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Governor Wrong About Nonprofits

by Brenda Peluso

In vetoing the $20,000,000 R&D bond, the Governor stated, “the majority of the funds from these bonds in the past have gone to government programs and not-for-profits. Taxpayer dollars should go towards R&D only when we can demonstrate a specific return on that investment. That return must be measured in taxes and jobs. Both of those rightly come in the private sector.”

Not only is he factually wrong about where the majority of these bonds funds go (55.5% to for-profit businesses*), but he is wrong that investing in nonprofits does not produce a good return on investment.  One could argue how the return should be measured, but even if you choose his measures, taxes and jobs, nonprofit status does not make an effective research and development organization a bad investment.

Nonprofit organizations employ 1 in 7 Maine workers and in rural counties, this percentage is often much higher.  Nonprofits seldom stray from the communities they were created to serve and provide good jobs for people wanting to stay in those communities.  Nonprofits provide a wide range of jobs from entry-level administrative and direct service jobs to jobs that require advanced degrees and extensive training and experience.  These jobs paid over $3.1 billion in wages to Maine workers in 2008 which translated to more than $119 million of personal income tax revenue for the state and nearly $354 million in federal income tax revenue.  Personal income tax is not the only tax nonprofit employers generate; unemployment, social security and Medicaid taxes are also paid at the same rate as for-profit employers.**

Betsy Biemann of the Maine Technology Institute, whose M-TAF fund would have administered the bond funding, responded to the Governor’s assertion that R&D bonds don’t create jobs by offering recent data to the contrary.  While this data includes both for-profit and nonprofit entities, it clearly demonstrates that nonprofit R&D organizations, such as Maine Medical Center Research Institute and Jackson Laboratory, are strong partners in our economy.

It is critically important to increase the number of jobs available for our residents and we need to do this in all sectors of our economy without disrespecting the nonprofit and government sector job creators.   Nonprofit employment is a small percentage of over-all private employment, but it is a critical part of the mix.  By acknowledging the importance of each sector of our economy and working together, we can find a healthy balance.

* Measures of Growth in Focus 2012; Maine Economic Growth Council

** Partners in Prosperity: September 2010; Maine Association of Nonprofits

One thought on “Governor Wrong About Nonprofits

Robert Rowe says:

Keep up the good educational work at MANP. This is an important issue for any Governor to understand, and your efforts to educate public policy makers is critical work. Thanks.

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