January 13, 2000 | Read Time: 7 minutes
In the last third of the 20th century, Americans quietly revolutionized the non-profit world.
The non-profit sector today is far bigger than ever before, far more diverse, and far better organized.
Because it is more prominent and more diverse, it is more controversial. Its leaders are more professional, more confident, and more assertive. Always part of America’s commercial, market-oriented culture, American non-profit organizations today are more commercial than ever.
The Quiet Revolution in America’s non-profit sector did not come easily. A product of the civil-rights movement, the Great Society, and President Richard Nixon’s new federalism, it was not inevitable — and it may not be permanent. At times, it displeases almost everyone: It promotes diversity and also, perhaps, division; it allows excellence yet may make equality more difficult to achieve. But it reflects powerful popular forces that will not easily be reversed.
As late as the early 1960s, longstanding prejudices and traditions still made it difficult or impossible for many people to organize a non-profit group. New York State judges had — and used — the power to deny non-profit charters as they saw fit — sometimes merely because they disliked a proposed name or thought another organization had already claimed a field of activity. Segregation-obsessed Southern state governments tolerated African-American churches and private schools but denied civil-rights organizations the right to organize. Southern state and local governments harassed those who sought to join civil-rights organizations.
In California during the McCarthy period, as sometimes before, tax assessors sought to impose “loyalty” or other political tests on churches that sought tax exemption. Women, who had won the vote in 1920 and had overcome many traditional civil disadvantages, still lacked substantial control over money and power. Overall, the non-profit world of the 1960s served the wealthy and the well-established — who were predominantly men — much better than it served the poor, people of color, and women.
When Alan Pifer, president of the Carnegie Corporation of New York, wrote in his foundation’s 1966 annual report about “the non-governmental organization at bay,” the Quiet Revolution had already begun to reshape the non-profit world. The civil-rights movement had persuaded federal courts to end practices that had denied to so many the right to create non-profit organizations. Henceforth, the First Amendment right to assemble, to petition, to publish, and to act on one’s beliefs would be more universally applied.
As the white South was forced to abandon segregation in the late 1960s, Congress, through the programs of the Great Society, agreed to provide federal funds for health care, education, and social services. Aware of continuing resistance to integration on the part of local governments — and of continuing objections to the creation of large federal agencies to provide services directly — Congress set up most Great Society programs in such a way that services could be provided by private charities as well as by government agencies.
That arrangement was not unprecedented, of course. After World War II, the federal government offered contracts to non-profit groups for scientific, defense-related, and medical research, and through the Social Security program and the G.I. Bill, it paid for some medical and nursing-home care and education. But even as late as the early 1960s, federal funds may have been less important to charities than exemptions from local and state taxes and local payments for orphans, wards of the state, and town scholars, who received funds to attend private schools if their towns lacked a public high school.
In the early 1960s, as it had for decades, philanthropy probably accounted for as much as half the income of many non-profit groups. Private fees accounted for much of the rest, and private boards that represented donors and fee payers alike truly ran most non-profit organizations.
The programs of the Great Society — first enacted under President Lyndon Johnson then continued, transformed, and expanded under Republican and Democratic presidents alike — were to fundamentally alter the size, scope, and financing of the non-profit world. From the beginning, Great Society funds rivaled private donations to non-profit groups. By the late 1970s, federal funds had eclipsed private gifts. Today, charities derive about a third of their income from the federal government, with private donors now accounting for only about one-sixth of their revenues.
When John F. Kennedy won the presidency in 1960, non-profit organizations represented just over 3 per cent of the American economy — up from the less than 1 per cent of the economy that it represented 150 years earlier. Today, non-profit organizations account for as much as 9 or 10 per cent of the U.S. economy. About half of this expansion is the result of a steady increase in federal spending on the sorts of services provided by charities. Under President Kennedy, such spending accounted for less than one-half of 1 per cent of the national economy; today, it accounts for 4.5 per cent — nine times as much. An increasingly wealthy American population also buys more non-profit services than ever: Revenues from fees and charges now account for about half of all non-profit income.
Empowered by their expanded right to associate as well as by the availability of federal funds, more and more people since the late 1960s have organized to provide services they thought Americans ought to be able to choose. Inevitably, controversy has flared over the direct federal financing of non-profit social-service charities that challenged established social arrangements or that sought to put controversial ideas into practice.
In response, Congress has shifted much of the provision of federal funds to what might broadly be called “voucher” programs. Following the examples set by Medicare, Medicaid, and college-student scholarships and loans, funds for federal food stamps, rent supplements, job training, and Medicaid have, since the 1980s, paid for more and more services while sometimes allowing those who receive services to select the providers. Such a system has also had the effect of reassuring leaders of non-profit hospitals and colleges, professionals as well as lay people, Protestants as well as Catholics and Jews, that large government programs would not displace them.
One result of the increased flow of government funds in the form of vouchers has been the “marketization” of what were once “charitable” services. The greatly increasing affluence of many Americans has reinforced marketization. Wealthier college students demand — and can pay for — private rooms, better food, and comprehensive recreational facilities. Highly skilled executives, doctors, and researchers resist job offers from cities that lack first-class non-profit arts centers. More and more families can afford elderly-care services.
A second result has been the rise of a better-educated, more confident, more autonomous cadre of non-profit executives. By necessity, today’s non-profit leaders have become skilled in dealing with exceptionally diverse constituencies and in responding to a wide variety of governments and markets.
A third key result of the great increases in government funds and consumer purchases has been a marked decline in the significance of philanthropy to most organized charities. Today’s 70-something donor was in her mid-30s during the Kennedy Administration. She almost certainly applauds the fact that today’s greatly expanded range of charities offers her a much wider array of opportunities to put her philanthropic donations to work. Understandably, she wants her donations to make a difference. But her donations — like those of spanking-new Internet millionaires — have to compete for influence with federal vouchers and fees earned in the market.
The Quiet Revolution defeated racists and male chauvinists. It has also disappointed social democrats who hoped that the Great Society would expand the direct role of government agencies. Because it led to marketization, it probably enhanced both innovation and inequality in American society. The Quiet Revolution has allowed many more Americans to shape the nation’s charities — and to shape them in so many ways that the very term “charity” seems less appropriate than in the past.
Those are mixed results that leave no one entirely pleased. But on present evidence we seem most unlikely to roll back the Civil Rights Movement, to restore the federal government to the narrow role it played in the 1940s and 1950s, or to abandon the market. Or to reverse the Quiet Revolution of America’s non-profit organizations.
David C. Hammack is professor of history at Case Western Reserve University and chair of the Educational Programs Committee at the university’s Mandel Center for Nonprofit Organizations. He is the editor of the book Making the Nonprofit Sector in the United States: A Reader (1998).
