PADP 7210 Chapter Notes - Chapter 16: Westview Press, Externality, Better Business Bureau
19 Nov 2020
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PADP 7210 Intro to NonProfit
Reading 16: History & Theories of Nonprofit Organizations (Great Depression to Present)
Citation:
Holland, T. P., Ritvo, R. A., Andrew, J S Ott, and L A Dicke. “History and Theories of Nonprofit
Organizations.” Essay. In The Nature of the Nonprofit Sector, 3rd ed., 59–65. Boulder,
CO: Westview Press, 2016.
Chapter (4): History & Theories of Nonprofit Organizations
I. The Post-Depression Era [1930s – 1970s]
• Well into 20th century, private donations by wealthy & grants from
foundations provided main sources of revenue for most nonprofits
o When Great Depression hit in 1930s, federal government took steps to
help needy (i.e. Social Security System, Aid to Dependent Children,
other public work programs)
▪ Such programs helped people regain independence, but brought
criticism from those who believed such expenditures
undermined self-reliance
• Post-Depression
o Distinctions among public, corporate, & nonprofit sector were clarified
▪ Though many programs still administered by hybrid
organizational forms
o Citizens often joined many different voluntary associations
o Some nonprofits established to address externalities
▪ Addressing negative externality make take form of advocacy
against a landfill near a neighborhood or efforts to require
company to reduce pollution
▪ Promoting positive externalities may be establishing after-
school programs for low-income children
▪ Private foundations often source of funds to address
unexpected consequences & they have enlarged & extended
efforts to improve particular aspects of nation as whole
o Public support for community services came to a peak with President
Lyndon Johnson’s “Great Society” legislation
▪ Directed money to numerous local projects designed to help
individuals gain greater skills & resources & become more
active participants in local government
• Mid 20th century, questions raised about private foundations’ rapidly growing
endowments & questions about nonprofit organizations that benefited from
gifts from those foundations & from wealthy benefactors
o Little public regulation of these organizations & critics saw them as
amassing enormous sums of money free from both taxes & public
scrutiny
o Congressional hearings led to passage of Tax Reform Act of 1969 –
instituted two new regulations:
▪ Foundations were required to distribute at least 5% of assets
every year
▪ Nonprofits were required to report income & expenses
annually using new 990 tax form
