NPL 273  Introduction to Nonprofit Leadership

Readings from The Jossey-Bass Handbook of Nonprofit Leadership and Management, 2nd Ed. Robert Herman ed. (2005)

Ch. 1  Historical Perspectives on Nonprofit Organizations in the United States,” (Peter Dobkin Hall)

  1. Note:  Although Hall states at the outset that “nonprofits” as a coherent sector date only to the 1970s, his own tracing of the lineage would seem to argue otherwise.
  2. Early America—philanthropy was common, but seen as public institutions.  Basic elements of the sector can be traced back to here:
    1. Legal concept of corporation and trust
    2. Self-governing boards, with no owners or stockholders, and exempt from taxation
    3. Importance of individual rights
    4. Experience organizing voluntary associations
    5. Use of associations to mobilize public opinion
  3. Voluntary associations in the New Republic, 1780-1860
    1. Private associations distrusted for pursuit of private interests.  Favored public institutions instead, especially in South and West.  New England was the exception.
    2. New York State established the Regents of the University of the State of New York to regulate all charitable, education, religious, and professional organizations.
    3. 1819 Dartmouth College v. Woodward, the Supreme Court ruled that a (philanthropic) corporation was a private contract and so protected by the US Constitution.
    4. Although de Tocqueville exaggerated the importance of voluntary associations in early America, it was certainly the case that there were a great number of them organized around almost any purpose.
  4. Nation Building, 1860-1890
    1. James Smithson’s bequest (which led to the Smithsonian Institution) confirmed the legality of charitable trusts.
    2. President Franklin Pierce, in 1854, vetoed a bill to use federal lands to support the insane, arguing that the Constitution did not authorize the Federal Government to provide public charity.  In the process, he reaffirmed the role of private charity in this area. 
    3. The Civil War drew heavily on associations, private charities, philanthropic giving, and volunteering.  The US Sanitary Commission (a private organization), for example, provided medical care to the Union Army in the Civil War.  It combined trained professionals with volunteer workers.
    4. Post-Secondary education also flourished in this era, both public and private.  Harvard University led the way in using philanthropy to develop a major institution.  Hospitals, museums and arts organizations, and professional & scholarly associations sprang up around the universities.
    5. 1874—Harvard’s President Charles Eliot defended the tax exemption of the College before the Massachusetts General Court on the grounds that it provided a public benefit
    6. Andrew Carnegie (one of the “Robber Barons”) argued in his essay, “Wealth,” that a man should be embarrassed to die wealthy.  Rather, he (and he meant “he”) should use his “genius for affairs” to reinvest his fortune in society.  Intelligent philanthropy could eliminate the root causes of social problems and sustain the competitive process essential to continuing progress.  He was opposed to charity, which alleviated the symptoms without addressing the cause.
    7. This was also the era of “a nation of joiners” as workers joined unions, the middle class joined professional and civic associations, and fraternal and sororal organizations blossomed.
  5. New Charitable Vehicles, 1890-1930
    1. Despite public concerns about potential abuse of economic power, the Robber Barons convinced the various State Legislatures to loosen charity laws to permit very large foundations.  The era of large trusts (“foundations,” as we call them today) was begun by Carnegie, Frick, Mellon, Rockefeller, and Ford.
    2. In 1910, Cleveland’s Chamber of Commerce created the first Community Chest (annual combined charity fund drive—United Way as it is called in most Minnesota Communities)
    3. In 1925, Cleveland established the first Community Foundation.
    4. Corporations practiced “welfare capitalism,” contributing to community institutions, establishing pension plans, educational programs, social and athletic activities for employees and their families.  This was the precursor of “corporate social responsibility.”
    5. Businessmen’s (sic) service organizations were founded in the 1920s (Rotary, Kiwanis, Lions, etc.).  Hoover argued that a nation based on public interest volunteerism would not be tempted by socialism and communism as the solution to inequality and injustice.
    6. Professional fundraising was begun, in part to raise funds for World War I.
    7. Reform-oriented social movements, like the NAACP, also began in this period.
  6. Big Government, the Nonprofit sector, and the Transformation of Public Life, 1930-1980
    1. As government grew, it turned to steeply progressive income taxes to finance its growth (since it only affected the few wealthy, it was politically palatable).  This created incentives for the wealthy to give their money away to causes they chose, rather than having it taxed away to the government. 
    2. On the other side of the equation, as government grew it turned to grants and contracts to implement its policies—and many of these went to nonprofit organizations.
    3. This was also the era of the growth in private foundations (charitable trusts that make grants to others).  However, Congress became skeptical that wealthy people were using foundations to avoid taxes.
    4. This was also the era of grassroots social movements and think tanks,  even as traditional voluntary association began to die off.
    5. Many nonprofits began to hire professional managers
    6. Religious organizations (now often free-standing churches or “parachurch” organizations, rather than mainline denominations) also returned as a force in the nonprofit sector.
  7. The Conservative Revolution and the Nonprofit Sector, 1980-2000
    1. Reagan’s Conservative Revolution focused on devolution (shifting from federal to state/local government) and privatization (for profit and nonprofit).
    2. Under Newt Gingrich’s “Contract with America,” the government social programs of the 20th Century were dismantled.  They also changed federal policies to permit for-profit and nonprofit organizations to compete for the same funding (even though nonprofits had no access to the equity capital market—stockholders).  This has forced nonprofits to be more commercial and entrepreneurial to survive.


Ch. 4  The Changing Context of American Nonprofit Management,” (Lester Salamon)


Note Salamon’s typical method of research—using simple cross-tabulations, he follows the changes in the pattern of allocation of funding across programs and sectors.  Using such simple data, he still comes up with quite influential analysis—because he has “the numbers” to back up what he is saying.  “Follow the money.”


  1. Introduction:  The Twentieth Century nonprofit was shaped by a government-nonprofit partnership.  In the last twenty years, that partnership has come under assault.
  2. Challenges and Opportunities:  The Changing Context of Nonprofit Action
    1. Challenges

                                                               i.      Fiscal challenge

1.      Federal retrenchment

2.      Changing form of public support:  From producer to consumer subsidies

3.      Tepid growth of private giving

                                                             ii.      Competitive Challenge—for-profit entry into traditionally nonprofit markets

                                                            iii.      Technology Challenge

    1. Opportunities

                                                               i.      Social & Demographic Shift

1.      Aging Baby Boomers

2.      Increased labor participation by women

3.      Doubling of divorce rate & 5-fold increase in births out of marriage

4.      Doubling in immigrant refugees

                                                             ii.      New Philanthropy/”Venture Philanthropy”

                                                            iii.      Greater visibility and policy salience

                                                           iv.      Resumption of government social welfare spending growth

  1. The Nonprofit Response:  A Story of Resilience
    1. Overall growth
    2. Commercialization
    3. Professionalization
  2. Implications for Nonprofit Managers
    1. Risks

                                                               i.      Growing identity crisis

                                                             ii.      Increased demand on nonprofit managers

                                                            iii.      Increased threat to nonprofit missions

                                                           iv.      Disadvantaging of small agencies

                                                             v.      Potential loss of public trust

    1. Resetting the balance:  return to “distinctiveness imperative” after swing toward “survival imperative”


© 2004 A.J.Filipovitch
Revised 2 April 2008