time employment. The study provides an unusually comprehensive look at financial hardship in the nonprofit work force, analyzing U.S. Census Bureau data on 13.9 million nonprofit employees across the country.
Researchers said the findings reveal a troubling tension in a sector dedicated to helping others in need.
“The nonprofit sector doesn’t exist outside of the context of America,” said Akilah Watkins, president of Independent Sector, a nonprofit membership organization. “Housing costs, transportation costs, child care costs. If you’re a nonprofit that wants to pay your folks a fair wage but you live in a region where costs are astronomical, that’s what’s driving this.”
Researchers used the ALICE (Asset Limited, Income Constrained, Employed) threshold, which accounts for local living costs, to paint a fuller picture of financial hardship among nonprofit workers. While 5 percent of nonprofit employees fell below the federal poverty level, another 17 percent were classified as ALICE — earning too much to be considered in poverty but not enough to afford the basics where they live.
“We have a structural problem in that the cost of living is more than a lot of occupations pay,” said Stephanie Hoopes, director of United for ALICE, an initiative that aims to more accurately capture financial hardship by accounting for cost-of-living differences.
Nonprofits, which are rarely flush with cash, often find themselves walking a financial tightrope that can lead to inadequate wages for their employees.
“Many of these nonprofits are struggling on a shoestring budget,” she said. “These organizations need more investment so their employees can get to that financial stability, and then they can do even better work in their communities.”
Some nonprofit workers were more likely to struggle than others, with variations according to nonprofit type, age, race, and professional role.
In the nonprofit health care industry, for instance, only 16 percent of workers over all faced financial hardship, but this masked stark internal differences. While just 13 percent of employees at general medical and surgical hospitals struggled to afford basics, that rate jumped to 33 percent for those in residential care facilities and 35 percent for home health-care workers.
Social assistance organizations such as food banks and day care centers saw some of the highest rates of employee hardship, with 32 percent of workers unable to cover essential costs.
The study also revealed stark disparities in financial hardship rates among nonprofit workers of different racial and ethnic backgrounds, mirroring challenges that workers of color face across the economy. While 17 percent of white nonprofit workers lived in households below the ALICE threshold, that figure jumped to 34 percent for Hispanic workers and 35 percent for Black workers.
While nonprofits often strive to address systemic inequalities and financial pressures in their communities, their work forces are not immune to such challenges.
What’s more, for nonprofits, supporting employee financial well-being is not just about retention but about living up to the values they promote in their communities. Amid significant tensions in the nonprofit work force in recent years, says Watkins, that ought to mean building more effective strategies to support workers’ financial stability.
“If we’re going to move to solve, strengthen, and develop a large and robust work force,” she said, “we really need to understand it.”
Other findings from the report:
- Among the youngest nonprofit employees, financial struggles were most acute, with 37 percent of workers under 25 living in households below the ALICE threshold, compared with 17 percent of those age 45 to 64.
- The presence of children in a household significantly increased the likelihood of financial hardship. Thirty percent of nonprofit workers with children lived in households below the ALICE Threshold, a figure that jumped to 53 percent for single parents.
- One-third of nonprofit workers with disabilities were below the ALICE Threshold, compared with 21 percent of those without disabilities.
- Part-time workers were particularly vulnerable. Thirty-seven percent were below the ALICE threshold, compared with 18 percent of full-time workers.
