The Ripple Effect: How Nonprofits Build Our Economy

by RaeAnne Marsh

“Based on Arizona and U.S. national statistics on impact of the nonprofit sector, it’s very clear that it is an economic driver in terms of workforce development generating economic potential,” says Richard Tollefson, founder and president of The Phoenix Philanthropy Group.

In fact, David Martinez III, director of community engagement at Vitalyst Health Foundation, calls it “an incredible economic impact” as he points to research that puts numbers on the nonprofit sector’s impact: The Lodestar Center at ASU reports the nearly 23,000 nonprofits across the state have more than 171,000 employees and produce more than $8 billion in wages. They also produce more than $31 billion in revenue for Arizona. 

“One thing they talk about in terms of economic impact of philanthropy is inflows and outflows of revenue,” says Tollefson, explaining the inflow comes from individuals or institutional donors in other states contributing to the State of Arizona. Sharing, “I believe the nonprofit sector does bring capital to Arizona in terms of investment in our nonprofit organizations,” he points to the $25 million contribution that Valley of the Sun United Way received last year from Amazon co-founder MacKenzie Scott, the largest single donation the organization had ever received. “That was a major inflow of money but also recognition of the importance of the work that nonprofits do in our state and the strong reputation that nonprofits have,” he says.

In this discussion, it should be clear that nonprofits are significant business organizations.

“Arizona philanthropic leaders know that, as the fifth-largest nongovernmental employer, the nonprofit sector is an economic powerhouse in communities across our state,” says Laurie Liles, president and CEO of Arizona Grantmakers Forum, the association representing Arizona philanthropy. “When funders invest in local nonprofits, they’re helping them create jobs as well as make people’s lives better in countless ways.”

Tollefson notes that the nonprofit sector in Arizona has traditionally been larger than the travel and leisure industry and creates more economic impact than the sports industry — industries commonly accepted as two of the primary drivers of the economy. “Not to diminish the importance of them to our economy,” he says, “but we should take a broader look at the type of organizations that have impact on workforce development — in terms of compensation, benefits, spending power of the employees and spending power of the nonprofit organizations themselves.” 

Says Steve Seleznow, president and CEO of Arizona Community Foundation, “The nonprofit sector is important to all communities.” As of 2018, he notes, 6.4% Arizona workers were employed by nonprofit organizations and the nonprofit sector contributes around 9% annually to Arizona’s GDP. “But most importantly,” he adds, “nonprofits provide services and experiences that make our communities better places to live.”

For instance, the Science Vortex STEAM Center encourages children from Cottonwood, Sedona, Jerome, Clarkdale, Cornville and Camp Verde to think critically, problem solve and explore their creativity. And the Naco Wellness Initiative provides medical and wellness services to the minds and bodies of those with limited resources in “Ambos Naco,” the cross-border community that encompasses both Naco, Sonora, and Naco, Arizona. “These are two examples of thousands across the state that change lives and bring people together,” Seleznow says.

Tollefson points out that the level of government support for leading economic, social and educational challenges that our state faces is generally decreasing for most major causes and organizations. “The COVID Relief Act or the America Rescue Plan Act generated a lot of resources that are not traditionally geared toward Arizona that significantly helped the nonprofit sector to expand their programs and services,” he says, “But in normal years, government just can’t foot the bill for all of these issues.” This further underscores the value of the nonprofit sector. “They look to the nonprofit sector to deliver the programs and services that are best delivered by the nonprofit community, who may have greater experience and expertise in particular areas,” Tollefson observes. Plus, he says, “They’ll look to nonprofit organizations to generate additional philanthropic revenue to support those causes — whether it’s homeless, domestic violence but particularly in terms of education.” But private philanthropy is never going to be enough to completely solve the challenge. “It needs to be a partnership between government, business and philanthropy together to address some of the leading social issues that confront us.” 

Expanding on that point, Martinez says, “Beyond the numbers, we know solutions must often come at the systems level. This requires solutions that bring together different sectors, from government and the nonprofit sector to chambers and local businesses. The nonprofit sector alone cannot solve all the issues in our community. Creating systemic change to solve issues like access to care and health insurance coverage, affordable housing and food access usually requires investments from government and businesses, and the solutions are often implemented by nonprofits.” 

He notes that, especially in times of crisis — like the COVID-19 pandemic — people turn to their local nonprofits. They turn to their churches, their local PTA and their community centers. And he points out that community groups have rallied and become gathering places for testing centers, vaccine locations and other community needs. “People come together every day to solve problems, regardless of affiliations,” Martinez says, “and we should continue to look to one another to help us improve the health and well-being of our communities as we move forward.”

Mary Jane Rynd, president and CEO of Virginia G. Piper Charitable Trust, believes the nonprofit community is essential to our community’s, and Arizona’s, success and socioeconomic infrastructure. She notes the nonprofit sector provides myriad essential services, filling gaps by providing a range of critical services — employment opportunities through training and placement along with other educational opportunities; healthcare, including basic, emergency and respite; housing including shelter for people experiencing homelessness, temporary housing placement and long-term solutions; child and elder care; food and clothing, and vibrant arts and cultural opportunities. “The list is endless,” she says. “Our nonprofits contribute to our quality of life every day, individually and collectively — and provide benefits to all — even to those who may not realize it.” 

Addressing those social issues has an impact on business and economic development partly in terms of attracting businesses to come here because of what the community offers to their workforce.

“If you look at the educational resources we do have in our state, if you look at arts and culture, social support networks and programs — companies look at that when making a decision that they’re going to come to Arizona or expand in Arizona, just as they look at issues of the environment and economic incentives from cities or counties and political decisions and laws that are considered or enacted,” Tollefson says. Acknowledging there is a whole portfolio of things that companies look at, he adds, “The health of the nonprofit sector and its impact on the community in a variety of ways is the key influencer.” 

Tammy McLeod, Flinn Foundation president and CEO, emphasizes the value of a flourishing and healthy nonprofit ecosystem to a flourishing and healthy American society. The Flinn Foundation works with nonprofits that provide direct services to their constituents, including the hospital systems in Arizona that have played an outsized role during the COVID-19 pandemic, as well as smaller organizations, such as Circle the City in Phoenix, which provides healthcare to individuals experiencing homelessness across Maricopa County. Also important are Arizona’s arts and culture organizations, offering world-class museums, performances, education, and outdoor gardens and zoos, which enhance quality of life for adults and children alike — whether in downtown Phoenix or downtown Globe. “But,” she adds, “they also contribute to the economic success of our state.” 

McLeod points to nonprofit Translational Genomics Research Institute, one of the Flinn Foundation’s longest-term grantees since 2000. Located on the Phoenix Biomedical Campus, TGen conducts world-class biomedical research to develop treatments for cancer, Alzheimer’s disease and other neurological disorders, rare childhood diseases and more. Notes McLeod, “TGen has also been an economic-development cornerstone for Arizona’s growth in the biosciences over the past two decades, securing research funding, spinning out new companies and generating jobs.” 

Community Impact Ripples Beyond the Funding

“COVID was in many ways a wake-up call for foundations and philanthropy — a sudden and visceral reminder that our funding is critically important not just for achieving project goals but for simply keeping the doors open and the lights on,” says ACF’s Seleznow. He notes that impact has taken on new meaning over the past two years as nonprofits have been doing more with less, working together to meet shifting community needs, and remaining resilient through it all. “When we trust nonprofits to use grant dollars on the things that will make the greatest impact on their organization, it allows them to retain and right-size their staff members and maintain efficiency even as more people rely on their services.”

ACF shifted its grantmaking to allow for more flexibility in the use of the grant dollars. All grants from its COVID-19 Community Response funds were unrestricted, meaning that any nonprofit receiving funding was able to use those dollars to address any immediate need brought on by the pandemic. ACF also encouraged its fundholders to recommend unrestricted grants and delay any reporting requirements that might cause unnecessary administrative burdens.

“We have always believed that local nonprofit organizations are best suited to knowing what they need to serve their community,” Seleznow says, observing that the pandemic provided more opportunities to really explore what it looks like when grant dollars are put to their best use. It gave ACF the chance to hear from and learn about the needs of smaller organizations, and this experience has shifted ACF’s focus. Says Seleznow, “We plan to use this knowledge as we invest in Arizona in new ways and work alongside our donors to bring them along on this journey.” 

As a community foundation, ACF has a history of partnering with other nonprofits to achieve its goals. In fact, Seleznow notes it’s right there in ACF’s mission statement: lead, serve, and collaborate to mobilize enduring philanthropy for a better Arizona. “We could not do our work alone and philanthropic dollars can only stretch so far.”

An example Seleznow shares is the New Arizona Prize, a series of innovation prize challenges where teams of community leaders present new ideas and ways to address specific community issues. Most recently, the Housing Security Challenge provided media coverage for five different nonprofit collaborations along with a cash prize for the winner. Several of the projects received additional financial support and connectivity to others that could help them implement their innovative ideas.

For the Virginia G. Piper Charitable Trust, “How we define and measure impact varies tremendously from grant to grant. Sometimes, it is great to learn that they will be able to pivot to respond to COVID-related needs and/or serve more people; other times, especially as we navigate the pandemic, we are so grateful that that they are able to remain open and continue operating,” Rynd says.

The Trust signed on to the Council on Foundations Call to Action in early 2020 — a pledge for philanthropies to act swiftly in supporting the nonprofit community with maximum flexibility through unrestricted grants with little to no reporting requirements. It was so important to the Trust to support the community through the COVID-19 pandemic that, for the first time in Piper Trust’s history, trustees supported dipping into Trust’s endowment to help meet more need. 

“Our expectations remain the same for our impressive local nonprofits; due to our strong relationships with our grantees, we remain confident that unrestricted funds will be used to carry out their missions,” Rynd says.

She explains that Piper Trust values learning alongside its grantee partners — identifying ways to measure the successes and challenges of any given effort in such a way that benefits the organization and the Trust’s own internal learning agenda. Defining intended outcomes is part of each grant the trust awards. But Rynd notes Piper Trust also defines its impact as a funder in the community by the strength of its partnerships, or relationships, with its grantees and others throughout the county. “We recognize that to be an effective funder and to help move any given needle requires more than grantmaking,” she says, sharing several examples:

Creative Aging: The Trust worked closely with Arizona Commission on the Arts to identify ways to support the creative aging community focusing on artists, arts organizations, healthcare organizations and organizations serving older adults; the Trust provided funding for the collaborative effort, and offered funding to try new approaches and programs in older-adult-serving nonprofits. The senior program officer who oversees the Trust’s arts grantmaking was participatory but allowed the nonprofits and teaching artists to lead the conversation and direction of the collaborative. 

Utility Assistance Network: Trust program staff worked very closely with Cynthia Zwick of Wildfire for three years to learn about utility assistance before the Trust awarded Wildfire the $75,000 to start the technology program that the network envisioned. Since then, Wildfire leveraged this initial grant and the work of the Network to win $20 million in COVID funds from City of Phoenix, which launched the technology program for City of Phoenix residents in July 2020. 

Trust staff worked alongside Duet, AARP, Banner Alzheimer’s, the Alzheimer’s Association and Benevilla to develop the Dementia Caregiver Alliance and, ultimately, support them in being more collaborative in their grantmaking and programs. 

Piper Trust was an active partner in an effort led by Vitalyst Health Foundation and other funders and nonprofits in 2020 to form the Rental Assistance Collaborative and, ultimately, decided that a marketing campaign was necessary to help individuals learn about the eviction process ( After working collaboratively to determine that solution, partners involved collectively gave at different amounts totaling $475,000 in an “eviction prevention and rental assistance fund” that Vitalyst managed. 

Piper Trust program staff assisted Maricopa Association of Governments to launch Age Friendly Arizona in a pilot grant to start the collaborative. The Trust worked alongside MAG and the aging community to identify this solution before funding it. Since then, the collaborative has lived-on through government funding. 

Currently, program staff is working closely with community partners to identify solutions for building back the childcare system after COVID dramatically decreased the number of quality and affordable childcare centers in Metro-Phoenix.

Flinn Foundation’s McLeod notes that COVID-19’s arrival in Arizona did not allow the luxury of time to develop new multi-year grants in partnership with organizations focused on long-term impact. “We needed to immediately fund the development of PPE, which was in short supply at the time. We needed to help ramp up COVID-19 testing for Arizonans. We needed to know — through innovative wastewater surveillance — where COVID-19 was spreading undetected in the community. We needed to know the impacts of the novel coronavirus on the rural populations of northern Arizona,” she says. In this regard, the Flinn Foundation was fortunate to have existing relationships with researchers and entrepreneurs in the community who could — and did — respond to these immediate needs. 

When performances were halted and museums closed, the Flinn Foundation recognized that arts and culture organizations, and especially those with weaker balance sheets, might struggle to reopen their doors. “In response to this emergency,” McLeod says, “we connected arts groups with expert financial-strategy consultants to map out scenarios to navigate the changed world, and provided grants to shift direction.” She credits the many Arizona organizations that thought outside the box to stay afloat, including building outdoor stages or hosting drive-through events. Flinn Foundation also gave its arts grantees discretion about whether a previously approved project was still the best use of funds, or whether an unrestricted grant was more important at this time. Reporting that, altogether, the Flinn Foundation gave nearly $900,000 in emergency COVID-19 recovery grants to Arizona arts organizations, ranging between $60,000 and $125,000, she says, “These unrestricted grants, along with other philanthropic and federal funding, makes us at Flinn more confident that these organizations will not only survive COVID-19 but emerge focused on retaining their financial strength.”

One of the Flinn Foundation’s most longstanding initiatives is built on a partnership with Arizona’s three public universities. The full-ride Flinn Scholarship was established in 1986 as a partnership between Flinn and the nonprofit universities to keep Arizona’s highest-achieving high-school seniors in-state to pursue their undergraduate studies. Yet the program’s goals went far beyond funding the education of 20 individual students a year. “More broadly, we wanted to contribute to stronger honors education at Arizona State University, Northern Arizona University and the University of Arizona, helping the universities attract more of the excelling students who might otherwise choose to leave the state. This decades-long partnership with the universities has benefited the state tremendously,” McLeod says. “Each university today has a stand-alone honors college, including residences, classrooms and collaborative spaces, that provides a world-class education to thousands of students each year.”

Vitalyst Health Foundation supports community-based organizations in a variety of ways, so, Martinez explains, its evaluation of grants and partnerships look different for each effort. Its grant to Activate Food Arizona, for example, helped AFA advocate for changes to allow SNAP (Food Stamp) funds to be used online and helped them communicate to retailers, especially small and independently owned and rural grocers. That change, Martinez notes, is a measure of success. Vitalyst was also an early funder of the Arizona Economic Recovery Center, a project of Local First Arizona, another Vitalyst partner, and Martinez notes the organization has now leveraged nearly $5 million in other support from entities throughout Arizona. 

“Overall, we wanted to ensure that our partners could continue their strong programmatic work, and that our grants process did not add to the challenges they were already facing with the COVID-19 pandemic. By that measure,” says Martinez, “we and our partners have been successful.” In response to the COVID-19 pandemic, the Vitalyst Board of Directors allocated an additional $1 million in extra support for community partners. Staff developed grant opportunities that focused on health equity and funded efforts that could impact policy, systems and environmental changes that occurred because of the pandemic. 

Says Martinez, “We analyzed data showing us the communities most impacted by both COVID-19 and by high unemployment, and then we nurtured community partnerships with groups serving those areas.” This included the South County portion of Yuma County, the Southwest Phoenix Metro area and the Navajo and Hopi Nations. So far, in fact, 16 groups across Arizona have been funded. And Martinez reports that, based on feedback and with ongoing pressures from the pandemic, staff recommended — and the board approved — an additional $300,000 to continue to support these efforts. “The COVID-19 pandemic focused our strategic direction and allowed us to learn from the way the health equity grants were distributed and evaluated. By holding an equity lens on issues like food, housing, access to care and economic opportunity — among other elements of a healthy community — we ensured that community health and safety were at the forefront of the work done by our partners.” 

Noting that the most impactful solutions are created in partnership and do not occur in silos, Martinez explains that Vitalyst’s work and grants processes incentivize partners seeking funding to create coalitions to find solutions that achieve systems change. “Depending on where partners are in creating coalitions, Vitalyst may fund in various ways,” he says. “We fund up to $20,000 in Spark Grants to support collaborations in their journey to address systemic change. In addition, we provide larger Systems Change grants to catalyze collaborative work that transforms systems through changes to policies and practices that improve the health of our communities.” 

One other unique way Vitalyst assists nonprofits is through capacity-building resources to community-based leaders, organizations and coalitions. These are known as Technical Assistance Partnership (TAP) Tools. They include workshops, training and TAPAZ, the Technical Assistance Partnership of Arizona, which offers back-office accounting and finance support through the fiscal sponsorship of organizations. 

“As we evaluate grant opportunities as a team, we also look for other ways to support potential partners aside from funding. For instance, we can still be supportive of community efforts by creating connections so partners can collaborate and/or access other resources,” Martinez says. 

Time, Too, Powers the Economy 

Discussing the ripple economic effect of nonprofits in terms of money and jobs, Rhonda Oliver, CEO of HandsOn Greater Phoenix, explains that nonprofit revenue typically consists of sponsorships, fees for service, grants and individual contributions, and all those income streams except individual contributions are directly tied to the delivery of some service or program. “Many nonprofits’ ability to deliver those services during the pandemic was hobbled either by circumstances of the pandemic itself (economic shutdown or restriction of in-person service) or the fallout of the shutdown (staffing shortages, volunteer shortages, surges in demand for service and supply chain),” she says. “Most nonprofits that we talked with and worked with were incredibly nimble and creative, but still faced funding gaps to maintain staffing levels and service delivery.” Through contributions received throughout the pandemic along with the PPP in 2020, HandsOn has been able to continue operating at a relatively healthy level. This, in turn, has enabled HandsOn to continue to support local organizations, especially those whose volunteer ranks were decimated by the pandemic.

In fact, according to Oliver, HandsOn Greater Phoenix received more unrestricted funds during the pandemic than at any other time in its 29-year history. Those funds came from local foundations, long-time corporate partners and individuals — a level of investment she credits to trust stemming from shared history and partnership or belief in HandsOn’s mission and reputation. 

“Pandemic or not,” she says, “we will continue to work hard to earn that investment and leverage it to maximum community benefit.” Observing that the pandemic has caused layers of paradigm shifts in the way we all do business, she says, “I think the organizations that readily adapt to shifts and changes without a high degree of expectation will fare better in the post-pandemic economy.”

Noting that nonprofits took a huge hit to their volunteer workforces during the pandemic from both corporate groups and individual volunteers, Oliver says HandsOn Greater Phoenix shifted throughout 2020 almost exclusively to supporting organizations around the issue of food security. “Without corporate groups in play, we relied exclusively on a small army of volunteers and our staff who wanted to support the many families and individuals who were in need of support because of the pandemic. And thankfully, because National Guard members were directed to support larger food banks throughout the crisis, that allowed HandsOn to support some of the smaller food banks and pantries.”

Oliver sees the mission and economic impacts of nonprofits as intertwined. “For many organizations, unpaid workforces — volunteers — are the economic driver that allows them to deliver their mission.” An example she cites is HandsOn Greater Phoenix’s mobilization in 2021 of 27,370 volunteers to help staff the state-run vaccine sites. Those volunteers worked eight-hour shifts for a total of 218,960 hours. According to the Independent Sector, the value of one hour of volunteer time to nonprofits or service organization is $28.54. “If you do the math, that volunteer workforce saved the State of Arizona $6,249,118,” she says, adding, “Wow!!” and noting, “Most nonprofits don’t have those funds sitting in their coffers to cover the loss of their unpaid workforce.”

Nonprofits Important as Employer

Employment is an important element of the economy and is one of the factors in nonprofits’ ripple effect on our economy. 

Goodwill, in 2021, provided more than 200,000 services to people looking for employment. “By providing access to resources, skills training and connections to hiring employers, we are able to help combat two contributors to poverty: unemployment and underemployment. Helping people find the right kind of employment empowers individuals to achieve self-sufficiency, stimulates the local economy by increasing consumer spending, and helps businesses fill their hiring needs with skilled workers,” says Tim O’Neal, CEO of Goodwill of Central and Northern Arizona. Goodwill’s goal is to upskill people so they are able to achieve meaningful, family-sustaining wages. This has a life-changing effect on not only the individuals who secure higher-paying jobs but on their families, too.

During the COVID-19 pandemic, Goodwill continued to evolve to ensure it is meeting the needs of people in our community. On its website,, people are able to access community resources, webinars and classes, participate in self-directed skills training and certifications, receive resume assistance, and much more; making these no-cost services available virtually enables Goodwill to provide consistent support to individuals who have had difficulty visiting a Goodwill Career Center in person due to challenges posed by the pandemic.

O’Neal credits Goodwill’s funders for their flexibility over the past couple of years, as Goodwill needed to modify its funding parameters due to COVID constraints. “For example,” he says, “COVID delayed the opening of our centers, so we served this community differently than what we wrote in the grant. Overall, we’ve felt like discussions were more open and there’s been more communication to make sure we are working together to best serve the community.”

A pillar of Goodwill’s mission is to “Build Stronger Communities,” which it does by partnering with other organizations to both help them live out their mission and also find ways to jointly serve our communities. “We have done this both by providing support through round-up-at-the-register campaigns in our stores as well as partnering to provide our career-development services either online or in person with other organizations,” O’Neal shares. In the past few years, for instance, Goodwill of Central and Northern Arizona has partnered with Junior Achievement, Child Crisis and Fresh Start Women’s Foundation.

“As a nonprofit, we are here to provide critical resources to those in our community, and across our state, who have been underserved — or completely missed — by existing systems,” O’Neal says. “There are gaps in areas of service, and the nonprofit sector is able to impact our community by identifying these gaps, and then finding ways to reach those who have been left behind. Together, with the support of our community, we can leverage our resources and expertise, and continue to evolve to better serve those in need.”

Speaking from her experience, Oliver shares, “My personal opinion is that it takes the combined resources of all three sectors — public, private and nonprofit — to provide safe, healthy and just communities.”

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