Nonprofits grew faster than state's private sector

  • Article by: PATRICK KENNEDY and JOHN J. OSLUND , Star Tribune
  • Updated: December 2, 2000 - 10:00 PM

Thanks to some fast-growing health care giants, Minnesota's 100 largest nonprofits grew at a faster pace in 1999 than their private-sector counterparts.

Revenues for the Star Tribune Nonprofit 100 jumped 12.2 percent last year while revenues at Minnesota's 100 largest for-profit firms grew 11 percent. Although nonprofits remain a tiny slice of the overall economy, the sector's growth is accelerating both in revenues and jobs.

In its October report, the Minnesota Council of Nonprofits shows that jobs in the not-for-profit sector grew twice as fast as the state's overall job growth. Nonprofit jobs grew 4.6 percent to 219,338 last year compared with 2.3 percent growth statewide.

Nonprofit jobs accounted for 8.6 percent of jobs in the state in 1999, up from 7.9 percent in 1995, Minnesota Department of Economic Security statistics show.

That's the highest percentage of nonprofit jobs of any state in the nation, said Jon Pratt, executive director of the Minnesota Council of Nonprofits, and something business leaders and state policymakers should consider in the debate over Minnesota's place in the so-called New Economy.

"I think business competitiveness is about comparative advantage," Pratt said. "And we have a stronger nonprofit sector than any other state. We ought to go with it; we ought to invest in it."

The Star Tribune's list relies on IRS forms filed at the Minnesota attorney general's office. To compile the list, the Star Tribune surveyed more than 140 of the state's largest nonprofit groups and ranked each by annual revenue. Then they were placed into five categories -- health care, social services, education, art & culture and "other."

This year health care led with revenues up 13.2 percent, followed by social services, 9 percent; education, 3.2 percent; and arts & culture, where revenues declined 4.6 percent.

Health care

Minnesota's high nonprofit employment figure is explained, in part, by the relatively large number of nonprofit health care providers here.

About 133,000, or 61 percent, of the state's nonprofit jobs are in hospitals, nursing homes and other nonprofit health care organizations.

The sector's dominance in the Star Tribune's ranking is even more pronounced -- for every dollar of revenue generated by the Nonprofit 100, 87 cents comes from health care providers.

And in this group, the big are clearly getting bigger. Revenues at the Mayo Foundation, No. 1 on our list, grew by a robust 21.8 percent in 1999 to 3.5 billion. Because of its size, Mayo's growth explains much of the growth in the health care sector and the Nonprofit 100 as a whole.

What's behind the numbers? More doctors and more hospital beds generating more revenue, explained John Herrell, Mayo's chief administrative officer. Plus a hefty investment gain thanks to 1999's bull market.

"Our gross revenues in Arizona were up 80 percent," Herrell said. Mayo opened a new 175-bed hospital in Scottsdale, which added about $100 million in 1999 revenues, he said. Mayo has about 1,200 doctors and scientists in Rochester and about 300 each in Jacksonville, Fla., and Scottsdale.

In addition, Mayo has merged over the past several years with a number of hospitals and practices in Wisconsin, southern Minnesota and Iowa.

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