Introduction
The profile, role, and expectations of the nonprofit sector have reached new heights in recent years, yet we know very little about the impact this development has had on the world of work in the sector. Does the sector have the human resources capacity to accommodate these new demands? What do they mean for the million-plus Canadians working in the sector? The purpose of this article is to raise the key questions that are emerging about work in the nonprofit sector, to highlight the gaps in current knowledge, and to identify steps for further research in this area.2
Interest in the nonprofit sector has been increasing, in part, because of the recognition by governments and others of the role it can play in three important areas of society. One is the potential that it has to play an even greater role as a builder of social capital or social cohesion so as to foster a more vibrant democracy, economy, and society (Putnam, 1993; Maxwell, 1997). Another vision for the nonprofit sector is that it will play an expanded role in job creation and the development of the labour force (Rifkin, 1995). Several provinces have developed programs with these aims.3 Finally, there has been increasing attention to the role that the sector can play in delivering public services, as governments look to alternative forms of service delivery in an effort to increase cost efficiencies.
What remains unclear is the implications of these expanded roles for employment and human resources in the sector.4 Two major questions arise:
First, does the nonprofit sector have the human resources capacity (e.g., the skills, expertise, human and financial resources, management practices, leadership, and training programs), that will be necessary to meet such increased responsibilities? • Second, is the right policy framework (e.g., occupational, training and labour standards), in place to support attractive career opportunities and satisfying working lives for people employed in the nonprofit sector-both on a career basis and on short-term work contracts?
We will begin by examining the kind of information needed if we are to be able to answer these questions, after which we will review the available information. In light of the knowledge gap revealed, we spend the final two sections indicating steps towards the advancement of research on work in the nonprofit sector. The first of two steps involves definition and classification work, which we believe is a necessary prerequisite to the second step, the generation of new data.
What we need to know about human resource issues in the nonprofit sector
In order to assess the adequacy of the nonprofit sector’s human resources capacity and the quality of work life provided, quantitative and qualitative data are required on a number of topics:
A profile of human resources in the nonprofit sector: How many people work in the nonprofit sector, in both a paid and unpaid capacity? What are the characteristics of workers by age, gender, and education level? What occupations make up employment in the sector? What proportion of employment is full-time, part-time, permanent and contract work? What is the nature of job tenure? How competitive are wages and benefits? Has the workforce been increasing or decreasing? What is the forecasted demand for nonprofit-sector labour?
This kind of information would give us basic information about who works in the sector and what kinds of jobs they have and would allow for benchmark comparisons with similar kinds of work in the private and public sectors. These data would also be useful for qualitative assessment.
• The nonprofit sector and human resources requirements: How have the skill needs of the nonprofit sector been changing as a result of the shifting economic and political environment in which the sector is operating? Are skill and occupational requirements being met with available training programs and standards/certification mechanisms? Is the sector able to attract the leaders and other skilled professionals it needs? Are sufficient numbers of young people with the right skillsets making career decisions to work in the nonprofit sector so that its activities can be sustained into the future?
• The integration of a paid and unpaid workforce: What unique human resources management needs arise because paid workers and volunteers work together? In the context of cutbacks, are volunteers taking on increasing and/or increasingly skilled responsibilities? From the perspective of both nonprofit sector stakeholders and labour groups, what is the optimal environment for the coexistence of paid and unpaid work in the sector and how can it be achieved and maintained?
• The nonprofit sector as a forum for job creation and labour force development: What is the role of the nonprofit sector in the human capital development of Canadians, particularly of young people and the economically marginalized? Do nonprofit organizations offer opportunities for skills development? Do work or volunteer placements in the nonprofit sector improve a worker’s subsequent employment opportunities? Ought governments to be considering policy levers that encourage job creation or volunteering in the nonprofit sector?
• Mobility among the sectors: To what extent do people move among public, private and nonprofit sector jobs? Does the nonprofit sector offer a bridge to the other sectors, particularly for young people and the unemployed? Does the nonprofit sector serve as a destination for employees from the public or private sectors who have lost or left their jobs? What is the degree of continuity in the nature of the work that people do as they move across sectors?
• Work culture: How do the working cultures and structures of organizations in the public, private, and nonprofit sectors differ? Do nonprofit organizations tend to have unique ways of organizing work? If so, what does this mean for the nature of work, worker-management relations, service delivery, and the kinds of workers that the sector attracts?
Information that is currently available on human resources issues in the nonprofit sector
In light of these questions about work in the nonprofit sector, we consulted two sources of research information, (i) government statistical data bases and (ii) quantitative and qualitative research studies. We found both sources to have limited information.
At first glance, Revenue Canada and Statistics Canada data sources offer some promise. Revenue Canada collects information filed by registered charities (about 75,000) and other nonprofit organizations (about 4,500). However, there are two problems with this information.s First, it is incomplete because as many as 100,000 nonprofit organizations are estimated to be either unaware of their requirement to file or are outside of the requirements.6 Second, organizations are required to file only a limited amount of information on work: aggregate employment data (collected for the first time in 1998 for registered charities), and aggregate wage and salary data.
Statistics Canada collects labour force data through regular household and business surveys. These surveys classify workers and businesses according to industrial systems of classification that distinguish between the government sector and the private sector, but do not separate the nonprofit sector. So, while nonprofit workers and organizations respond to the surveys, they are classified in either the private or public sectors according to their area of activity. This makes it impossible to isolate data on nonprofit sector workers or organizations for separate analysis. Ideally, classification systems and survey instruments could be amended to remedy this defect. (The issues and challenges associated with this are discussed in the final section.)
In the absence of comprehensive national data sources, studies on work in the nonprofit sector have typically been based on studies targeting specific segments or issue-specific aspects of the sector. While their findings are not conclusive, some important first insights about human resources in the nonprofit sector have been gained from these studies:
• At least nine per cent of the Canadian workforce held jobs in registered charities in 1993. This is the same number of workers that were employed in the construction industry and in the finance, insurance, and real estate businesses in that year (Sharpe, 1994). Charities are estimated to represent about half the organizations in the nonprofit sector, so the number of people with jobs in the nonprofit sector in 1993 was actually much greater.
• Approximately one-third of employment in the nonprofit sector in
1993 was part-time. This was well above the economy average of 19 per cent (Sharpe, 1994; LFS data).
• The available evidence suggests hat
highly educated group (British Columbia 1992; CPRN, 1997), but they do not appear to reap the earnings premium associated with higher education. In 1994, most earned a wage below the economy-wide average of $30,000 (Browne, 1996).
• Women are over-represented in both the paid and unpaid workforces in the nonprofit sector (Armstrong, 1995; CPRN, 1997).
• According to one study, 58 per cent of paid workers in nonprofit organizations rated their opportunities for advancement as “bad” (Browne, 1996).
• A significant minority (15-42 per cent) of nonprofit organizations are completely volunteer-run. Most organizations which do employ paid staff, are quite small (employing between one and five), with the exception of large institutions such as hospitals and universities. Most organizations with paid workers also rely on a volunteer workforce. In total, volunteers in nonprofit sector organizations appear to outnumber the paid workforce by a ratio of 3:1 (Sharpe, 1994; Brown, 1996).
There are several limitations to these observations. First, these studies mostly cover the registered charitable segment of the nonprofit sector and we do not know how they apply to other parts of the nonprofit sector. This is a problem currently endemic to research in the sector: our lack of information on the number of organizations in the complete nonprofit sector presents a continuing stumbling block to assessing how representative the studies are . Second, most of this information is almost five years old, which is especially troublesome given the changes that have been underway within the sector in those years.
Where should we go from here?
Two steps must be taken to advance nonprofit sector research to a point where we know the dimensions of its basic universe and labour market characteristics.
1. Define and Classify the Nonprofit Sector for Labour Market Research
Purposes
The nonprofit sector in Canada continues to lack sufficient definition or classification for the purposes of labour market research. Our review of the existing literature has led us to the conclusion that Canadian nonprofit sector researchers should adopt the international research standard on definition and classification developed by Salamon and Anheier of the Johns Hopkins University Comparative Nonprofit Sector Project. This standard would require some adaptations to suit the Canadian context.
Definition
The tools we have for distinguishing nonprofit from for-profit organizations in the Canadian context exist largely for legal administrative/tax purposes. From this point of view, the nonprofit sector universe is defined as organizations that register as charities, file information returns as nonprofit organizations, or incorporate as nonprofit organizations. As distinguishing tools, these criteria are limited in their ability to give us a realistic picture of the entire sector for two reasons. First, a relatively large portion of the sector is not officially recognized from an administrative point of view. While almost 80,000 organizations are defined in these terms, it is estimated that there are another 100,000 organizations outside this scope because they are too small, too informal, or otherwise ill-suited to the current definition.7 Second, the rules for nonprofit incorporation at the national and provincial levels vary across jurisdictions, making it difficult to achieve one comprehensive definition of “nonprofit”.
This situation requires that we find supplemental, non-legal criteria with which to define the nonprofit sector. Various sets of criteria have been suggested in the literature, based on structural-operational, economic, and functional factors (Hansmann, 1987; O’Neil, 1992). After reviewing these sets, we suggest adopting the Johns Hopkins international structural-operational definition with some modifications. The Johns Hopkins model sets out five criteria according to which organizations must be: 1) formally institutionalized to at least some degree; 2) nongovernmental; 3) non-profit-distributing; 4) self-governing; and 5) involve some significant degree of voluntary participation (Salamon and Anheier, 1997).
Most countries—and Canada would be no exception —require modifications to this definition to suit their local context. Integrating flexibility into the Johns Hopkins model where the definition establishes boundaries with our public, private, and household sectors would suit diverse research needs better. A few examples:
The nonprofit sector and its boundary with the public sector: hospitals and universities. In the Canadian context, it is not always clear whether hospitals and universities fit into the nonprofit or the public sector (or somewhere in between). Legally, these institutions are generally registerd as charities, which would seem to put them in the nonprofit sector. However, governments stipulate the principles by which they must operate, as well as the terms and conditions of employment of many of their workers. In short, it is not always clear whether hospitals and universities meet the Johns Hopkins “nongovernmental” criteria. In practice, nonprofit sector researchers require the flexibility to decide whether to include or exclude these institutions from analysis depending on the nature of the research question. A legal analyst or charitable sector stakeholder would probably choose to include hospitals and universities in the analysis because these institutions are among the most important components of the nonprofit sector as it is defined in legal and charitable terms. An analyst researching work in the nonprofit sector would probably exclude these institutions for the practical reason that we already know that they have relatively clearly defined human resources practices in comparison to the less institutionalized organizations in the nonprofit sector.
Along the border with the private sector: co-operatives/credit unions. Cooperative organizations would be excluded from the Johns Hopkins definition of the nonprofit sector because they do not meet the non-profit distribution criteria; however, these organizations have played a historical role in the development of the Canadian nonprofit sector. For example, in Quebec, caisses populaires are the historic cornerstone of “I ‘economie sociale”. Hence, it will be important to allow for modifications to the Johns Hopkins definition, for example, replacing the non-profit distribution criterion with a non-profit maximization criterion, where the distribution of profits is motivated by collective distribution towards social goals as distinguished from the bottom-line motivations of profit distribution to private shareholders (Vaillancourt, 1996).
Unpaid activities: household or nonprofit? The Johns Hopkins definition explicitly excludes any activity that is not formally constituted in an organization. In some countries, this excludes almost all nonprofit sector activity. In the Canadian context, it would reflect the research needs of some analysts better if there could be flexibility as to the inclusion or exclusion of voluntary contributions of time provided outside of an organizational affiliation. According to the last Canadian Survey of Volunteer Activity, 7.5 million Canadians provided care to the sick or elderly outside of the demands of their own regular household activities without attachment to an organization, and five million people worked to improve either the environment or their local community/society without attachment to any particular organization (Duschene, 1989).8 For the purpose of labour market research, it might make the most sense to examine paid and volunteer work in nonprofit organizations. However, an analyst of the role of the nonprofit sector in social cohesion would probably want to include contributory political and helping activities that take place outside of organizations as central to a measurement of the health of civic society.
Classification
Once we have agreed upon appropriate definitional boundaries around the nonprofit sector, internal classification becomes critical. The nonprofit sector is a vast, heterogeneous universe and classification is the tool by which this universe can be most effectively organized for analysis. For instance, we already know from previous experience that hospitals must be classified outside of the rest of the nonprofit health sector in analysis because their relatively massive size skews the statistical averages of the rest of the sector if they are included. The same holds true for universities and places of worship. Current Canadian systems of classification embody many other limitations that have inhibited effective nonprofit-sector research. As in the case of definition, we suggest adopting the Johns Hopkins classification model with modifications for the Canadian context.
The nonprofit sector in Canada is not currently classified except in broad administrative terms according to whether an organization is registered/unregistered, and incorporated/unincorporated. There is a Canadian system of classification for the charitable component of the nonprofit sector (used by Revenue Canada), but this has several drawbacks.9 For example, by covering only charities, this Revenue Canada system captures only a portion of the entire nonprofit sector. But even as a system of classification for charities, it has the further drawback of being too outdated to reflect current significant distinctions. For instance, the system classifies myriad diverse organizations such as environmental, human rights, and international development organizations in “not elsewhere classified” categories, even though these organizations now exist in large enough numbers to merit categories or their own. Further, organizations are currently coded to the classification category of their stated purpose when they first applied for registration with Revenue Canada even if they have changed their area of activity.
The proposed Johns Hopkins classification model, The International Classification of Non Profit Organizations (ICNPO), presents a system of classification with 12 Major Activity Groups, 24 Subgroups, and a flexible number of further subgroups (Figure 1).10 This system represents several improvements over the Revenue Canada classification system. First, it allows for the entire nonprofit sector to be classified in one comprehensive place, rather than having a system of classification reserved for registered charities only. Second, it includes categories for activities such as environmental and international development organizations in their own right. Third, it has been applied in a number of diverse countries which means that, if adopted in Canada, it could provide an opportunity for international comparative research.
However, while we find that the Johns Hopkins classification framework provides a good starting point, like the Johns Hopkins definitional model, it could benefit from adaptations to suit the Canadian context better. For example, although we argued that legal distinctions are not sufficient for describing the Canadian nonprofit sector, they are nevertheless one distinguishing factor in it and ought to be embedded in the system of classification.
Also, elements of a taxonomy system proposed by Quarter (1992) could be usefully integrated into the Johns Hopkins classification system to create a model better able to reflect Canadian nuances. The Quarter model proposes distinctions between mutual interest associations (e.g., unions, professional and consumer associations, ethnic and religious organizations) and public service organizations (e.g., food banks and women’s shelters); as well as distinguishing, according to the type of activity, whether a nonprofit organization is oriented towards social rights and regulation (e.g., advocacy groups), commercial activities (e.g., co-operatives), or community ties (e.g., service groups or ethnic organizations).
A synthesis of current Canadian legal distinctions, the Quarter taxonomy, and the Johns Hopkins descriptive system would result in a multidimensional classification model that distinguishes organizations according to:
• domain of activity (outlined in Figure 1, e.g., health);
organizational type (public service or mutual benefit);
• type of activity (oriented towards capital accumulation, social rights and regulation, or community ties); and
• legal status (registered charity versus nonprofit organization).
The result would be categories such as: “health charity: public service delivery”, “health nonprofit: professional association”, “health nonprofit: advocacy”, and so on. This multidimensional model would allow for rich analysis that would capture many nuances of the Canadian context.
A final important aspect to consider in the adoption of a new system of classification is whether or not it permits comparison with currently existing standard systems of classification so that contrasts can be revealed among workers in similar domains across economic sectors. Modifications could make possible comparisons with the Statistics Canada Standard Industrial Classification system and with the ICNPO adaptation for the National Survey on Giving, Volunteering and Participating (NSGVP), which would be obvious candidates.
This first steps towards achieving labour market research on the nonprofit sector (definition and classification), would ultimately be reflective of any first steps, in that the models would have to be adapted and adjusted to suit changing needs as they arose. Inevitably, the boundaries between our economic sectors will remain in a state of flux and therefore blurred which is why we argue for a system that allows flexibility according to research or stakeholder needs. However if we are going to take the role of the nonprofit sector seriously and make informed decisions about its most effective role in our economy and society, it is necessary at this juncture to create starting points, even if imperfect, for labour market research in the form of a definition and system of classification. This step is a prerequisite for the collection of data specific to the nonprofit sector.
2. Develop Nonprofit Sector Labour Market Data-Collection Capabilities We proceed here with an explanation of a relatively simple way in which we believe that data on the nonprofit sector might be generated, and follow this by a discussion of the challenges that would be involved in collecting these data if our “simple” method were to prove impractical.
(a) Exploit existing databases at Statistics Canada
Although the nonprofit sector data are embedded in labour force databases at Statistics Canada, these databases are not currently structured to allow data on the nonprofit sector to be isolated from data on the public and private sectors.II One of the most obvious steps towards generating data on the nonprofit sector, then, would be to seek a modification to these databases so nonprofit data could be isolated in a category of its own. For example, could questions be inserted into a survey such as the Labour Force Survey, asking respondents to specify the sector of the economy in which they work?
At present, there are no tested methods for allowing respondents (or the people coding their responses) to identify whether or not they work in the nonprofit sector. Hence, the definitional and classification work described above is a necessary prerequisite to the success of data collection. Nevertheless, because the definition is blurred, it will be a challenge to come up with just the right question or series of questions to allow us to isolate nonprofit sector respondents. We would also have to think carefully about the survey to which we would hope to append this question, considering both feasibility and the kind of information we would hope to generate.12
(b) Creating a new survey of the nonprofit sector
Two factors motivate us to think about new survey work on the nonprofit sector. First, if the attempt to isolate nonprofit data from existing databases proved to be impossible, new survey development would be one obvious alternative. Second, there may be qualitative information required that is not currently available from traditional labour force databases. However, the nature of the nonprofit sector is such that new survey work would involve high investment and risk.
Who should be surveyed?
This question again indicates the importance of first coming up with a definition of the nonprofit sector universe. However, even with a definition in hand, we will encounter the practical difficulty that the actual organizations in the sector have eluded any kind of comprehensive “listing” by governments.’3
One way to deal with this is to target a relatively small, known portion of the nonprofit sector, such as registered charities. This has generally been the method employed in previous national surveys of the sector. The drawback is that, as we have already emphasized, we have no way of knowing whether the results are generally applicable to the whole nonprofit sector.14
Another challenge stems from the diversity of the nonprofit sector. The section on systems of classification revealed that there are many sub-categories to which an organization can be ascribed and each of these kinds of organization is spread across urban and rural communities in every region of this country. A survey would have to reach an enormous number of organizations in order to be able to afford comprehensive analysis of every type of organization, as well as allowing for regional nuances. One way that this could be approached would be to begin with an analysis of one sub-sector, chosen by field of activity (e.g., health). The advantage of starting small in this area of research is the opportunity it would afford to experiment and apply the lessons learned to later and larger projects. The disadvantage is that the larger sector perspective would be lost.
How could response be encouraged?
Achieving a useful level of response to a research survey will be difficult because so many organizations are small, informal, underresourced, and/or lack comprehensive administrative and human resources records. Our research for HRDC indicated that sector stakeholders were generally interested in participating in research efforts that would generate information on work in the sector, subject to certain conditions: the research would have to be driven by the sector, be clearly defined to produce tangible and practical outcomes for the sector, and involve reasonable expenditures of human and financial resources on the part of the organizations. Unfortunately, many nonprofit organizations may have no time to spare for participation in research. A targeted nonprofit sub-sector pilot might also be beneficial in this case as it could provide information about the most successful methods of encouraging response.
Conclusion
We currently know very little about work in the nonprofit sector. Further research has been inhibited because we lack both theoretical and practical knowledge of the nonprofit sector in Canada. The important steps that must be taken to advance research on work in the nonprofit sector are (i) definitional and (ii) data development. We have gained enough preliminary insights about work in the nonprofit sector and the pressures the sector is facing currently to believe that the development of solid information would be an important contribution to further policy decisions about the role of the nonprofit sector in our economy and society. Specifically, it would be important to have knowledge of the human resources capacity, quality of working life, and appropriateness of our current labour market policy framework to support the new roles the sector is being asked to play.
FOOTNOTES
1. Working in partnership, the Canadian Centre for Philanthropy and Canadian Policy Research Networks recently prepared a report for Human Resources Development Canada in which they reviewed the literature and consulted with nonprofit sector stakeholders on labour market and human resources issues. This article is drawn largely from that work (Canadian Centre for Philanthropy and Canadian Policy Research Networks 1998). The researchers were: Paul Bernard, University of Montreal; Gordon Betcherman, Canadian Policy Research Networks; Sandra Boozo, Canadian Centre for Philanthropy; Susannah Bush, Canadian Policy
Research Networks; Katie Davidman, Canadian Policy Research Networks; Michael Hall, Canadian Centre for Philanthropy; Ronald Hirshhorn, J.R. Hirshhorn & Assoc.; and Deena White, University of Montreal. The authors of this article are indebted to the whole team for their ideas, from which they have drawn liberally. The views and analytical interpretations expressed in this paper are, however, those of the authors and do not necessarily represent any position or policy of the institutions with which they are affiliated.
2. An important step would be to define the nonprofit sector for labour market research purposes. While this is discussed in detail later in this article, it should be noted that the discussion which follows is based on a conception of the sector as being composed of, among other things, organizations that are formally institutionalized to at least some degree.
3. Quebec is probably the most prominent example. Its Summit on Economy and Employment has resulted in plans for the creation of up to 26,000 new jobs in the social economy. Other provinces with job creation or training programs in nonprofit sector organizations include Ontario, Alberta, and PEL
4. There has been some work to assess the impacts on the nonprofit sector of some of these new role expectations (Rekart 1993; Hall and Reed, in press) but very little has been done to assess human resources impacts.
5. For an extensive examination of the Revenue Canada data sets see Day and Devlin
(1997) and Sharpe (1994).
6. To be required to file an information return, a noncharitable nonprofit organization must either have total assets that are more than $200,000 at the end of the immediately preceding fiscal period or the organization must have received or be entitled to receive, taxable dividends, interest, rentals, or royalties totaling more than $10,000 in the fiscal period. An organization must also file if it has ever filed previously.
7. For instance, nonprofit multicultural organizations are not permitted to register as charities, although this is currently being challenged in the Supreme Court of Canada.
8. New information about the contributions of Canadians in volunteer activities will be forthcoming in the new National Survey of Giving, Volunteering, and Participating. The NSGVP is a national survey of over 18,000 Canadians that provides information about the charitable giving, volunteering and organizational participation of Canadians that can be correlated with detailed demographic and labour market information. It was conducted by Statistics Canada on behalf of a consortium of nonprofit organizations and federal government departments including the Canadian Centre for Philanthropy, Volunteer Canada, Canadian Heritage, Health Canada, Human Resources Development Canada, and the KahanoffFoundation’s Nonprofit Sector Research Initiative.
9. The drawbacks of the Revenue Canada classification system have been outlined in Sharpe (1994).
10. In the Canadian context, this classification system has already been adopted for use in the National Survey of Giving, Volunteering, and Participating.
11. Statistics Canada databases investigated by CPRN in the Fall of 1997 included: Business Register, LFS, SEPH, SLID, Survey Work Arrangements; SIC/SOC codes, NSGVP, and the Census. We also undertook a preliminary review of Revenue Canada databases: T3010, T1044, Business Numbers, Payroll Deduction Remitter Series, LEAP; and of federal and provincial government registries to see what kind of labour market data could be extracted.
12. CPRN took a first step in the development of this option in the Fall of 1997 when it tested two questions on a small survey of the Canadian population to see whether nonprofit workers could be isolated from workers in other sectors. The survey was Rethinking Government, done by Ekos Research Associates among a representative sample of about 3,000 members of the Canadian population.
13. Although incorporated nonprofit organizations are embedded in provincial and national registry listings, they are currently inseparable from private sector organizations. The Business Register at Statistics Canada has plans to try to distinguish nonprofit organizations in their listing of Canadian businesses by isolating organizations that file information returns as charities or nonprofits, and nonprofits that file for GST exemptions. This list would still, however, exclude an unknown portion of nonprofit organizations.
14. In our work for Human ·Resources Development Canada, we suggested that an improvement over sampling only from the charitable sector would be to engage in a “snowball” sampling technique. This would allow us to widen the sampling by asking known nonprofits to name other organizations to which they have links, and then engaging in successive rounds of sample building in the same manner.
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KATIE DAVIDMAN and GORDON BETCHERMAN
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MICHAEL HALL
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DEENA WHITE
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Correction
Sandra L. Bozzo, Research Assistant at the Canadian Centre of Philanthropy, was a member of the partnership between the Centre and the Canadian Policy Research Network which prepared a report for Human Resources Development Canada. Ms Bozzo was incorrectly identified in footnote 1 of “Work in the Nonprofit Sector: The Knowledge Gap” (1998), 14 Philanthrop. No.3, p. 45.
