NPL 273 Introduction to Nonprofit Leadership
Readings from The Jossey-Bass Handbook of Nonprofit Leadership and
Management, 2nd Ed. Robert Herman ed. (2005)
“Historical Perspectives on Nonprofit Organizations in the United States,”
(Peter Dobkin Hall)
- 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
- Early America—philanthropy
was common, but seen as public institutions. Basic elements of the sector can be
traced back to here:
concept of corporation and trust
boards, with no owners or stockholders, and exempt from taxation
of individual rights
organizing voluntary associations
of associations to mobilize public opinion
associations in the New
associations distrusted for pursuit of private interests. Favored public institutions instead,
especially in South and West. New England was the exception.
- New York State
established the Regents of the University of the State of New York to
regulate all charitable, education, religious, and professional
Dartmouth College v. Woodward, the Supreme Court
ruled that a (philanthropic) corporation was a private contract and so
protected by the US Constitution.
de Tocqueville exaggerated the importance of voluntary associations in
it was certainly the case that there were a great number of them
organized around almost any purpose.
- Nation Building, 1860-1890
Smithson’s bequest (which led to the Smithsonian Institution) confirmed
the legality of charitable trusts.
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
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
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.
President Charles Eliot defended the tax exemption of the College before
the Massachusetts General Court on the grounds that it provided a public
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.
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.
Charitable Vehicles, 1890-1930
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.
Chamber of Commerce created the first Community Chest (annual combined
charity fund drive—United
Way as it is called in most Minnesota
established the first Community Foundation.
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.”
(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.
fundraising was begun, in part to raise funds for World War I.
social movements, like the NAACP, also began in this period.
Government, the Nonprofit sector, and the Transformation of Public Life,
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.
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
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.
was also the era of grassroots social movements and think tanks, even as
traditional voluntary association began to die off.
nonprofits began to hire professional managers
organizations (now often free-standing churches or “parachurch”
organizations, rather than mainline denominations) also returned as a
force in the nonprofit sector.
Conservative Revolution and the Nonprofit Sector, 1980-2000
Conservative Revolution focused on devolution (shifting from federal to
state/local government) and privatization (for profit and nonprofit).
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.
“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.”
- Introduction: The Twentieth Century nonprofit was
shaped by a government-nonprofit partnership. In the last twenty years, that
partnership has come under assault.
and Opportunities: The Changing
Context of Nonprofit Action
form of public support: From producer to
growth of private giving
Competitive Challenge—for-profit entry into
traditionally nonprofit markets
Social & Demographic Shift
labor participation by women
of divorce rate & 5-fold increase in births out of marriage
in immigrant refugees
New Philanthropy/”Venture Philanthropy”
Greater visibility and policy salience
Resumption of government social welfare spending growth
Nonprofit Response: A Story of
for Nonprofit Managers
Growing identity crisis
Increased demand on nonprofit managers
Increased threat to nonprofit missions
Disadvantaging of small agencies
Potential loss of public trust
the balance: return to
“distinctiveness imperative” after swing toward “survival imperative”
© 2004 A.J.Filipovitch
Revised 2 April 2008