INTRODUCTION
When you use a standard Industry Event in IMPLAN, the model applies the average characteristics of that Industry in your selected Region—including average profit margins, tax payments, and staff structures.
However, non-profit organizations operate under a different financial structure. They don't have "owners" taking home profits, and their tax-exempt status means they don't contribute to certain tax pools the way a private firm does. To capture the true economic footprint of a non-profit, you need more than an Industry average.
The Industry Impact Analysis (IIA) Detailed Event is the perfect tool for this task. It allows you to enter labor and expense data while "zeroing out" the components that don't apply to a 501(c)(3) or public entity. By using this event type, IMPLAN automatically rebalances the Industry's production function to match the unique reality of your non-profit.
THE NON-PROFIT ECPONOMIC PROFILE
To understand how we model non-profits in IMPLAN, it’s helpful to review the concept of the Leontief Production Function (LPF). In IMPLAN, every dollar of Output (total budget/revenue) is broken down into two main categories: Intermediate Inputs (spending on goods and services) and Value Added (wealth created within the organization). These two categories can then be further broken down.
For a non-profit, we typically need to adjust three specific "Value Added" components that differ from private-sector benchmarks:
- Proprietor Income (PI): This represents payments to self-employed individuals or owners. Since non-profits do not have owners, this value should almost always be $0.
- Other Property Income (OPI): This includes corporate profits, interest, and Rents. While some non-profits have "surpluses," they do not distribute dividends to shareholders. In most impact models, OPI for a non-profit is set to $0 or left as a very small residual.
- Taxes on Production & Imports (TOPI): This includes sales, property, and excise taxes, as well as fees and licenses. Because of tax exemptions, a non-profit’s direct TOPI is significantly lower than a for-profit peer. In a "pure" non-profit model, we often set this to $0 (or a known small value for specific local fees).
By removing these "for-profit" elements, the "saved" money doesn't just disappear; it is redistributed. Usually, this means the non-profit is spending a higher percentage of its budget on Employee Compensation or Intermediate Inputs (its mission-driven operations) than a private firm would.
SETTING UP tHE IIA DETAILED EVENT fOR NON-PROFITS
So how do we account for the unique economic structure of non-profit enterprises? With the Industry Impact Analysis Detailed Event!
The beauty of the IIA Detailed Event is that it’s flexible and provides a more custom approach to modeling economic impacts.
STEP ONE: SELECTING THE INDUSTRY (Specification)
Click on Specification to choose the Industry that most closely matches your non-profit’s activity. Search for the Industry by name that most closely matches your non-profit’s primary activity. By selecting the description rather than a code, you ensure your model remains consistent with current NAICS-to-IMPLAN mappings:
- Higher Education: Search for "Colleges, universities, and professional schools." This captures both public and private non-profit institutions.
- Healthcare: Search for "Hospitals." While this includes private hospitals by default, our IIA adjustments will tailor it to a non-profit structure.
- Social Services: Look for "Individual and family services" or "Community food, housing, and other relief services."
- Professional/Civic Orgs: Search for "Grantmaking, giving, and social advocacy organizations" or "Civic, social, professional, and similar organizations."
STEP TWO: USING PAYROLL DATA
Non-profits are often labor-intensive. The IIA detailed provides you several flexible options for capturing the nuances of non-profit employment with payroll data:
- Employee Compensation: IMPLAN expects fully-loaded payroll for Employee Compensation inputs. If your payroll data only includes "gross wages" (cash pay without benefits), toggle to Wage & Salary Income. IMPLAN will then internally "load" those benefits and employer-paid taxes based on regional averages.
- Employee Headcount: Employment in IMPLAN is an Industry-specific mix of full-time, part-time, and seasonal employment. If you only have FTE data available, you can use the FTE toggle.
STEP THREE: ACCOUNTING FOR NON-PROFIT STATUS
This is the most critical step for non-profit modeling. To override the default "for-profit" assumptions in the Industry's background data, you should enter values for the following:
- Proprietor Employment & Income: Enter 0. Non-profits do not have owners or self-employed "proprietors" who retain a share of the earnings.
- Other Property Income (OPI): Enter 0. This removes corporate profits and dividends from the equation.
- Taxes on Production & Imports (TOPI): If you know specific small amounts of non-exempt local fees, enter them. Otherwise, entering 0 reflects a fully tax-exempt status for direct operations.
STEP FOUR: OUTPUT (TOTAL BUDGET)
Finally, enter your Output. For a non-profit, this is typically your Total Annual Operating Budget.
ADVANCED CUSTOMIZATION: THE SPENDING PATTERN
Sometimes, you know more than just the total budget; you know what the non-profit is buying.
Because spending patterns can differ across non-profits (e.g., a food bank supply chain might look different than a housing social service office), you may need to customize the Spending Pattern.
Customizing the spending pattern allows you to:
- Modify the Weights: Change the percentage of the budget spent on specific Commodities.
- Adjust the LPP (Local Purchase Percentage): If you know your non-profit makes a point of "buying local," you can increase the LPP for specific commodities to ensure those impacts stay within your Region.
SUMMARY AND BEST PRACTICES
Modeling a non-profit is about stripping away the "for-profit" noise to reveal the true mission-driven spending of the organization. By using the Industry Impact Analysis (Detailed) event type, you move away from generic Industry averages and toward a defensible, data-backed representation of your organization.
Key Takeaways for Your Analysis:
- Always zero out PI and OPI to reflect the lack of ownership and profit distribution.
- Adjust TOPI based on the specific tax-exempt status of the entity.
- Use the W&S toggle if your payroll data doesn't include the full cost of benefits.
- Refine the Spending Pattern if the organization’s supply chain is unique (e.g., a food bank’s heavy emphasis on food manufacturing vs. office supplies).
By following this workflow, your results will accurately reflect that while a non-profit might not pay direct corporate income taxes, its true value lies in its significant payroll ripple effects and its local operational spending.
INTERPRETING THE RESULTS
When you run a non-profit model using the IIA Detailed method, your results will look a bit different from a standard for-profit analysis. Here is what to look for in your Results tab:
DIRECT TAX IMPACTS
If you entered $0 for TOPI, all TOPI components of your Direct Tax Results for state and local taxes will be zero (or near-zero). However, TOPI is not the sole source of Direct Taxes. Taxes are generated from every component of Value Added. You will see non-zero Direct Taxes because non-profits generate personal taxes such as income tax and motor vehicle license taxes.
INDIRECT AND INDUCED TAX IMPACTS
You will still see Indirect and Induced Tax Impacts. Even if the university doesn't pay property tax, the local bookstore it buys from (Indirect) and the professor who spends their paycheck at a restaurant (Induced) definitely do.
VALUE ADDED COMPOSITION
In the Value Added results, you will notice that Employee Compensation makes up a much larger share of the total impact than in for-profit industries. Since you've removed the "leakage" of profits (PI and OPI), the economic value of the non-profit is concentrated almost entirely in its labor and its supply chain.
OUTPUT VS. INTERMEDIATE INPUTS
Check the Direct Intermediate Inputs in your results. This represents the spending on the goods and services required to run the organization. If this number looks higher than expected, it’s because IMPLAN has rebalanced the budget to account for the lack of profit.
CASE STUDY: OLD DOG PARADISE
To put these concepts to work, let’s look at Old Dog Paradise, a 501(c)(3) non-profit in Seattle, Washington. ODP is unique because it doesn’t operate a central kennel; instead, it supports over 1000 senior dogs in permanent foster homes.
As part of its mission, ODP covers all veterinary expenses for any fostered dogs. To do this it uses a network of veterinarians in the Seattle area.
Additionally, all necessary dog food, leashes, collars, and other dog care products are donated by local pet supply companies and retail stores.
THE ECONOMIC DATA
Based on ODP’s operational profile, we have the following estimated inputs for an annual impact model:
- Total Output (2025 Annual Budget): Approximately $3,800,000 which is covered through donations and fundraising.
- Intermediate Inputs: ODH states that 75% of expenses go directly to dog care (primarily veterinary services and medications).
- Employment: A small core staff of 8 manages the network of hundreds of volunteers and fosters. The fully loaded payroll is equal to $720,000.
- Tax Status: 501(c)(3) IRS charitable corporation.
SETTING UP THE ANALYSIS
Selecting the Industry (Specification)
To identify the appropriate IMPLAN industry, we can use the NAICS to IMPLAN industry search. Searching for Humane Societies indicates that the appropriate IMPLAN industry is 504 - Grantmaking, giving and social advocacy organizations.
Using Payroll Data
ODP has a headcount of 8 employees with a fully loaded payroll of $720,000. We can enter these directly into our IIA Detailed inputs.
Accounting For Non-Profit Status
To account for non-profit status, we set OPI, TOPI, and Proprietors and PI all equal to 0.
Output
ODP has an annual operating budget of $3.8 million.
Advanced Settings
We have one final important piece of information to incorporate into our model. Because of the special nature of this dog rescue, we know that their spending pattern should reflect:
- 75% of their spending is on local veterinarian bills (Commodity 3449 - Veterinary services, LPP=100%). This is not part of the standard spending pattern for Industry 504, so we will need to add it to the spending pattern.
- 0% of their spending goes towards pet food or supplies, because this is completely donated (Commodity 3383 - Wholesale Services - Other nondurable goods merchants).
After making these changes, we’ll also need to Normalize the spending pattern.
Running the Analysis
Once the IIA Detailed Event is set-up, we’re ready to run our analysis. We Drag our Event to the Seattle-Tacoma-Bellevue, WA MSA Group. Note that our Dollar Year is set to 2025, since our data reflects the 2025 budget.
INTERPRETING THE RESULTS
When modeling the economic impact of non-profit organizations, it's essential to understand that these entities create ripple effects throughout their communities that extend far beyond their direct operations.
The Multiplier Effect in Action
Our analysis of ODP Rescue demonstrates a fundamental principle of non-profit economic modeling: every direct job creates additional employment. While the organization directly employs 8 people, the total employment impact reaches nearly 20 jobs when we account for indirect and induced effects. This means that for every direct position, the organization supports approximately 1.5 additional jobs in the broader economy.
How Non-Profits Generate Economic Activity
The $3.8 million (2025 dollars) in direct operational spending by ODP Rescue ultimately generates $6.4 million (2025 dollars) in total economic output for the Seattle-Tacoma-Bellevue region. This happens through the three traditional impact channels of direct, indirect, and induced impacts.
The Tax Revenue Contribution
An often-overlooked aspect of non-profit impact is tax generation. Despite their tax-exempt status, non-profits support substantial tax revenues through their employees' income taxes and their suppliers' business activities. This analysis shows nearly $571,000 in supported tax revenues across all levels of government, with the majority ($467,000) flowing to federal coffers.
The Bottom Line
Non-profit organizations are economic engines in their communities. They create jobs, support local businesses, and contribute to the tax base; all while fulfilling their charitable missions. Understanding these broader economic impacts helps demonstrate the full value these organizations bring to their regions.
RELATED ARTICLES
Hospitals: Modeling Public & Non-profit Hospital Impacts with Industry Impact Analysis
Industry Impact Analysis (Detailed) Events
Written May 5th, 2026