Connecting the current landscape of nonprofits in the US with historyDr. Penna is best known as the author of The Nonprofit Outcomes Toolbox. Bob is particularly interested in bridging the gap between results-based practices native to the corporate world and the nonprofits that could benefit from knowing about and applying those practices. Here, Bob talks to Kathryn Engelhardt-Cronk, co-founder and CEO of MissionBox, about his newly published book, "Braided Threads," a historical overview of the nonprofits and philanthropic culture in the U.S.
You've just published a new book. Can you tell us a bit about it?The name of the book is Braided Threads. Effectively, it is a thematic history of the American nonprofit sector. I set out to trace what I felt were the most important influences upon the sector and the most important developmental jumps in its growth and evolution over time.
What made you write about this topic in particular?
Right now, the U.S. is supporting the biggest, most diverse and best funded nonprofit sector in the world. It is a major force in our economy and employs a significant number of people. Most people can scarcely go a week without coming into contact with at least one nonprofit organization. The sector is literally part of the fabric of American life. And yet, very few people know much about it or where it came from.
As Americans, we tend to have a short view of history, we have a tendency to look at everything through the lens of “now.” But the American nonprofit sector has a very long and rich history that people ought to know about. It is also a quite complex developmental story, which is why I call the book "Braided Threads", because it’s not one line or one constant string of events. Different things happened — some of them having little or no direct relationship to the nonprofit realm — that wove together over time to produce the dynamic arena we know today as “the nonprofit sector.”
What is the overarching theme of the book?
I would say the overarching theme is the adaptation of organizations we call “nonprofit” to changing circumstances. Lester Salamon has called nonprofits the “resilient sector” and the story I tell in "Braided Threads" is effectively how that resilience was manifested over time.
Beyond that, I’d say there are three main thrusts. The first, both historically and in terms of influence, was the gradual secularization of charity, how it went from a largely religiously-prompted activity to something mostly undertaken by purely secular organizations and entities, at the same time evolving beyond the strict realm of help for the less advantaged to the wide range of efforts — everything from science museums to opera houses — that we today consider 501(c)(3) charities.
The second central story was the influence of the Puritans of New England, it was utterly tremendous and is generally not given the credit it is due. Their world view and their culture had an impact that lasts to this day.
The third element was the quite unique American propensity for organizing, the creation of private, citizen-led groups formed to achieve certain social ends. Even de Tocqueville, as early as 1831, remarked upon this thoroughly American trait that had no real parallels in Europe. These groups became the bedrock, the form, and the vehicle for an American approach to social need that the world had never before seen.
Can you expand on these three topics?
The first thing that has to be recognized is that America and our culture did not spring forth in a vacuum. As the native population was displaced, North America was largely settled by Western European colonists, so it is there, to Western Europe and then to England, that we have to look for the antecedents of American charitable practice.
During the Middle Ages, after the fall of Rome, Europe was predominantly Catholic, and in that view charity was seen —and this is very important — as one of the two twin, and irrevocably connected paths to salvation: faith and good works. Charity was primary among those good works, but it was not necessarily meant to alleviate the suffering of the poor. It was meant to buy the donors, so to speak, a way into heaven. But with the Reformation begun by Martin Luther, this began to change. He separated faith and good works, and thereby set charity off on a path quite separate from the mechanisms of salvation.
A second event in this line of developments occurred then when Queen Elizabeth I issued a decree on charitable works in 1601. Included was not just the things one might expect, things like the care of the indigent and the aged, the poor, care of the sick, but also things that we would today consider to be social work. She codified the idea that charity could also include undertakings of social benefit, as opposed to just helping the poor such as the collection for dowries for poor maidens, the support of scholars, public works, bridges and things of this nature.
This trend was further strengthened during the 1800s, when the Congregationalists and Unitarians took over most religion in New England, and the Baptists and Methodists expanded in the rest of the country to become largest Protestant denominations in the U.S. As opposed to the “Mainline sects” — the “Reformed Catholics” such as the Anglican/Episcopalians, Lutherans, and even the Presbyterians — all of whom were very dogma-heavy, these far more populist denominations focused much more on social action and reform than on ritual and theology.
Over time, the social activism in which these groups engaged came to be seen as having a value of its own, quite divorced from any religious necessity or connection. Through this evolution we went from being a nation where the biggest charitable organizations were the Bible and Tract Societies to one where the Red Cross, Feeding America and the Dana-Farber Cancer Institute are the three biggest, wealthiest charities in the country. We became a country where even originally religious-founded organizations — think of the YMCA, the Young Men’s Christian Association — are today completely secular and nonsectarian. It was an evolution no one a few centuries ago could have foreseen.
How were the Puritans different in their outlook from other groups; why were they so important?
Absolutely alone among all the other European colonists to land on these shores, the Puritans came with the idea of building a better society, the proverbial City on the Hill. They believed in the perfectibility of society. And, more importantly, they saw nothing wrong -in fact, they advocated- using the law…secular, civil law…to enforce moral precepts. The idea that we should use legislation to enforce moral concepts is very, very puritan. And when you think about the advocates today in the nonprofit world, working for the regulation of this or that, or for different kinds of legislation, it very much follows the path that the Puritans began. As the Puritans’ influence spread beyond New England, as the culture Colin Woodard calls “Yankeedom” moved into New York’s Mohawk Valley and then beyond there into Ohio, the Midwest and ultimately to the Pacific Northwest, this activist idea, this notion of creating a better society and using civil law to cement its gains, spread as well. It truly is the DNA of today’s American nonprofit arena.
In what way did adaptation have an effect on nonprofits in the US?
The ability of the sector to adapt over time was always central and crucial to its character.
From the beginning, Americans organized themselves into associations for a broad range of purposes. By 1820, New England alone already had over 2,000 of these “voluntary associations,” organized for all sorts of purposes and doing all sorts of things. Most were small and very local, focused often upon benefits for their members or the local community. But then they broadened their horizons and took on wider issues; think of the groups that formed around the abolition of slavery, temperance, child labor laws and women’s suffrage.
By the 1850s, you had professions organizing into associations and trying to impact and affect things. This was something totally new at the time. In addition, wars affected the nonprofit sector and caused it to adapt, specifically the Civil War and World War I.
When the Civil War broke out, it was the YMCA (and not the government) that started sending volunteers out to the POW camps and the battlefields. In fact, when World War I began, the only organization that had any sort of experience with large-scale service to the armed forces was “The Y.” It was soon joined by the Salvation Army and the Red Cross. Similarly, the mammoth humanitarian relief efforts directed toward Europe during the War weren’t a governmental initiative; they were the product of America’s voluntary sector, which adapted to changing need.
The Great Depression presented the sector with another great challenge and again forced it to not only adapt, but to largely alter its core mission. Many people do not realize that the traditional voluntary and charitable sector was for the most part cut out of the initiatives of the New Deal. Unless the sector adapted to the new realities, it was in danger of becoming irrelevant. It adapted again to the post-war realities of the 1950s, and yet again in the 60’s when President Johnson’s Great Society again threatened to make it irrelevant.
This is a sector that over the course of its history has been buffeted by events — some planned, many unforeseen — and through it all, it has proven resilient. That is perhaps the book’s central message: that through all of this history, through changes in law and custom, through wars and recessions, through changes of administration and political outlook, through changes in governmental funding, the American nonprofit sector has adapted, and has not just survived but prospered. In spite of the vast changes in American society over time, the sector has gotten bigger and stronger.
This is one of the reasons why today, in the environment in which we now find ourselves, where so many people think they see an existential threat to the sector because of certain political events, I can’t get on that bandwagon because I have a much longer view.
What trends do you see coming to nonprofits in the next few years?
Not just coming, some of them are happening right now. The biggest one, and the one that could have a phenomenal effect, is continued growth of the sector.
The government has literally no idea how many nonprofits there are, and that is a telling fact. There’s a rough estimate that there are close to 2 million nonprofits incorporated in the U.S. Of that number, all but about 600,000 have applied for tax-exempt status. Of those, the largest number are the 501(c)(3)s. There are roughly a million of them, and more are being formed every day.
I think that this expansion is going to have an impact because all these nonprofit entities are essentially competing for the same dollars. Whether it comes from government, foundations, corporate or individual donors, there is effectively a limited pot of money. Sooner or later, there’s going to have to be a shakeout. We just cannot keep producing 50,000 new nonprofits every year and think they’ll all find their place in the sun and that they’ll all survive. Granted there is some atrophy every year, but overall, the arena is growing at a prodigious rate.
The other related question is whether any of them are doing any good, which brings us to the next “trend,” something near and dear to both our hearts: the whole idea of nonprofit performance.
Does the concept that nonprofits should and be required to demonstrate their actual effectiveness going to ultimately start weeding out the good from the bad and the ugly? That will also be something to watch closely.
Some organizations today are focused on performance. But the rest — a large number in fact — are still focused on the traditional approach of pointing to problems and offering activity accounts. If it turns out that the donor community does not insist on seeing performance data, or demonstrate that it will support only those organizations that can provide that information, my fear is that the sector could largely just slip back to their old ways again, which I do not believe is in the best interests of those these organizations exist to serve.
The third thing to keep an eye on is how time marches on. In a way we have not seen before, the millennials and technology will radically change the traditional relationship between donors and nonprofits. Gone are the days when charities reached donors through something arriving in the mailbox. Today those appeals are popping up on your phone, your Facebook page or in your email. But at the same time, to engage now, you just need to pick up your phone and tap a few numbers or tweet something and just like that, you’re donating.
I think that this is leading, in a way never before possible, to impulse giving and it is changing the familiar paradigm between donors and organizations. Traditionally, for example, the relationship between donors and nonprofits was based (particularly for the middle class) on community. There were certain kinds of reliable “markers” or characteristics that told nonprofits who was a good prospect. It had to do with your marital status, your income, where you lived or your profession. But the millennials have thrown all that out the window because their sense of “community” is significantly different than that of older generations. In addition, they are marrying later (or not marrying at all) they’re moving around, changing careers and they’re not chasing money the way that we did. Also unlike their predecessors, they are connected and available 24/7.
All of these things are going to dramatically change the model of giving. Those nonprofits that get ahead of the curve through technology and messaging will wind up surviving and doing well. As we’ve seen in the retail field, some of the more traditional, well-known names that you and I grew up with may ultimately fall by the wayside, because it’s also true that that the Millennials are giving differently than Gen X, the baby boomers and the traditionals. We baby boomers are more similar to our parents in the way and the things to which we give, than the younger generations.
I believe that these three developments: the explosive growth of the sector, the issue of performance and the significantly different giving patterns we’re seeing amongst the millennials will have the greatest impact on the nonprofit sector over the next decade or so.
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