Study: Some Nonprofit Workers Live in Poverty, Struggle Financially

Writing in TheNonProfitTimes, Paul Clolery reports on a 2022 study conducted by United For Alice and Independent Sector. United For Alice is a U.S. research organization, led by United Way of Northern New Jersey, that drives innovation, research and action to improve life across the country for ALICE(R) (Asset Limited, Income Constrained, Employed) and for all. Independent Sector is a coalition of nonprofit organizations, foundations and corporate giving programs in the United States. Founded in 1980, it is the first organization to combine the grant seekers and grantees. The study, titled “ALICE in the Nonprofit Workforce: A Study of Financial Hardship,” reveals that more than one in five nonprofit employees (22%) live in poverty and struggle financially. 

According to the study's findings:

Among nonprofit workers in 2022, 5% were below the official U.S. poverty level, and another 17% qualified in the category of ALICE®. 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 cannot 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.  

Commenting on the study's findings, Independent Sector President and CEO Akilah Watkins, Ph.D., stated: “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." Dr. Watkins continued: "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.”

According to the study:

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.

The study reveals that in 2022, almost half (45%) of the nonprofit workforce was aged 25 to 44, followed by 38% aged 45 to 64. These two groups, in their prime working years, had the lowest rates of hardship: 23% of workers aged 25 to 44 lived in households with income below the ALICE threshold, as did 17% of workers aged 45 to 64. The youngest nonprofit workers, younger than age 25, had the highest rate of financial hardship at 37%. Nonprofit workers aged 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; 19% were within the ALICE threshold. Stephanie Hoopes, Ph.D., national director, United For ALICE and chief research and impact officer of United Way of Northern New Jersey, stated: “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 benefits. But interestingly, even with their nonprofit salary it was not enough to get 19% above the ALICE threshold."

Surely, this is a chilling revelation of the plight of nonprofit workers, people who take care of our most vulnerable citizens, including seniors and children.  

Prof. Vaughn E. James, Texas Tech University School of Law