Monday, November 29, 2010

Nonprofit organizations in American history

David C Hammack.  (2002). Nonprofit organizations in American history. The American Behavioral Scientist, 45(11), 1638-1674.
Every question concerning U.S. nonprofit organizations and its nonprofit sector as a whole has a historical dimension. Changing state and federal laws have always determined both what nonprofit corporations and associations can do and who can join and lead them.
Even, question concerning U.S. nonprofit organizations and its nonprofit sector as a whole has a historical dimension. Changing state and federal laws have always determined both what nonprofit corporations and associations can do and who can join and lead them. Conflicts over individual freedom, the nature of government, the role of various religions, race, ethnicity, class, gender, and other matters have always shaped these laws. Learning about the nonprofit sector has just begun, but large numbers of books and data sources-many noted in this article-are relevant. Numbers of nonprofit employees grew from near zero to 1% of the U.S. labor force in 1900, to 3% in 1960, and 9% in 2000. Consumer wealth, steadily increasing government subsidies, and expanded individual rights explain the growth. The sector limits religious and other cultural conflicts and promotes diversity, while increasing inequality.


What can historical perspective contribute to the contemporary study of nonprofit organizations and the nonprofit sector? Why should contemporary students and policy makers care about information concerning change in the nonprofit sector and nonprofit activity over long periods of time? As it exists today, the nonprofit sector in the United States is highly complex: We can best understand its complexity if we recognize that it is the product of a long history. British law governed formal nonprofit activity during the colonial period; state decisions in the Revolutionary and post-Revolutionary eras carried much of that law into the fundamental U.S. rules governing nonprofits. The United States Constitution changed the context in which British rules were applied, however, and created fundamentally new legal and political situations for nonprofits in the United States.
Until well into the 20th century, the "eleemosynary," nonprofit corporations that provide the essential framework for substantial nonprofit activity were entirely governed by the states; state government of corporations reflected state political traditions, including notions about the roles of corporations, of religion, and of race and gender that varied very greatly from one state to another. British legal traditions, the Constitution, and state regulation continue to shape nonprofit activity today. To these regulatory streams have, of course, been added much greater federal controls. Some of these federal controls derive from the general expansion of the federal government since 1918 and especially since 1929 and 1941. Some of these controls derive from the civil rights movement (and from the opposition to civil rights that in part shaped the Tax Reform Act of 1969, with its enhanced regulation of foundations and endowments). And many federal controls are now imposed through funding arrangements that have developed in the wake of the Great Society legislation that opened the way to the great expansion of Medicare, Medicaid, federal student loans, the National Institutes of Health, the National Science Foundation, the food stamp and rent supplement programs, and many other federal programs that provide resources, directly and indirectly, to nonprofits. As advocates for nonprofit organizations are well aware, it is often possible to resist proposed federal regulation by raising Constitutional questions-questions deriving from fundamental arrangements that date back to the early republic and that sometimes build on British precedents. Those who wish to understand nonprofit organizations in the present, and to predict their likely evolution in the future, cannot ignore the effect of these historically based legal and regulatory systems and the political cultures that sustain them.
Scholars are currently investigating a wide variety of questions about the history of nonprofit organizations, civil society, and philanthropy in the United States (and elsewhere): Each set of questions can best be explored through a different set of sources. Which sources are most useful for historians of philanthropy, nonprofit organizations, the nonprofit sector, and civil society? What sources should be developed to support future historical research on these topics?
This article focuses on the large set of questions that relate to the history and development of nonprofit organizations and the nonprofit sector as a whole over the course of American history. A focus on nonprofit organizations is broader than a focus on philanthropy and overlaps, but is perhaps more limited than, a focus on "civil society." Nonprofit organizations and the nonprofit sector constitute a large set of topics but form a reasonably coherent whole. And there are many reasons, scholarly as well as practical, for understanding how they have developed and grown over the course of American history.
What is a "nonprofit organization"? History makes it clear that no simple definition is possible, any more than it is possible to define the "bundle of sticks" that constitute "property rights" in simple terms. On the basis of their extensive efforts to define "nonprofit organizations" in many parts of the word, Lester Salamon (1999, pp. 10-11; compare Fisher, 1998) and his colleagues have identified the following six characteristics of nonprofit organizations.
1. They are formal organizations operating under relevant law, legally distinct from their officers, capable of holding property, engaging in contracts, and persisting over time.
2. They are "private," institutionally separate from government (though government officials may appoint some members of their governing boards).
3. They are nonprofit distributing (though they may sell services, pay high salaries, and accumulate surpluses).
4. They are self-governing (though they must obey relevant general laws).
5. They are voluntary in the sense that participation on their boards or in providing them with support is not required by law.
6. They serve some "public benefit."
This set of characteristics provides a framework for thinking about nonprofit organizations in American history. Historical studies make it clear that such organizations have played important roles in the United States since the early 19th century. But historical studies also make it clear that each of these six defining characteristics has been the object of continuous debate and change over the years. What Americans have meant by each of the key terms has changed in many important ways: Formal organization, corporation, property, private, public, profit, employee, surplus, self-governing, voluntary, and public benefit are all terms whose meanings have changed dramatically. Americans have changed their notions of citizenship and of rights even more dramatically, with profound consequences for nonprofit organizations and the nonprofit sector.
Nonprofit organizations have played key roles in American society, and in the American polity, from quite shortly after the American Revolution. In the past three decades, they have grown to occupy a substantial part of the U.S. economy, accounting by some estimates for as much as 10% of nonagricultural employment and perhaps for 8% or more of the gross domestic product (GDP). Nonprofit organizations provide many of the most distinctive features of life in the United States. It is through self-governing nonprofit organizations that Americans have expressed-and managed-their religious, cultural, and ethnic diversity; the availability of nonprofit organizational forms has been important in limiting religious conflict in American history. It is through self-governing nonprofits-as well as through the powers and initiative of state and local governments-that Americans have developed the competitive variety of their hospitals, research universities and liberal arts colleges, research institutes, think tanks, and cultural and arts organizations. Nonprofit organizations (and the political forces they embody) have allowed-or forced-the United States to develop its distinctively decentralized delivery of services under an expanded national "welfare" state. Nonprofits have always operated in a market economy, and so they have always been implicated in both the positive and the negative consequences of market-based activity. The ability to participate in and to lead nonprofit organizations was long limited and controlled in ways that reinforced distinctions of race, gender, religion, and national origin and that favored some causes and organizations over others. Yet, women, African Americans, and others have used nonprofit organizations to create alternative power structures and to advance their own ambitions.
American nonprofits reflect many cultural impulses and market conditions, but historical research makes it clear that they have always operated under the control of state laws and state courts. States and the federal courts conferred significant powers on nonprofit corporations from the early 19th century. Until well into the 20th century (and beyond), states also limited the ability to use nonprofit organizations in ways that favored White, Protestant men in the Northeast and upper Midwest, and that disadvantaged women, working people, people of color, and those who lived in the South and Southwest. To maintain slavery and segregation, to implement Protestant values, to sustain traditional gender roles, and to support dominant notions of order, American states and courts limited nonprofit activity. American states have sometimes encouraged their residents to act through associations and cooperatives (themselves closely regulated by state law), but much more often they have channeled their residents into corporations. Subject to very real and continuing legal and legislative constraints, American nonprofits have always lived in markets for fees, donations, and government subsidies-markets that often promote inequality. The recent history of American nonprofit organizations reflects the civil rights movement's expansion of the right to organize and participate in American life; the expansion of federal support for health, education, and welfare activities; and also the increasing wealth of many Americans.
We understand much of this story, but we still have much to explore. Many sources are relevant: state laws, court decisions, legislative debates, writings about the law; actions and records of state regulatory agencies in the fields of education, health, and welfare-and also in many fields of economic activity; actions and records of state and local tax authorities; records of nonprofit organizations, their leaders, and their constituents; and records of formal and informal associations, their leaders, and their members. The following pages will specify some specific historical questions and sources more precisely.
BRITAIN'S NORTH AMERICAN COLONIES: ESTABLISHED CHURCHES CREATED A HOSTILE ENVIRONMENT FOR INDEPENDENT NONPROFIT ORGANIZATIONS AND ASSOCIATIONS
There were very few nonprofit organizations in colonial America-if we define nonprofits in the contemporary U.S. way as independent, self-supporting, self-governing corporations that provide services and do not distribute profits to investors (Salamon, 1999). Nonprofit corporations that put into action First Amendment rights to freedom of belief, speech, and assembly; employ people to provide a variety of religious, educational, and human services; and depend on voluntary contributions as well as earned income and government aid did not appear until after the American Revolution. (For late 20th-century legal definitions, see Simon, 1987; for a provocative discussion of economic factors relevant to nonprofit and cooperative organizations of all kinds, see Hansmann, 1996. For the early decision to limit the rights of workers to organize, see Tomlins, 1993. For further discussion, see Hammack, 1998.)
Precisely because it lacked many organizations that would now be recognized as nonprofits, the experience of Britain's North American colonies is very relevant to several general questions about nonprofit organizations and voluntary action in later periods. What conditions inhibit or encourage the appearance and development of nonprofit organizations? How do legal and constitutional arrangements, as well as mental structures, political cultures, and economic conditions, affect nonprofit and voluntary activity? If conditions in the United States after 1789 encouraged the proliferation of voluntary associations and nonprofit corporations, what was it about colonial conditions that had discouraged them?
A high priority for investigation should surely be placed on studies of the roles of established churches in the American colonies. By later American definitions, nearly all colonial churches and "reform" societies were government agencies more than independent organizations. Indeed, nearly all of Britain's American colonies had tax-supported churches that enjoyed the privileges and carried out the official duties of establishment. Under the Elizabethan Statute of Charitable Uses adopted in 1601 and in force, with minor revisions, throughout the entire colonial period, allegations of wrongdoing (including the use of unacceptable religious forms) were to be investigated by Anglican bishops (for the statute and some discussion, see Hammack, 1998). Although there are notable exceptions, including Carl Bridenbaugh's Mitre and Sceptre (1962), Rhys Isaac's The Transformation of Virginia (1982), Patricia Bonomi's Under the Cope ofHeaven (1986), and Jon Butler's Awash in a Sea ofFaith (1990), historians have paid relatively little attention to the implications of religious establishment for the provision not only of religious services but for education and social care as well. (David D. Hall's excellent essay on "Religion and Society" in the history of Colonial America [1984], for example, brilliantly surveys three or four generations of historical scholarship but pays almost no attention at all to the control of church and school facilities and personnel.) Religious establishment developed slowly in 17th-century Virginia and Maryland, but in the direction of English models (Horn, 1994). Established churches provided most religious services offered in the colonies. Often neglected is the fact that established churches, their ministers, their ministers' wives, their colleges, and their missionary efforts also provided many other services. These included nearly all of the formal education (Calam, 1971; Thompson, 1951), most of the libraries (Thompson, 1954), most of the efforts to "reform" personal behavior, and, following British examples (Slack, 1988), some of the most important efforts to aid the poor in the colonies (Bahlman, 1957; Bonomi, 1986; Thompson, 1951; Wright, 1993).
In England, Scotland, and Wales-though not in Ireland-the Toleration Act of 1690 did diminish somewhat the position of the established Church by allowing Protestant dissenters (but not Quakers, Catholics, Jews, or Unitarians) to worship in their own ways-though it required those who wished to hold political office to accept the practices (if not the ideas) of the Church of England. Britain also required frequent use of religious oaths, offensive to Quakers and some dissenters, in legal proceedings (Tully, 1994).
In an influential publication of 50 years ago, Richard Hooker suggested that Charles Woodmason's vivid account of his misfortunes as a minister in the Carolina backcountry demonstrated the laughable futility of Anglican efforts as late as the 1760s (Hooker, 1953), and this view has been widely influential (Isaac, 1982; Levy, 1999). But Jon Butler and some other scholars have disagreed. In Virginia and Maryland, they argue, the Church of England had by the 1730s or so gone far toward making itself an effective established church, with reliable clergy, effective regional supervision by "commisaries" in the absence of a bishop, and a significant focus on the College of William and Mary (Butler, 1990; Gundersen, 1989; Isaac, 1973; Seiler, 1949; Van Voorst, 1989; Woolverton, 1984). A case has also been made for Anglican effectiveness in the Carolinas (Bolton, 1982; Woolverton, 1984). In addition to their positive efforts to develop an established Church of England in North America, British officials used their powers to limit alternative religious activity. Despite the Toleration Act, British officials in the southern colonies exercised the right to forbid unauthorized persons to preach, and, inconsistently and intermittently, they sought to discourage assembly for religious activities of which they disapproved (T. D. Hall, 1994; Isaac, 1982).
British officials also worked quite effectively to use the Church of England to increase their influence in Pennsylvania and New York, by insisting on Anglican control of King's College in New York and by moving toward Anglican control of the University of Pennsylvania. By denying charters and other privileges, they worked to frustrate the efforts of Presbyterians, Moravians, and others to develop their own institutions (Bonomi, 1971, 1986; Bridenbaugh, 1962; Katz, 1972; Klein, 1963, 1974; Schwartz, 1987; Tully, 1994). Some aspects of the story remain unclear: Although Anglican parish officials controlled the placement of wards and presumably had something to say about their education, Britain allowed the Dutch Reformed and the Jewish communities of 18th-century New York City to maintain their own primary schools (Kaestle, 1973); and the Church of England kept the American colonies under the bishop of London (Cross, 1902). A fresh general look at British efforts to use the Anglican Church as an instrument of control in the middle colonies would be very useful (but see Doll, 2000).
New England is of course a special case. Initially, Puritans who did not draw a clear line between church and state controlled the areas that evolved into Massachusetts, Maine, New Hampshire, and Connecticut. English Puritans supported their efforts in a variety of ways, including the use of a missionary corporation chartered by the Long Parliament during the Puritan Revolution (Kellaway, 1961). Britain reduced Puritan control in New England after the Glorious Revolution of 1688 (Akers, 1964; Haffenden, 1974; Johnson, 1981; Middlekauff, 1971; Murrin, 1983). Anglicans then took a role in the governance of Harvard (M. S. Foster, 1962) and even won over, briefly, the leaders of Yale, and they denied a charter to a Puritan effort to engage the Indians (Bridenbaugh, 1962). In England itself, reforming societies and independent corporations took over from the Church as such many efforts to improve moral behavior (Bahlman, 1957; Jones, 1938; Owen, 1964).
It was under these conditions that Cotton Mather responded in 1710 with Bonifacius: Essays to Do Good, an essay whose call for earnest Protestants to exert influence through the coercion of voluntary and neighborly (and sometimes extralegal) association rather than through legislation, remained influential and in print for nearly 200 years. Jonathan Mayhew famously protested further Anglican efforts to colonize New England in the 1750s and 1760s (Akers, 1964). But it was quite clear to Baptists and other non-Puritans that the Congregational Church retained its own established status. In practice, Congregational churches retained some of the privileges and duties of establishment well after the American Revolution-in Connecticut until 1819, with individual towns in Massachusetts until 1833 (McLoughlin, 1971; Meyer, 1933; Purcell, 1918; Reed, 1914). Roger Finke and Rodney Stark (1992) have argued that the established churches of colonial America discouraged alternative churches while failing to engage even one fifth of the population in religious activities.
Clearly, the topic of establishment has not gone unstudied. Yet, studies of colonial religion have emphasized the relation between religious ideas and the development of notions of national identity and purpose. They have neglected the relation between religious establishment and the actual provision of educational and social services. Studies of colonial politics have neglected Britain's political uses of an established church.
Colonial historians in the past few years have begun to pay more explicit attention to the kinds of questions that we are now asking about nonprofit organizations, voluntary associations, civil society, and related topics. In 18th-century America, as in Great Britain, there were, of course, a rapidly increasing number of independent clubs and mutual benefit associations, but these handled little money and employed very few people (R. D. Brown, 1973; Clark, 2000; Crow, 1952). The realities of religious establishment shaped many of these early associations. In Boston, for example, the earliest mutual benefit associations provided for merchants and seamen who were not part of the settled religious communities of New England's towns-a perspective that invites further study. The Masonic order benefited from the patronage of British aristocrats who were tied to the established Church (Bullock, 1996). As early as the 1690s, Quakers and other dissenting Protestant groups did use associations based in London to press for the uniform implementation of the Toleration Act throughout England, to reduce the arbitrary actions of local Justices of the Peace, and to press for less oppressive legislation (Hunt, 1961). Dissenting Protestant organizations in England supported Puritans in New England as well (Middlekauff, 1971; Tully, 1994). The fact that colonists were able to set up committees of correspondence so quickly in 1774 and 1775-a phenomenon that has, of course, attracted significant historical attention but perhaps deserves more thought from those concerned with nonprofit history-suggests that many colonists were by that time quite able and willing to act independently of the state, in ways characteristically associated with "civil society" (Maier, 1972, 1991; Newcomb, 1995; Wood, 1991).
Some historians have emphasized the history of civil liberties in British and colonial American history, and the general topic of what Leonard Levy recently called the "Origins of the Bill of Rights" (Levy, 1999; Rakove, 1996). Popular writers on nonprofit organizations in the United States still often write as though 11 colonial America was a society in which freedom of expression was cherished," but as Levy wrote 40 years ago, that notion "is an hallucination of sentiment that ignores history" (Levy, 1960). Writing at the end of the McCarthy period, he added that the suppression of ideas imposed by "the traditionally maligned judges" was much less important than "the intolerance of community opinion or the tyranny of governors who, acting in a quasi-judicial capacity with their Councils, were a much more dreaded and active instrument of suppression than the common-law courts" (Levy, 1960, pp. 19-20). Despite the importance of the committees of correspondence, historians have paid much more attention to the colonial suppression of free speech and a free press than to the limited granting of corporate charters (but see Hartog, 1983) or the suppression of free association (Charles E. Rice's very useful Freedom of Association [ 1962], for example, is not nearly so fully developed as several of the contemporary works on speech and the press).
Historians of colonial America have exploited a wide range of sources. Interest in topics concerning the legal, political, religious, and intellectual climate that discouraged or permitted colonial nonprofit activity could direct attention to the following:
* Church of England records in Great Britain, including those of the Bishop of London, whose diocese included the American colonies.
* Records of 18th-century Church of England, Puritan, and Quaker philanthropies and associations concerned with religion, education, libraries, Indians, and related North American matters.
* Records of individual Church of England churches, parishes, and institutions in the United States.
* Records of individual North American churches and schools sponsored by religious communities other than the Church of England; see, notably, M. S. Foster (1962).
* Grants of charters for schools and other institutions in North America, and related records in Great Britain.
* Legal disputes concerning charitable corporations in North America during the colonial period, including cases brought under the Statute of Charitable Uses in North America and also in London, whose bishop had some jurisdiction.
* Legal disputes concerning charitable donations and legacies in North America during the colonial period.
* Writings, unpublished as well as published, of notable colonial leaders, including such anti-Anglican leaders as Massachusetts Puritans Cotton Mather and Jonathan Mahew, and the evangelical Presbyterian sponsors of colonial Pennsylvania's famous "Log College," which could not get a charter. And also the writings of leaders who were not so strongly anti-Anglican, including William Penn, Ben Franklin, and Anglican leaders including later members of the Penn family.
* Evidence of activity by charitable corporations in particular places, such as Carl Kaestle (1973) found in a wide variety of printed sources (newspapers, broadsides, pamphlets) concerning elementary and secondary education in New York City between 1780 and 1860, and as Clement (1985) found for poor relief in Philadelphia between 1800 and 1850. To date, the best studies are for Boston, New York City, and Philadelphia, but we do not have a satisfyingly complete study of charitable corporation activity in any of these cities for the colonial period. In calling for better studies of colonial oligarchies, Alan Tully noted that
at the present time, we simply do not have enough in the way of detailed, regional, socioeconomic studies and biographical data on the large numbers of colonials who participated in the power structures of provincial, county, and township government to make possible any kind of sensitive analysis of the interplay of the personal, social, economic, and political forces underlying the New York and Pennsylvania oligarchies. (Tully, 1994,p.538)
I would note that those who controlled churches, colleges, schools, and charities also held important positions in the colonial "power structure."
* Evidence of associational activity through arrangements other than corporations, informal as well as formal and sustained, in colonial contexts: Concerted and continued lobbying of colonial legislatures as well as in London (see Newcomb, 1995; Sosin, 1965); records of any kind relating to the Log College and similar enterprises; letters, diary entries, court records, and other records of the associational activities of women (see, e.g., Kierner, 1998).
REVOLUTION AND NEW REPUBLIC: CREATING A BENIGN ENVIRONMENT FOR NONPROFIT ORGANIZATIONS
Nonprofit organizations and voluntary associations proliferated in the aftermath of the American Revolution (R. D. Brown, 1973). Why did that happen? The fact that nonprofits proliferated only after about 1790 argues against some mid-20th-century arguments that still resonate in the popular press: something about the "American Character"or about the influence of the frontier as conceptualized by Frederick Jackson Turner (Curti, 1958; Schlesinger, 1944; and especially Boorstin, 1963); perhaps something about the effect of Enlightenment ideas (Crow, 1952; Schlesinger, 1944). Brown's dating suggested a wide variety of other factors, including characteristics of the U.S. Constitution (Curti, 1958; Schlesinger, 1944); religious enthusiasm associated with the "Second Great Awakening" (R. D. Brown, 1973; C. I. Foster, 1960); the growth of cities, increasing population density, increasing literacy in the last third of the 18th century (R. D. Brown, 1973), and the policies of the United States Postal Service (John, 1995; Skocpol & Fiorina, 1999). Wright (1993) suggested that after 1790, New England evangelicals gave up the effort to create small, closed, perfected communities in favor of more narrowly targeted reform and service-provision efforts. Recent studies of the American Revolution and the early republic emphasize constitutional the arrangements that made it difficult for states as well as the federal government to levy taxes and expand programs (Bailyn, 1967, 1968, 1990; Curti, 1958; Wood, 1991).
I have put particular emphasis on constitutional and legal rules that shaped institutions-the separation of church and state, increased individual rights for White, male U.S. citizens, state constitutional arrangements that made it difficult to raise taxes, court protections of property rights for nonprofit corporations-rather than on changing religious or other philanthropic motives (Hammack, 1998). The separation of church and state at the American Revolution had a larger effect than historians have previously acknowledged; this effect deserves more attention. Where the Church of England had been (more or less) established-that is, in Georgia, the Carolinas, Virginia, Maryland, Delaware, and New York-churches lost tax support with the Revolution (Pratt, 1967, noted the debate over the extent and nature of establishment in colonial New York, p. 103; Buckley, 1977, detailed the debate over the fate of the Church of England's extensive properties in Virginia). Independence and disestablishment also cost churches, schools, and libraries access to English philanthropies (Calam, 1971; Thompson, 1951, 1954). Disestablishment came later in Puritan, Congregationalist, and Unitarian New England-not until 1817 in Connecticut, and 1833 in Massachusetts (Hanson, 1998; Meyer, 1930; Purcell, 1918). But the Constitutional separation of church and state at the federal level removed the possibility of imposing "God's will" on the nation as a whole; increasing pressure for states to follow suit surely encouraged New England evangelicals to refocus their efforts.
With disestablishment and with the effect of the U.S. Constitution and of the state constitutions that mostly followed its central features, both national and state governments (including Massachusetts and Connecticut) adopted institutions that made it more difficult than it had been under British rule to impose taxes and to subsidize institutions of all kinds (Bailyn, 1990; Wood, 1991). Throughout the new republic, not only churches but also schools, libraries, orphanages, homes for the elderly, and clinics were all forced to seek nongovernmental private sponsorship, to raise their fees, to request state permission for lotteries (Swift, 1911), and to look increasingly to private donations and alternative sources of funds. In this way, it seems to me, Constitutional change accounts both for a new demand for nonprofit organizations (or of a means of some sort to provide essential educational, cultural, social, health care, and religious services) and a new supply of nonprofit organizations. In the Dartmouth College Case and other actions, U.S. federal courts reinforced the shift to independent, self-financing nonprofit corporations by discerning and protecting property rights on the part of nonprofit trustees (P. D. Hall, 1987, 1992; Hammack, 1998). Constitutional change itself was no doubt the product of ideas as well as political action-and, perhaps, inertia-but we should, I think, start our analysis of the expansion of nonprofit and associational activity after 1789 by examining Constitutional and legal changes rather than other possible factors.
The American Revolution eventuated in a legal environment that proved remarkably favorable to the creation of corporations and voluntary associations. Historians of the American Revolution in the past generation and a half have emphasized the effect of "republican" ideals on the Revolutionary generation and on political culture in the United States in general but have paid little attention to any ideas "republicans" may have held about corporations. The French Revolution also drew on republican ideals, and in France, notions of republican virtue and civic unity seem to have been compatible with long-lasting opposition to autonomous corporations or associations (Higgonet, 1988, discussed the effect of republican ideas on Revolutionary France and America but ignored corporations and associations; Archambault, 2001, raised the topic). Is this contrast the consequence of very different notions of "republicanism" or the accidental result of bitter fights over the roles of monarchy and the Catholic Church in France?
Whatever the answer to that question, some legal scholars and historians emphasize the important point that the contrast is often overdrawn and that for decades, perhaps a century or more, American corporations were much more subject to regulation under legislative "police powers" than has often been asserted (P. D. Hall, 1992; Hartog, 1983; Horwitz, 1977; Novak, 1996; Roy, 1997). Nor did the Dartmouth College decision limit the ability of state legislatures to insist that new corporate charters include a clause permitting the legislature to alter terms in the future. Yet, it remains true that a corporate charter conferred very valuable powers and immunities and that these powers increased over time in such areas as the ability to accept and use voluntary gifts from living donors and from legacies (H. S. Miller, 1961). Legislatures rarely changed terms retroactively, and for White, Protestant (and Jewish) men and some womenand even for Catholics-it became very much easier to obtain a charter after the earliest years of the republic than it had ever been under British rule.
Historians of the American Revolution and the early republic have exploited many sources. Interest in topics concerning the constitutional context and in the legal, political, religious, and intellectual climate that encouraged an expansion of nonprofit and associational activity after the adoption of the Constitution might direct attention to the following:
* Debates within individual states over the disestablishment of the Anglican Church and over the implications of disestablishment for education, health care, social services, and cultural activities generally in the states where the Anglican church had been established. There is a good study of debates over disestablishment in Virginia (Buckley, 1977), but so far as I know, no comparable study of New York (Pratt, 1967, is a good start), Maryland, or the Carolinas. Some relevant records and debates may well be located in Church of England depositories in London.
* Debates over the relation between church and state in New England and over ways to support the schools, libraries, and social services previously maintained by churches. There are some good studies of these matters (McLoughlin, 1971; Meyer, 1930; Purcell, 1918; Reed, 1914), but none from the perspective of the nonprofit sector as it has developed since 1970.
* Records of late 18th- and early 19th-century religious associations and denominations in the United States and of their supporters. Several of the most celebrated books on these activities of the past 50 years emphasized efforts to advance narrow, even bigoted Protestant agendas, or to establish "social control" by some groups of Protestants over other Protestants, Catholics, the "unchurched," and others (Billington, 1938; Griffin, 1960). These criticisms are well-taken yet may well not capture the entire set of concerns that motivated many Protestants (see, for example, Smith-Rosenberg, 1971, on New York City after 1812).
* Debates over the role of the states, state legislative, and state and federal court actions concerning the chartering and regulation of charitable or eleemosynary corporations and associations. As a recent historian of law and regulation in 19thcentury America pointed out, the "public regulatory history" of "corporate law ... has yet to find [its] historian" (Novak, 1996, p. 105). This is certainly true of the history of the law of the eleemosynary, nonprofit corporation.
GROWTH OF NONPROFIT ORGANIZATIONS AND OF THE NONPROFIT SECTOR TO 1900
There were (by definitions accepted since the 1960s) almost no nonprofit organizations in the United States in 1800; by 1900, nonprofits that fit current definitions accounted for about 1 % of nonagricultural employment. How much, exactly, did the various components of the nonprofit sector grow in the 19th century? What factors encouraged growth? What factors limited the growth of nonprofit organizations and associations? What difference did nonprofit organizations make in this period?
In the past 10 years, we have begun to learn something about the size and growth of the nonprofit sector over the course of the 19th century. Churches became increasingly significant as factors in American life over the course of the 19th century, and most nonprofit activity took place within religious contexts. Roger Finke and Rodney Stark argued that Americans increased their affiliation with organized religion quite steadily over the course of the century. Standardizing "membership" figures on the basis of churches that count children as members, they estimate that 17% of U.S. residents actively adhered to a religious denomination at the time of the Revolution, 34% by 1850, 45% by 1890, and 51% by 1906 (Finke & Stark, 1992, p. 16, who dispute the much higher estimates of Bonomi, 1982, 1986). Data collected for the forthcoming Millennial Edition of Historical Statistics of the United States (in press) indicate that the number of people per church building in the United States declined from 610 in 1850 to 443 in 1906. Similarly, the number of people per clergyman declined from 859 in 1850 to 562 in 1890 before growing again to 679 in 1900 and then, under the press of immigration from 1910 to 1930, to about 800 (Burke, 2001). Contemporary accounts celebrating the development of Protestant Churchbased nonprofits (and, later, of Catholic institutions) reinforce the impression of significant growth in the 19th century (Baird, 1844; Oates, 1995).
Throughout the 19th century, religious institutions and private schools, usually operating under religious sponsorship and often led by clergymen, were by far the biggest nonprofit employers (Kaestle, 1973, 1983). Historical Statistics of the United States (1975) data indicate that clergy and religious women accounted for about 0.57% of the U.S. labor force in 1900. Teachers accounted for about 1.5% of the labor force. If nonpublic schools (which in 1890 taught about 11% and in 1900 about 8% of all elementary and secondary students) maintained the same student/teacher ratios as public schools, they employed about 0.12% of the labor force in 1900-and most nonpublic schools were sponsored by religious groups (Hammack, 2001).
Adding the employees of private nonprofit colleges, orphanages, old age homes, publishing houses, libraries, museums, and other nonprofit organizations would be unlikely to bring the total above I% of the labor force. (The U.S. Census counted 436,000 elementary and secondary school teachers in 1900 but only 12,000 nurses and 7,000 college and university teachers, deans, and presidents.) Colleges, hospitals, museums, and other nonprofit institutions were neither numerous nor large by 1900. One respected source counted only 178 hospitals in the entire United States in 1873, though it found the number growing very rapidly indeed shortly thereafter, rising to 4,359 in 1909 (Corwin, 1946, cited in Stevens, 1998). Hospitals remained small until after the turn of the century (Rosenberg, 1987; Rosner, 1982). Private, nonprofit museums did not appear until 1870 (before that date, courts might well have denied that a display of art was a "charitable purpose"; to protect their charitable status, it seems likely, American museums always stressed their educational aims). Clergymen and teachers were not highly paid, but their earnings compared well with those of ordinary farmers. Finke and Stark (1992) provided 1906 salary averages for the clergy of several denominations, ranging from $536 for southern Baptists and $703 for Catholics, to more than $1,200 for Episcopalians, and more than $1,600 for Unitarians (p. 156). Teachers' incomes were at the lower end of this range. Average income of city wage- and clerical-worker families in 1901 was $651; the average farm-which relied on the labor of several members of a family-earned $625 in 1910 and $525 in 1911 (Historical Statistics of the United States, 1975, pp. 322, 483).
Most 19th-century private giving went to pay for the services of religious workers, missionaries, and teachers (recent estimates suggest that about 45% of private gifts still go to religious organizations; Burke, 2000). Religious charities developed remarkable methods for encouraging gifts and managing funds, sometimes pioneering marketing techniques for business firms (C. I. Foster, 1960; Wosh, 1994; Wyatt-Brown, 1969). To date, we do not seem to have good estimates for the total amounts they received. Colleges also invented exceptional methods to secure support. According to the U.S. Census of 1850, nearly 24% of college income came from endowments (among many relevant works see, e.g., Green, 1979; P. D. Hall, 1982; S. E. Harris, 1970; McPherson, 1975).
Not all private giving went to churches, schools, and other nonprofit organizations-some of it has always gone to governments (most notably, perhaps, to the Smithsonian Institution (Hellman, 1978; Oehser, 1983; True, 1946) and to the United States Sanitary Commission for the health care of soldiers in the Union Army during the Civil War [Attie, 1998; Frederickson, 1965; Giesberg, 2000]). Significant private giving went to public schools. Some donations went directly to individuals in need; some to scholars and artists through patronage. (The most general account of private giving is still Bremner, 1960, 1988.) Churches and other private charities did provide measurable if meager charitable aid to the poor and distressed (often in the form of emergency supplies of food, fuel, and clothing, as well as tracts and bibles), adding to their total contribution to the nonprofit economy. Much of this went through orphanages, which in 1910 received about one third of their incomes from donations, according to an exceptionally extensive survey conducted by the U.S. Census (Hacsi, 1997). Some popular accounts suggest that voluntary donations played the leading role in relieving poverty in the 19th century (Olasky, 1992; Trattner, 1974), but the best documentation suggests that voluntary donations for the relief of poverty amounted at most to 0.22% of gross national product (GNP) in 1913-when perhaps 30% of the U.S. population was deeply impoverished (Patterson, 1994, p. 25). Some of these funds may well have come initially from government sources.
The earliest estimate of total private giving that we do have for 1922 amounted only to 0.6% of the estimate for GNP for that year. The actual proportion may have been closer to the 1 % reported for 1930, which is in turn the lowest of estimates for all later years (Historical Statistics of the United States: Millennial Edition, in press). But the figure of 0.6% of GNP going to charity in the early 1920s is consistent with an estimate that nonprofit organizations employed about 1% of the nonagricultural labor force in 1900.
U.S. nonprofits have never, of course, relied exclusively on private donations. From the beginning of the republic, they have earned more income than they received in gifts (school tuition and fees, hospital fees, library memberships, and so forth). An early historian of academies wrote that their "principal source of revenue" was "tuition fees," which accounted for at least 3 times as much as government payments until the 1870s and continued to exceed government funding in 1890 (G. F. Miller, 1922). Antebellum colleges also depended much more on fees than on donations (Burke, 1982; curiously, most historians of higher education have ignored the topic of funding). Orchestras, operas, and some museums, which received large private donations (DiMaggio, 1986; Fox, 1963; Horowitz, 1976; McCarthy, 1982), also charged admission fees. Hospitals and clinics always charged those who could afford to pay. Fees from parents and other relatives even provided 13% of orphanage income in 1910 and as much as 21 % for Catholic orphanages (Hacsi, 1997). Fees probably accounted for more than one fifth of public school income in 1850 (United States Historical Census Browser, 1998). Clearly, fee income has been much more important than historical studies have suggested, perhaps because so many historians have campaigned to expand the role of public schools and other government agencies or to extol and increase voluntary giving,
Nonprofits have also always received some government subsidies despite the factors that made it difficult to raise taxes. Local and state governments provided considerable income to 19th-century schools and academies (2.8% of income reported to the U.S. Census of 1850; see Jorgenson, 1987; Lannie, 1968; G. F. Miller, 1922); the state of New York provided construction subsidies to many private academies, some of which were sponsored by Catholics, through the middle half of the 19th century (Hough, 1885). No historian of education seems to have pursued the fact that Horace Mann launched his famous campaign for state and local tax support of public schools within a few years of the 1833 ending of tax support for churches in Massachusetts: Notions of "public" and "private," "government," and "nonprofit" changed as state tax support for public schools grew. State and local governments also provided considerable assistance to "private" colleges (10.6%) in the middle of the 19th century. New York State provided founding and operating subsidies from time to time to colleges, both nonsectarian and religiously affiliated (Hough, 1885).
"Private" colleges and universities such as MIT and Cornell also benefited from federal land grants in the 1860s and 1870s. The federal government provided some funds to Gallaudet University in the 19th century (Gallaudet University, 2002), and larger amounts to Protestant organizations that ran schools on Indian reservations (R. H. Keller, 1983). In many states, local governments provided proportionately larger subsidies to orphanages (Hacsi, 1997, p. 103; Warner, 1908) and other social welfare institutions (Katz, 1986). The museums of New York, Boston, Philadelphia, Chicago, and most other cities, which date from 1870 and later, seem to have received half of their early resources (land, buildings, operating subsidies) from local governments (Fox, 1963). No one seems to have worked out estimates for government aid to hospitals and clinics before 1900, though we do know that federal agencies guaranteed hospital care for merchant mariners in the 19th century (Gottlieb, 1991).
We know enough about the relationship between the U.S. federal government, private gifts, and nonprofit organizations in the 19th century to know that the topic calls for more attention. The remarkable use of the "voluntary" United States Sanitary Commission to provide health and welfare services to soldiers in the Union Army and the use of church schools to provide education for Native Americans were noted above. The Union Army itself drew on volunteer military units (Skowronek, 1982). After the war, Congress not only passed "purity" laws advocated by the Society for the Suppression of Vice but gave its leader, Anthony Comstock, a federal appointment as postal inspector, enabling him to shape the federal "obscenity" rules and enforcement procedures that criminalized the distribution of information about birth control and diseases of the reproductive organs (Beisel, 1998; Broun & Leech, 1927).
As Robert Putnam (2000), Theda Skocpol and Morris Fiorina (1999), Skocpol and Ziad Munson (2000), Gerald Gamm and Putnam (2001), and their colleagues have recently emphasized, associations dedicated to a wide variety of purposes flourished in the 19th century (Ferguson, 1937; Gist, 1940). Associations have attracted attention for their contribution to civic life, but in the form of cooperatives, especially cooperative banks and insurance companies, they also provided many practical services (Beito, 2000). Standard and more recent accounts suggest that cooperatives enjoyed at best mixed success in serving their members and customers (Lipson, 1977; M. Keller, 1963; Soyer, 1997), but this topic calls for more attention. At the same time, Amy Gutmann (1998; see also, more generally, Hansmann, 1996) and others have been reminding us that associations can serve evil or doubtful as well as good purposes. American legislatures and courts in the 19th century agreed with this view and took a very active role in regulating associations that threatened local norms, values, and interests. States granted legal status only to some voluntary associations and required associations to follow very precise rules for many purposes (Clemens, 1997, 2000).
When they were allowed to do so, American nonprofits grew larger and more numerous over the course of the 19th century as they found ways to increase their earned, donated, and government income. Yet, states-with the permission and sometimes the instigation of federal legislation and the federal courtslimited nonprofit growth through the 19th century and beyond. To enforce religious, gender, racial, and in some cases class norms, state governments denied charters to many people and limited the range of permissible charitable missions (for a penetrating account of 19th-century limitations on the rights of citizenship in the United States, see Smith, 1997; on the limits imposed on labor, see Tomlins, 1993).
Most Protestants obtained increased rights after the Revolution, though some unusual sects, and Unitarians, did face political resistance. Catholics confronted state incorporation laws and practices that retained the anti-Catholic policies of British and colonial government (Cogliano, 1995; Metzger, 1936). As immigration from German-speaking areas and Ireland, and then from southern Europe, increased Catholic numbers, anti-Catholic restrictions fell. Yet, throughout the 19th century, many states limited the ability of Catholics to obtain the kinds of corporate charters they sought, on the grounds that a corporation controlled by a bishop would be controlled by the Pope (Carey, 1987). Jews, whose practices were more similar to those of Protestants, found many fewer legal impediments to their religious organization in the United States, although they sometimes encountered direct rejection of their practices (Silber, 2001), and until World War II found the courts indifferent to their exclusion from important organizations and associations.
States seem also to have expanded notions of "charitable purpose" over the course of the 19th century. The Elizabethan Statute of Charitable Uses, which influenced most state courts and legislatures until well into the 19th century, did not recognize arts activity as a legitimate object of charity (except insofar as art and music took place within the Church). Early American museums and performing arts organizations seem to have been set up as profit-seeking corporations or as associations (N. Harris, 1966, chap. 10), but the great museums and orchestras founded from 1870 on took the form of nonprofit corporations (DiMaggio, 1986; Fox, 1963). Perhaps it was essential that they be nonprofit if they were to benefit from municipal subsidies, and perhaps their boards emphasized their educational purposes out of fear that the courts would reject their nonprofit status if they emphasized the arts; these topics call for more attention.
States continued to enforce limitations based on race, gender, and class well into the 20th century. Race mattered in the North as well as the South: 19thcentury Connecticut denied a charter to a school for African Americans (Silber, 2001). But big differences in the use of nonprofit corporations did develop between the North and South, and for reasons that have yet to be explored, these differences have persisted. Southern states, citing Jeffersonian dislike of corporate privilege but also very much concerned to limit literacy and the discussion of slavery, granted few charters and insisted (sometimes violently; Carwardine, 1993) that corporations support slavery and, after the Civil War, segregation (Bellows, 1993; Carwardine, 1993; Eaton, 1940; Kuykendall, 1982; Pease & Pease, 1985; Quist, 1998; Silber, 2001; Wade, 1964; Wisner, 1970). During Reconstruction and later, White Southerners used "private" corporations and associations, including religious congregations and Masonic associations, as substitute governments out of the reach of federal military and civilian authorities; Blacks responded with comparable uses of their own segregated organizations (Tripp, 1997). Traditions of governance and attitudes toward education within the dominant religious groups of the South (Heyrman, 1997) probably reinforced these policies of the Southern states.
Women did obtain charters for some charitable organizations, even in the South, early in the 19th century (Lebsock, 1984), but mostly for purposes acceptable to men (Bordin, 1981; Ginzberg, 1990; Kierner, 1998; McCarthy, 1990; McCurry, 1995; Pease & Pease, 1990; Porterfield, 1977; Scott, 1992; Varon, 1998). Working through churches and through formal and informal associations, White women exerted considerable influence on the abolition (Jeffrey, 1998) and temperance movements, as well as on notions of respectability (Parker, 1997). African Americans faced oppressive limitations, even in freedom, after the Civil War as well as before (DuBois, 1907; Montgomery, 1993; Raboteau, 1978).
Altogether, what difference did it make that 19th-century Americans organized so much of their religious, educational, health care, social care, and cultural activity through nonprofit organizations? We have hardly begun to consider this set of questions. Women, African Americans, and members of other disadvantaged groups did make impressive use of nonprofit organizations. But wealthy, White, Protestant men enjoyed very real advantages in establishing and controlling nonprofits. In the slave and then segregated South, White men certainly used private corporations to reinforce their control and effectively limited access to nonprofit charters for those who challenged them. Throughout the nation, labor organizations faced more stringent limitations than did business corporations and associations. Many of us have assumed that in the United States, governments provided less support for educational, health care, and other services than was common in Western Europe. If that were the case-and I know of no rigorous comparative study of the question-reliance on nonprofits probably reinforced two characteristics of the market. Service providers offered as wide a variety of services as people were willing to pay for or to support through contributions-and probably provided somewhat less for the poor than would have been available through government-paid services.
At the same time, nonprofits arguably helped maintain social peace in a diverse and deeply divided nation. Slavery led to civil war; religious and ethnic disputes produced local violence, but that violence was always limited and contained. Protestants did not agree among themselves, and many Protestants disagreed very sharply indeed with Catholics and to a lesser extent with Jews (for a related argument, see Banner, 1973, and Hatch, 1989). Masons and Mormons encountered especially violent opposition. During the 19th century, large-scale immigration, together with the continued expansion of the African American population, gave the United States an exceptionally diverse population in terms of religious and ethnic identity.
Historians now generally agree that the great divisions in American society fall along the lines of race, class, and gender, not religion and ethnicity. We should explore the ways that nonprofit organizations and the rules governing them reinforced these great divisions. We should also explore the hypothesis that nonprofit corporations channeled many religious and ethnic conflicts away from violence and into efforts to build institutions. The American nonprofit sector made possible the creation of a wide variety of sectarian institutions, but it also forced those institutions to prove themselves capable of attracting enough donors and paying clients to survive.
Historians of the United States in the 19th century have exploited many sources. The study of the expansion of nonprofit and associational activity-and of its limitations and achievements-might direct attention to the following:
* Debates, legislation, and court decisions concerning the regulation of charitable, nonprofit corporations and voluntary associations within the several states, including attention to key cases and the works of law writers. We know less about Southern and Western states than about those in the Northeast.
* Debates, legislation, and court decisions concerning the provision of elementary, secondary, and higher education in the states, including attention to the definition and regulation of the institutions (corporations, associations, towns, school districts, individual proprietors, and partnerships) that controlled schools, as well as to questions of tax exemption and tax subsidy. Again, we know less about Southern and Western states than about those in the Northeast.
* Debates, legislation, and court decisions concerning the provision and control of medical and health care services in the states, including attention to the definition and regulation of clinics, hospitals, and other institutions, tax exemption, and tax subsidies.
* Records of the founding, growth, decline, and activities of nonprofits and associations in all fields regulated by state and municipal agencies, including schools and colleges; physical and mental health clinics, hospitals, and asylums; orphanages and foundling homes; and so forth. Several states had important state agencies in these fields; the records of these agencies have not been adequately examined. The first of all these agencies, and one of the best documented, is the University of the State of New York, founded in the immediate aftermath of the American Revolution; an 1885 account listed all colleges and academies chartered by the university and by the state legislature to that date (Hough, 1885).
* The oldest of the notable state agencies concerned with social welfare institutions appeared in Massachusetts at the end of the Civil War (Board of State Charities, 1864-1878; Board of Lunacy and Charity, 1886-1898; Board of Charity, 18991919); New York followed (Board of State Commissioners of Public Charities, 1867-1872; State Board of Charities, 1873-1929). Other notable late- 19th-century state agencies in the field concentrated in the Northeast-Rhode Island (Board of State Charities and Corrections, 1869-1915); Pennsylvania (Board of Public Charities, 1876-1917)-and in the Midwest-Ohio (Board of State Charities, 1868-1921; Ohio Welfare Conference, 1896-1922); Illinois (Board of State Commissioners of Public Charities, 1870-1909; Board of Administration, 1910-1916); Wisconsin (State Board of Charities and Reform, 1871-1890; State Board of Supervision of Wisconsin Charitable, Reformatory, and Penal Institutions. 18811890; Board of Control, 1891-1936); Michigan (Board of State Commissioners for the General Supervision of Charitable, Penal, Pauper, and Reformatory Institutions, 1873-1879; State Board of Corrections and Charities, 1879-1920); Minnesota (State Board of Corrections and Charities, 1884-1900; State Board of Control, 1900-1938); Indiana (Board of State Charities, 1889-1943). An exception to the generally slow creation of states welfare agencies in the South was North Carolina (Board of Public Charities, 1870-1916; State Board of Charities and Public Welfare, 1918-1944). These agencies usually focused on institutions run by their states but included reports on private institutions as well.
* A thorough analysis of U.S. Census, U.S. Office of Education, and other records concerning schools, "benevolent institutions," churches, hospitals, religious workers, teachers, and other organizations and individuals related to nonprofit organizations, gathered by the federal government.
* Debates and records in the federal government relating to federal government relations (including land grants) with individual schools, colleges, and hospitals; concerning the United States Sanitary Commission; concerning schools on Indian reservations; concerning the "Comstock Laws"; and other matters. Also, Congressional and banking investigations into and discussions of approaches to the regulation of nonprofit, mutual-benefit savings banks and insurance companies.
* Records of individual nonprofit organizations and voluntary associations, including especially those of the Presbyterian, Episcopalian, and other Protestant denominations that sponsored and worked to coordinate significant numbers of schools, colleges, hospitals, and institutions for orphans and the elderly. Some of the most notable and thorough late- 19th-century studies appeared in publications of such private advocacy groups as the New York State Charities Aid Association (initially, a private agency for the inspection of public institutions, 1873-1966); the State Charities Aid Association of New Jersey (1887-1914); the Charity Organization Society of Baltimore City (Annual Report, 1880-1907). Protestant and nonsectarian charities in several cities produced substantial annual directories after about 1880: New York Charities Directory, 1883-1920; The Brooklyn Charities Record and Directory, 1878; A Directory of the Charitable and Beneficent Organizations of Boston, 1880-1952; and A Directory of the Charitable, Social Improvement, Educational and Religious Associations and Churches of Philadelphia, 1895-1903. The American Social Science Association and then the National Conference of Charities and Correction (1903-1912) also gave hearings to substantial discussions. W.E.B. DuBois and later scholars have demonstrated the value of the records of African American denominations, organizations, and their national donors, including several of the earliest foundations, but more records remain to be identified and interpreted.
* Special attention should be accorded to the Catholic and Jewish organizations that were often excluded from the listings produced by Protestant federations, and also to organizations sponsored by the relatively little-studied Southern Baptists, Southern Methodists, and churches in the denominations of the Stone-Campbell tradition. Attention should also go to organizations and individuals that fostered cooperation among the different faith traditions and that fostered the growth of more universal alternatives.
TRANSFORMATION AND GROWTH OF THE NONPROFIT SECTOR, 1900 TO 1960
Between 1900 and 1960, nonprofit organizations grew somewhat more rapidly than in the 19th century, to perhaps 3.7% of the U.S. labor force, or perhaps 2% of the GDP (author's calculations from Council of Economic Advisors, 1999; Historical Statistics of the United States: Millennial Edition, in press; Independent Sector, 2000; Statistical Abstract of the United States, 2002). Established legal and administrative rules and practices-the relative simplicity of the rules for establishing nonprofit corporations, the powers accorded nonprofit boards-continued to encourage the growth of nonprofits. Increasing use of what Ellis W. Hawley (1974, 1995) named the "associative state" actually increased the importance and power of nonprofit corporations as American govements struggled to reconcile long-standing opposition to government action with the needs of modern society (Karl & Katz, 1981). Some key policy compromises, especially with Catholics during the Great Depression and World War II, allowed faster growth. Nonprofits seem to have raised much more in private donations and in fees after the 1920s, due in part to the triumph of the nonsectarian, scientifically based research university and medical center. At the same time, Catholics, Southern Protestants, and others significantly increased both their gifts and their purchases of services from nonprofits.
Most striking, perhaps, was the rise of the nonsectarian, scientifically based, voluntary medical center and hospital. Many American hospitals had always been sponsored by private, nonprofit organizations, usually out of religious and community motives. Hospitals expanded rapidly once they were able to help many patients: Nurses, for example, constituted only 0.04% of the U.S. labor force in 1900, but 0.36% in 1920, 0.68% in 1940, and 0.93% in 1960. Gifts by individuals and foundations played a key role in the early phases of this expansion (burden, 1998; Gates, 1911; Gottlieb, 1991; Harvey & Abrams, 1986; Stevens, 1971, 1998; Wheatley, 1988). After World War II, federal policy supported the expansion by granting tax subsidies to employer-paid hospitalization insurance (Cunningham & Cunningham, 1997) and by providing construction funds to nonprofit "community" hospitals under the 1946 Hill-Burton Act (Lave & Lave, 1974; Stevens, 1998). Nonprofit hospitals provided about 32% of hospital beds in 1923, 25% in 1940 and 1950, and 30% in 1960 (Historical Statistics of the United States: Millennial Edition, in press).
The fact that most American colleges and universities were organized as private, nonprofit corporations rather than as the agencies of a single national government allowed them considerable flexibility in response to the major intellectual challenges posed by the rise of science. Although these challenges dated from earlier in the 19th century (Turner, 1985), religious commitment had shaped nearly all private higher education through the 19th century. As late as the 1880s and 1890s, most college-educated leaders in education, the social services, mental health, corrections, and related fields had, it appears, graduated from colleges in which Protestant values still dominated (Haskell, 1977). Responding to pressure from students, donors, and funders, many colleges and universities changed quite quickly after 1900, and by the 1930s, most of the modem research universities had appeared (Curti & Nash, 1965; Geiger, 1986; Jencks & Riesman, 1968; Kohler, 1991; Rudolph, 1962; Veysey, 1965). The mid-20th-century expansion of nonprofit colleges and universities was also due, in part, to the small flow of federal funds through the National Institutes of Health in the 1930s and 1940s, and to the greatly increasing flow after World War II through the National Science Foundation, the GI Bill, and the National Defense Education Act (Geiger, 1986; Harden, 1986; D.R.B. Ross, 1969).
The traditional Protestant denominations struggled after the turn of the century (Ronsvalle & Ronsvalle, 1968) but the expenditures of private, nonprofit colleges and universities rose slowly, from 0.33% of GDP in 1929 to 0.46% in 1949, then more rapidly to 0.64% in 1959 (Historical Statistics of the United States: Millennial Edition, in press). Altogether, according to the best estimates, private gifts rose from about 1.06% of GDP in 1930 to 1.24% in 1940, 1.48% in 1950, and 2.1% in 1960 (Historical Statistics of the United States: Millennial Edition, in press). Some of these new funds were raised through new nonsectarian efforts that built on the innovations of 19th-century denominational and interdenominational fund-raising techniques to create the community chest (Brilliant, 1990; B. Ross, 1989; Seeley, et al., 1957), the community foundation (Hammack, 1989), the March of Dimes (Sills, 1957), and other efforts.
Also contributing to the growth of America's nonprofit sector in the first 60 years of the 20th century was a slow expansion in the right of Catholics and some others to organize and run their own institutions (Carey, 1987). Nonpublicnotably Catholic-schools retained their 8% share of elementary and secondary enrollments from 1900 to 1920, then (in the face of sometimes bitter and determined opposition to their right to exist; Jorgenson, 1987; Tyack, James, & Benoit, 1987) increased more rapidly than public schools, especially after World War II, until they accounted for more than 13% of national school enrollment in 1960. For Catholic schools, it appears, the time of greatest expansion came in the 15 or 20 years after World War II (Oates, 1995; Sanders, 1977).
Nonprofit organizations played increasing roles in governing the United States in the 20th century, and this fact no doubt attracted many of their supporters. Private research universities set national models and standards through their commitment to research, especially scientific research. Through the Teachers' Insurance and Annuity Association, the College Board, and the Educational Testing Service, their leaders also shaped the development of other colleges and of secondary schools as well (Lagemann, 1983, 1989). Through their roles in setting professional, engineering, health care, and other standards, nonprofit organizations played important roles in governing other aspects of American life as well, in ways we have not yet explored. As they became more influential, foundations and other nonprofits have attracted some criticism, especially on the grounds that they are elitist, racist, regionally biased, and sexist (J. Anderson, 1988; Arnove, 1980; Gaul & Borowski, 1993; Lemann, 1999; Lindeman, 1936). They have also attracted mixed praise for their ability to counter parochialism and racism (E. A. Anderson & Moss, 1999; Lagemann, 1983, 1989, 1999).
Several factors continued to limit the growth of the nonprofit sector before the 1960s. New Deal programs were designed to get aid and employment directly to citizens through government agencies; Harry Hopkins, the New Deal's chief relief administrator, declared that no New Deal funds would go to private welfare agencies. In Cleveland, Ohio, and elsewhere, the entire staff of the leading private welfare agency moved to become part of the county government as a result (D. M. Brown & McKeown, 1997; Waite, 1960). Government subsidies (nearly all from local and state governments, with the exception of GI Bill college tuition support, Hill-Burton hospital construction funds, and science research grants) remained small. Most people's incomes were low-too low to allow them to pay for private schools, for private hospital rooms and elective surgery, for tickets to the opera. Also important and usually overlooked, many Americans were not allowed to establish nonprofit corporations to provide services that they thought important.
Long-standing prejudices and restrictive traditions still, as late as the early 1960s, made it difficult or impossible for many people to organize a nonprofit. In New York, Pennsylvania, and other states, judges had the power to grant or deny nonprofit charters. New York State judges had-and used-the power to deny nonprofit charters as they saw fit. Sometimes they denied a charter merely because they disliked a proposed name or thought another organization had already claimed a field of activity. Other times, they disapproved of the religious practices of the applicants. 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 Alabama, the state required nonprofits to submit lists of members annually to local officials. When the U.S. Supreme Court disallowed that practice, Arkansas required all employees of state and local government to submit annually a list of the nonprofit organizations they belonged to. State imposition of "public purpose" tests in the service of narrow purposes were not limited to the segregated South. In the 1950s, California tax assessors sought to impose "loyalty" tests on churches that sought tax exemption (Silber, 2001). African Americans organized many nonprofits but struggled under oppressive political and financial constraints (J. Anderson, 1988; DuBois, 1907; Gamble, 1995). Women had organized some important nonprofits in the 19th century, had won the vote in 1920, and had overcome many traditional civil disabilities, but they still lacked substantial control over resources (McCarthy, 1990; Scott, 1992). By 1900, there was one woman's organization for every 4,000 or so people in the United States, but that ratio did not change over the next 40 years (Burke, 2001).
My own preliminary estimate is that the expenditures of nonprofit organizations in Cuyahoga County, Ohio-Cleveland-equalled about 3.2% of the county's salaries and wages in 1930, about 3.6% in 1960. (This estimate is based on annual reports and local surveys of the area's largest nonprofit organizations and on local estimates of salaries and wages; Hammack, 1993.) Nationally, nonprofit expenditures accounted for about 1.6% of all salaries and wages in 1930, 1.5% in 1940, 2.5% in 1950, and 3.4% in 1960 (author's calculations from Council of Economic Advisors, 1999; Historical Statistics oj' the United States: Millennial Edition, in press).
Overall, the nonprofits of the 1960s continued to have effects similar to those noted for the 19th century. They served the wealthy and the well-established, organized Protestants, Catholics, and Jews, and men, much better than they served the poor, people of color, and women (Perelmann, 1988). Through foundations, research universities, and medical centers, progressive business and professional leaders did find ways to address national problems that American legislatures refused to acknowledge before World War II (Karl & Katz, 1981)though in a context dominated by Northern, White (and Protestant?) men. They also varied in their significance from one part of the United States to another, playing the most important roles in the Northeast and Great Lakes states. Private colleges and some other institutions did play a significant regional role in the South, where public institutions lagged, but with very few exceptions they remained smaller than their Northeastern counterparts.
Many sources are relevant to the development and growth of nonprofit organizations in the United States in the first two thirds of the 20th century. The questions raised here might direct attention to the following:
* If it is true that private donations account for a large, or the largest portion, of the growth of the nonprofit sector between 1900 and 1960, we might well give more serious attention to the history of fund-raising in that period. This was an extraordinary period in the development of "nonsectarian" fund-raising efforts, some under broadly Protestant auspices in a tradition that dated to the early 19th century (the YMCA, for example, the Salvation Army), some more inclusive of Jews and Catholics (the community chest, community foundations), some oriented more specifically to science and the humane relief of suffering (predecessors of the American Lung Association, the March of Dimes). This was also the period of the creation of professional fund-raising firms. We do not really know for certain that private giving increased, or, if it did, whether the efforts described here account for the growth of private giving in general. Sources would include records of the relevant fund-raising organizations and of nonprofit organizations.
* If much of the growth of nonprofit organizations after 1930 was supported by federal funds, we might pay a good deal more attention to the development of federal policy relating to the support of scientific and medical and defense research, education, and health care. If some senior New Deal administrators, notably Harry Hopkins, sought to restrict government funding to services provided by public agencies, how much success did they have, who opposed them, and how did the debate over federal support of "public" and "private" agencies evolve? Sources would include papers of policy makers, federal agencies, and records of court cases.
* If much of the expansion of nonprofit health care is the result of Hill-Burton funding for "community hospitals" and of federal policy decisions that gave favored tax treatment to Blue Cross and similar health insurance programs, how did those policies evolve? Was their impact on nonprofit organizations anticipated and encouraged, or incidental, or accidental? Sources would include papers of members of Congress and others who shaped Hill-Burton and health insurance legislation.
* I have had some success developing estimates of the income by source and total expenditures of nonprofit organizations in Cleveland/Cuyahoga County, Ohio, by consulting records of the community chest and similar fund-raising agencies, of welfare councils and similar monitoring organizations, reports of the American Hospital Association (AHA), annual reports of private colleges and universities in the region, state estimates of total wage and salary income in the county from the 1920s and later, and so forth. AHA reports have become less available in the past few years, I understand. But if such sources could be found for several other large metropolitan areas in other parts of the United States, we would have a valuable way to check my estimates for Cleveland and to improve national estimates of the size of the nonprofit sector and its major subsectors from time to time and place to place.
* The data noted above raise some questions about other matters: What happened to the movement to create and expand women's organizations after 1900? What happened to fund-raising for Protestants other than those in the "mainstream" denominations?
* The complete study of Catholic fund-raising and institutional development seems not yet to have been carried out.
THE EXPANDING NONPROFIT SECTOR SINCE 1960
Nonprofits were clearly growing in the years after World War II, as direct and indirect federal subsidies and increased private affluence paid for more and more nonprofit services. But the rate of growth in the nonprofit share of salaries and wages slowed sharply, from 70% in the 1940s to 37% in the 1950s to 9% in the 1960s. Then it shifted sharply upward. Nonprofit expenditures as a share of U.S. wages and salaries increased by 36% in the 1970s, then doubled between 1980 and the mid- 1990s. In the year 2000, nonprofit organizations accounted for as much as 10% of U.S. employment and perhaps for 8% of the domestic economy as a whole. In Cleveland/Cuyahoga County, my preliminary estimate is that nonprofits accounted for as much as 12% or more of salaries and wages by 1990. Nationally, there had been one formal nonprofit organization for every 1,790 people in 1900, and one for every 2,590 in 1940. But there was one for every 848 people in 1970, and one for every 423 in 1990.
I have argued that three factors account for the relative expansion of the nonprofit sector since 1960: the steadily increasing affluence of the American people, the Great Society programs launched under President Lyndon B. Johnson, and the civil rights movement (Hammack, 2001).
Private charitable giving and volunteering seem to have accounted for a substantial share of nonprofit activity through the 1950s but do not account for the growth of the nonprofit sector. According to the best estimates, total private giving stabilized at 2% of GDP after 1960, falling perhaps to 1.75% in 1980 before rebounding to about 1.95% in the 1990s. Private gifts continued to go to individuals and governments, and abroad, as well as to nonprofits. Private gifts continued to support building campaigns and endowments more than immediate program expenses (for a pioneering study of regional variation in giving, see Wolpert, 1993). But because private giving did not increase as a share of the economy, it cannot account for the growth of nonprofit organizations as a share of the national economy. Nonprofit managers continue to complain about a "crisis" in finding volunteers; one measure of the problem is the decline in the total number of Catholic religious women-nuns-in the United States, from an alltime high of 163,000 in 1960 to about 85,000 in 1998. (Historical Statistics of the United States: Millennial Edition, in press; for other estimates of the growth of the nonprofit sector, see Weisbrod, 1988).
Increasing American affluence is certainly one key explanation of the nonprofit expansion. An increasingly wealthy American population buys more nonprofit services than ever; revenues from fees and charges now account for about half of all nonprofit income (Historical Statistics of the United States: Millennial Edition, in press). This point is usually glossed over in discussions of the nonprofit sector, but it is of great importance. Average per capita incomes in the United States, calculated in 1983 dollars, more than doubled from $6,231 in 1945 to $14,138 in 1990. As Americans became wealthier, they bought more services of all kinds. Americans more than quadrupled their spending on services between 1945 and 1990, from less than $125 billion in 1983 dollars to considerably more than $600 billion. As a result, the share of the growing GDP devoted to services in the United States more than doubled, from just over 8% in 1950 to nearly 20% in 1990. Nonprofit organizations provide services rather than goods, so it is not surprising that they grew as American demand for services increased.
But if the demand for nonprofit services is just part of the general demand for services, the general growth in services would account only for a doubling of the nonprofit sector. In fact, the nonprofit sector seems to have tripled or more as a share of the American economy between 1945 and 1990. To explain this increase, we have to turn to the impact of the Great Society on the expenditures of the U.S. federal government for health, education, and other programs.
Federal subsidies increased very sharply indeed. Since the early 1980s, nonprofits have derived about one third of their income from the federal government. Most of this federal income comes from Great Society programs first enacted under Lyndon Johnson, then continued, transformed, and expanded under Republicans and Democrats alike. Under President John F. Kennedy in 1962, federal outlays for the purchase of health care, education, research, arts activities, and social services of the kinds offered by nonprofits (as well as by public agencies and some for-profit businesses) amounted to just 0.4% of the GDP. That figure rose to 1.83% in 1970, 2.96% in 1980, 3.53% in 1990, and to 4.44% in 1997 (Budget of the United States Government, Fiscal Year 1999, pp. 50-64; see also Campbell, 1995; Higgs, 1987; Marmor et al., 1990).
The Great Society and the civil rights movement-together with greatly increased affluence-brought what I have called a "quiet revolution" that has transformed the nonprofit sector since the 1960s (Hammack, 2001). The civil rights movement persuaded federal courts to end practices that had denied to so many the right to create nonprofit organizations. Henceforth, the First Amendment rights to publish, to petition, and most important to assemble in stable nonprofit organizations would be more universally applied.
Nonprofit organizations have also played a key role in the politics of the expansion of the roles of the federal government in the United States. Once the nation decided to insist on the end of segregation in the late 1960s, Congress agreed to federal funding 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 federal operating agencies-Congress set up most Great Society programs to pay for services that might be provided by private as well as by government agencies. In strong contrast to the New Deal, Great Society programs were not designed only to pay for services provided directly by government agencies and their employees. Following the GI Bill, Hill-Burton Act, and National Science Foundation research grant precedents, many Great Society programs provided funds directly to nonprofit organizations. This arrangement reassured leaders of existing hospitals and colleges, professionals as well as lay people, Protestants as well as Catholics and Jews, that the expansion of federal activity would not threaten but would aid their institutions (but see Commission on Foundations and Private Philosophy, 1970; Commission on Private Philanthropy and Public Needs, 1975; and Brilliant, 1990). This sort of arrangement also allowed federal funds to flow directly to organizations closely related to the civil rights movement, including Head Start programs for preschool children as well as many "War on Poverty" and "Model Cities" organizations designed to encourage civic participation and the "empowerment" of the poor and of people of color.
Change did not stop in the late 1960s. Emboldened by their expanded right to organize as well as to the availability of federal funds, people from every part of the country have indeed organized to provide services they think Americans ought to be able to choose. As we have seen, the number of organizations per capita doubled between 1970 and 1990. Inevitably, controversy has flared over the direct federal funding of nonprofit social service agencies that challenged established social arrangements or sought to put controversial ideas into practice. In response, Congress shifted much federal funding to what might very broadly be called "voucher" programs. Following the examples set by the World War 11 GI Bill, which paid for the college education of veterans at schools, including religious schools, of their choice, the Great Society set up Medicare and college student scholarships and loan programs on similar lines. New York and some other states followed suit. The administration of President Ronald Reagan sought to apply this approach in the welfare field as well, placing more emphasis on food stamps, rent supplements, and even looking for ways to introduce vouchers for job training and counseling. At the same time, of course, the Reagan administration sought to cut back on public housing and on direct operating grants to social service and legal assistance agencies.
The most discussed result has been a sharp retreat from federal funding for "community action" and legal services programs and organizations, a "defunding of the Left." But the whole story is much more complicated. As the fact of increased federal funding-and the results of the 1996 and 1998 U.S. elections-indicates, there has been political support for steady increases in federal funding for many health care, educational, and even social services organizations despite the controversies (Hammack, 1998).
Another result has been the "marketization" of many nonprofit services (Nathan, 1996; Salamon, 1993). By shifting from direct grants to organizations to vouchers and related arrangements, Congress has increased the ability of elderly hospital patients, college students, and others to choose within limits among available organizations. And, of course, the increasing affluence of large parts of the U.S. population has reinforced marketization. Wealthier college students demand and can pay for private rooms, better food, and comprehensive recreational facilities. Better paid professionals resist job offers from cities that lack first-class museums and performing arts centers as well as big-league sports. More and more families can afford health and elderly care services in private facilities and can rely less on the unpaid labor of the women of the family. Nonprofit organizations increasingly compete for customers as well as for donors (Alexander, 1996; Smith & Lipsky, 1993).
The result, arguably, is both greater diversity and greater inequality. The increasing diversity of American nonprofits might divert many potential conflicts into competitive institution building and social peace. It might reinforce and exaggerate group differences and lead to troubling conflict in the future-or it might lead most organizations into the market, where economic pressures might well lead to converging competition for the middle class customer (Verba, Scholzman & Brady, 1995). It would require another article altogether to evaluate the consequences.
[Reference]  »   View reference page with links
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[Author Affiliation]
DAVID C. HAMMACK
Case Western Reserve University

[Author Affiliation]
DAVID C. HAMMACK is Hiram C. Haydn Professor of History and chair of the Graduate Program Committee of the Mandel Center for Nonprofit Organizations at Case Western Reserve University. He was recently elected to the board of Greater Cleveland Community Shares, and he serves on advisory committees to the United Way of Greater Cleveland, the Western Reserve Historical Society, and David Shimotakahara's GroundWorks Dancetheater. While teaching at Princeton, he chaired the Faculty Committee on Undergraduate Admissions and Financial Aid Policy and represented the university at many alumni events; at Case Western Reserve, he has played leading roles in building the Mandel Center and in reviving the College of Arts and Sciences. His most recent book is Making the Nonprofit Sector in the United States: A Reader (1998; paperback edition 2000; honorable mention for the Staley-Robeson-Ryan-St. Lawrence Prize for Research on Fund-Raising and Philanthropy from the National Society of Fundraising Executives, 1999). He is also the author of Power and Society: Greater New York at the Turn of the Century (1982) (nominated for a Pulitzer Prize); coauthor with Stanton Wheeler of Social Science in the Making: Essays on the Russell Sage Foundation (1994), and coeditor, with Dennis R. Young, of Nonprofit Organizations in a Market Economy (1993). His articles and reviews have appeared in The American Historical Review, The Journal of American History, Nonprofit and Voluntary Sector Quarterly, The Journal of Urban History, Urban History/histoire urbaine, The Chronicle of Philanthropy, and other publications.

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