Nonprofits are growing, which is good news for agents and brokers specializing in this diverse niche market.
Data released by the U.S. Department of Labor’s Bureau of Labor Statistics in August 2018 shows that the job growth rate of the nonprofit sector is outpacing that of for-profit industries by 3-to-1. Between the pre-recession year of 2007 and 2016, nonprofit employment grew by nearly 17 percent while for-profit employment grew by less than 5 percent. That trend was found in nearly every state, according to BLS.
The nonprofit employment growth rate over the recent decade exceeded that of for-profit firms in 49 of 50 states, with the exception being North Dakota, where the two sectors were tied.
The growth is not only in small local agencies or services but also in large organizations, according to Melanie Lockwood Herman, executive director of The Nonprofit Risk Management Center based in Leesburg, Va.
Although 66 percent of all nonprofits have budgets under $1 million, there are thousands of nonprofits that have much larger budgets, and could be great accounts for agents. “I think that’s something agents and brokers may not appreciate,” she said.
In the health and human services nonprofit sector alone, which encompasses many different types of nonprofit organizations, Lockwood Herman says there are more than 7,000 organizations with budgets of $5 million or more a year. Despite the challenging financial constraints nonprofits often face, the sector as a whole continues to grow, she added.
Nonprofit organizations are the third largest private workforce of all U.S. industries, trailing only the retail trade and manufacturing sectors, according to BLS. Nonprofits also account for the third largest employee payroll, with total nonprofit wages exceeding those of most other U.S. industries, such as construction, transportation, and finance.
Another reason nonprofits make the ideal target market for agents and brokers – their loyalty, says Lockwood Herman.
“Nonprofits are really connected. They work through nonprofit associations and federations, and nonprofit leaders believe in networking,” she said. “It’s so important for agents and brokers looking at opportunities in this sector to recognize that if you work with one nonprofit organization, the person you are working with works with dozens of others.”
And they talk to one another regularly, she adds.
“In our experience at the Nonprofit Risk Management Center, our clients always look for insurance referrals from other nonprofits,” Lockwood Herman said. “They ask their colleagues who they’re working with? Who is their agent or broker? And are they happy with their services?”
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