Nonprofit Radio for August 23, 2021: How We Got Here

My Guest:

Robert Penna: How We Got Here

It’s the story of the unpredictable trajectory that led to today’s U.S. nonprofit sector. How did we come to be what we are? The story is told by Dr. Robert Penna, author of the book, “Braided Threads.” (Originally aired 8/3/18)




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[00:00:02.84] spk_3:

[00:01:19.44] spk_2:
and welcome to tony-martignetti non profit radio Big non profit ideas for the other 95%. I’m your aptly named host of your favorite abdominal podcast. Oh, I’m glad you’re with me. I’d be thrown into this phase asia if I had to swallow the idea that you missed this week’s show how we got here. It’s the story of the unpredictable trajectory that led to today’s U. S. Nonprofit sector. How did we come to be what we are? The story is told by dr robert, Penna, author of the book, braided threads This originally aired on August 3, 2018, Antonis take two truly sharing is caring, were sponsored by turn to communications pr and content for nonprofits. Your story is their mission turn hyphen two dot C. O. And by sending blue, the only all in one digital marketing platform empowering non profits to grow tony-dot-M.A.-slash-Pursuant in blue. Let’s get started here is how we got here.

[00:02:10.34] spk_0:
I’m very glad to welcome dr robert m pena bob back to the studio. Um he’s the author of the new book braided threads, a historical overview of the american nonprofit sector. He served for five years as a consultant to charity navigator and also as an outcomes consultant to the World Scout Bureau. Indeed, his last book was the nonprofit outcomes toolbox, which we talked about on this very show. He’s presented before, nonprofit organizations and associations across the U. S. And in Canada Poland kenya Saudi Arabia and Australia bob is a native of the Bronx new york and he still sounds like it, even though he lives in Wilmington north Carolina. You’ll find him in his book at braided threads dot com. Welcome back bob

[00:02:13.96] spk_1:
Bennett, thank you very much for

[00:02:15.13] spk_0:
having come a little closer having.

[00:02:16.49] spk_1:
Thank you very much for having me. My pleasure. Thank

[00:02:25.34] spk_0:
you for coming to the studio. Um, this braided threads, overview,

[00:02:26.06] spk_1:
overview. Um,

[00:02:28.54] spk_0:
let’s see what, you know, we’re,

[00:02:30.64] spk_2:
I think that, you

[00:02:39.04] spk_0:
know, I think you make the point, there’s just not enough of an appreciation among those of us in the nonprofit sector. Well, it’s, it’s not

[00:02:39.90] spk_1:
just where we are, where

[00:02:41.08] spk_0:
we came from, where we came from.

[00:03:19.84] spk_1:
Well, I think a lack of knowledge about the sector is probably throughout the population, but for those of us that work in it. Um, most people know it’s time to think about where it’ll come from. And uh, like so much else around us, we americans are notorious for lack of a historical sense generally. Uh, we just kind of accept that, you know, okay, that mall was built for my convenience right before I was born, forgetting about what was there before being a farmer. God only knows what is the same thing with the sector. Um, people just accept it for what it is today and you know, they don’t know the real size of the real dramatic uh, economic impact. And um, I thought that that story ought to be told. It actually started, uh, what I thought was gonna be a chapter in another work and it got as big as a book. And it was to me a fascinating, fascinating story.

[00:03:33.44] spk_0:
What’s the thread that you think is most important

[00:03:46.94] spk_1:
Resilience through the history resilience. In other words, it has changed. The reason it’s called braided threads is because it is not one unbroken series of events that took place in sequential owner and all in one line is a metaphor

[00:03:54.21] spk_0:
really for the history and and the strength. I thought

[00:04:23.24] spk_1:
both of the sector, there are all these different things that were happening that when they were woven together gave us what we have today. Uh, so that’s where the, the title came from. But if you had to pick one thing, I think it’s a story of resiliency. It’s a story of before. It was a formal sector, such as it is today. It still was a movement. It was, it was a things that people were doing and it ricocheted off of Reacted to, but also impacted events for over 200 years.

[00:04:35.94] spk_0:
You’re clear to point out that it’s not a history of nonprofits. It’s how the nonprofit sector evolved because of discrete events in

[00:04:54.44] spk_1:
history. Well, that’s why it’s called an overview. In other words, I didn’t start out with day one and try to give chronologically month by month, year by year. Whatever what I did was I looked at what I thought were the most impactful things that happened during or to the history of the sector. And those are the things I wrote about

[00:04:58.44] spk_0:
now. Um, I’m not sure we’re going to go strictly chronological. We

[00:05:01.62] spk_1:
made the book isn’t actually strictly chronological. They’re places where I had to double

[00:05:07.24] spk_0:
back. Um, now, when you were on last time we talked about Queen

[00:05:09.65] spk_1:
Elizabeth, important Elizabeth at first, but I know martin

[00:05:11.92] spk_0:
Luther uh, piques your

[00:05:13.96] spk_1:
interest. I thought

[00:05:15.30] spk_0:
pre he’s pre

[00:05:57.04] spk_1:
by about 60. His shame by about 16 years. I particularly thought it was interesting because if you look at the sector today is largely secular humanist. Um, not that there aren’t religious or religiously affiliated organizations in it, but it is not a religious sector. I mean, generally speaking, not that there aren’t religious organizations and affiliations, but it is a very humanistic secular in some cases, you might say liberal, I don’t know, uh movement and yet its roots were distinctly religious. So how did that break happen? Why did that break happened? Where did and personally, I traced it back to martin Luther and the reformation.

[00:06:00.94] spk_0:
So, you are. Well,

[00:07:07.54] spk_1:
because up until then, I mean, again, and this is not to be uh focused on just one, you know, ethnicity or religious tradition. This is certainly not to leave anybody else out. But the truth of the matter is that europe was catholic ever since, you know, Constantine made it the Catholicism Christianity, the official uh Religion of the Empire in 3 30, 80 europe was catholic. And then comes along martin Luther and he initiates along with a few other people with the reformation. And his biggest point was that unlike where the catholic church said it was faith and good works that got you into heaven, martin Luther with Sola fida faith alone and split them and he said you can do all the good works you want, they’re not going to get you into heaven. Faith is and he divided it at that point and that crack, that infant Ismael airline crack got wider and wider and wider and wider. People began to realize over time maybe they never even articulated it. It became a sense that there were certain things you do because they’re right, not because it’s an extra two points to get into heaven. This tradition had not existed there to four and that’s why I peg one of the 1st, 1st steps towards what we have today and particularly the United States with martin Luther

[00:07:15.18] spk_0:
now, uh huh and then Queen Elizabeth.

[00:07:17.86] spk_1:
Queen Elizabeth

[00:07:36.94] spk_0:
Was important. Yes. Now if listeners want to go back, you can go back to the June 2016 show, we talked for about a half an hour. Not all about Queen Elizabeth, but we talked a fair amount about her more than we’re going through today, but you could go to 20 martignetti dot com search bob’s last name pena P E N N A. And the june 2016 show last time he was on uh well well appear to

[00:08:23.84] spk_1:
You. Okay, please very quickly. Um Queen Elizabeth. We got time. Okay, Queen Elizabeth in 1601 uh issued something that was called a statute of charitable uses. And what she did was um and that’s not to say this had never happened before, but she codified with the idea that things that were of civic and civil benefit could be appropriate targets of charitable givings. What’s things founding of funding of schools, the funding of scholars, the building of bridges, the building of causeways, the ransoming of prisoners. All of these things were in this list. So what was she doing there? She was a further secularizing charity, but be she was putting into the charitable pot things that they’re 24 had not been considered charity charity, but charity was always personal to help poor. Now she’s moving far away from help the poor bridges, Bridges causes

[00:08:37.51] spk_0:
and ransoming

[00:09:02.24] spk_1:
hostages or also uh putting together a sort of a charitable pot for the dowry for poor maidens. Okay. Um there was things that today you might call you the social engineering or what what not. But the point is it was no longer the idea that charity always was always had to be about helping the poor. So first martin Luther breaks off the idea of These good deeds, having nothing to do with getting you into heaven. And then she comes along 60 years later and says on top of that charitable activity, things that are good for the community and not necessarily what was thought of his personal charity, putting the coin in the Beggar’s hand.

[00:09:19.44] spk_0:
Beyond martin Luther uh religion, the evolution

[00:09:23.28] spk_1:
of religion. I think it has been important, tremendous particularly the United States. We’re

[00:09:27.34] spk_0:
probably going to hit religion a bunch of times but give us an overview of why, why you say tremendous,

[00:10:44.44] spk_1:
Well I would say two reasons. First off because of the impact of the puritans. Um if you wouldn’t mind me mentioning another author, Colin Woodward’s book, american Nations, he makes what’s his name, Colin Woodard? American nations. He’s in your forward or your introductions in the introduction and he makes the point that they were founding cultures here in the United States and one of these founding cultures he calls yankee dumb basically the puritan culture. And uh the thing of it is that that had a tremendous impact because their worldview, they were the only ones coming here amongst the settlers, amongst the french, the spanish the Swedes, Everyone else who came here who came with this idea of creating a better society. We’ve all heard that term, the city on the hill, john Winthrop in their Mayflower compact was writing this down and was saying that amongst the things we’re going to do is every person has to be responsible for every other person built into the D. N. A. Of that colony. And what it became eventually in terms of one of the privacy dominant cultures in the United States was this concept that we have a responsibility, a civic civil human responsibility for helping each other. We’re going to come back

[00:10:47.14] spk_0:
to Winthrop, one of the new England puritans.

[00:11:53.74] spk_2:
It’s time for a break. Turn to communications. The relationships. They have the relationships with the well known outlets nationwide to get you attention to get you coverage when you deserve to be heard when you need to be heard when there’s something in the news that you can comment on and that you want to be heard on. Or maybe it’s not something news like news hook like but maybe it’s a simple op ed or blog post or getting to podcasts. Turn to has the relationships. So if it’s cutting edge like timeliness or it’s more evergreen. They have the relationships to get you covered to get you heard because your story is their mission turn hyphen two dot C. O. Now back to how we got here.

[00:12:08.84] spk_0:
So let’s jump ahead. We might come back. Like I said, we may not chronological, but you mentioned Winthrop New England puritan. The new England puritans were different than in terms of their their uh concept of charity. Then the southern,

[00:13:23.54] spk_1:
it was also a pioneer was also what it had a lot to do with was the way they set their society up. If you think of the south. Um the first off there was the tidewater south, the Maryland Virginia. Uh northern north Carolina. That was one society. But then there was what we came to know for better, ill as the south. Eventually the confederacy, etcetera that all started in south Carolina. It was a plantation. Both of these were actually plantation societies and these plantations were largely self sufficient. So amongst the things they didn’t do, they didn’t worry about having a public school because the rich took care of their own Children. They had tutors or perhaps they sent the Children away someplace. But they didn’t worry about public schools didn’t matter. And the poor didn’t need education, neither white nor black. It didn’t matter. So all of the things that we take now as thinking of their earmarks of society, their earmarks of civilization, They didn’t exist down there. Conversely, the first things you did in New England was you, where’s the village green? The church is going to be at one end congregationalist of course. Uh, the school is going to be at the other end. Everybody supported it through their taxes. So right there you had a division. This then later was reflected in terms of things like the pieces of civil society that you and I would consider to be a charitable efforts. They didn’t exist in the south

[00:13:34.44] spk_0:
since religion is a

[00:13:35.52] spk_1:
threat that it’s

[00:13:36.80] spk_0:
very important. The congregationalists in that time. They were, they were the statement that the state religion

[00:13:43.38] spk_1:
in massachusetts.

[00:13:44.46] spk_0:
Oh, just in massachusetts

[00:13:51.84] spk_1:
in massachusetts, Rhode island Connecticut there as you went for the south. It became the anglicans. In fact, the anglicans were a minority in massachusetts. And what became of, you don’t, you don’t see a pilgrim church or puritan church anymore. They became the congregationalists

[00:14:03.14] spk_0:
which were supported by uh taxes, taxes,

[00:14:05.99] spk_1:
taxes, they all work. So,

[00:14:07.16] spk_0:
I mean, a complete, uh, you know, this is obviously uh all pre revolution, pre pre constitution, but in that, in that day we had state religions.

[00:14:16.44] spk_1:
Yes, yes,

[00:14:17.12] spk_0:
in every every colony, some of the Northern state, every

[00:15:14.14] spk_1:
colony, okay, could not, you know, including eventually, you know, as things got more settled down south. The Anglicans, the angle of the Church of England was the state church. So, for example, in Virginia had to de institutionalized the anglican church. So taxes wouldn’t go to it anymore. But it did have this thread, tony of uh of how religion impacted it. It goes through this whole story because when the minister is no longer were part of the government, so to speak, they had to find a new role. You had other sects that came along after the second great awakening amongst them, the Baptists. Methodists, they were incredibly influential because they had they didn’t have all the formal theology that others had. It was, that’s why you would hear a baptist preacher referred to as brother Parsons or something, because they weren’t ordained ministers in many cases and because of that lack of formality, number one. um they could, they didn’t church necessarily, they could preach under a tree, but secondly, they also had a much more accessible kind of idea uh the way they approached it and a lot of what we see today came from specifically the baptist evangelicals and the Methodists like

[00:15:31.34] spk_0:
what about some of these traditions as well?

[00:15:38.24] spk_1:
For example, the 1st 1st nationwide survived the first nationwide uh charities you want to call were bible and tract associations and they were all run by, funded by and pushed by these southern uh evangelicals, Methodists and Baptists and that became like the first nationwide charities. Uh, the precursors of all the big ones, you know, today, they were the first ones who were like coast to coast.

[00:15:57.84] spk_0:
What else is there? Another tradition that you can,

[00:16:46.14] spk_1:
you can, I think, I think another tradition I would connect is uh the activism of many, many groups. So for example, going back to the abolition of slavery, which of course started of all places in boston, boston was the home of the abolitionist movement and a lot of the people up there were religiously affiliated. But it is also true that during Reconstruction and wanted a lot of the quote charitable work that was done down there amongst the Freeman, amongst the freed slaves, etcetera, was done by northern Methodists and northern Baptists. So this threat, this involvement, but they weren’t doing it necessarily for the, for the same reasons that going back to, you know, the 14 hundreds, the catholic slash christians were giving money to the poor that was trying to buy their way into heaven. Slowly, completely different. This

[00:16:50.36] spk_0:
was this was a contribution to society. Exactly.

[00:16:59.84] spk_1:
It was, it was like a centering the nation beyond was a secular act being done by people who who belonged to uh a particular denomination in this case. It’s interesting to see the the degree of do get think back, you know, go back to the anti war movement during the sixties, how many of those people marching? They were protestant ministers, many of them, many of them were Methodists and Baptists. This strain never went away.

[00:17:30.94] spk_0:
What was, I’m jumping way ahead now, we’ll come back to the constitution and uh separation of church and state, but um ancient greek uh Greece Rome, Egypt. What was, what was the conception

[00:17:34.92] spk_1:
of charity then? Well, Egypt does

[00:17:37.14] spk_0:
vary by empire

[00:18:06.24] spk_1:
generally speaking. I mean, even in Egypt, there are, there are higher, horrible effects have been found and have been translated that roughly say that, you know, your place in the afterlife, depending upon how you treated people in this life. So you might say there was that kind of strain of charity in Greece and Rome charity was much more uh what um Queen Elizabeth did. In other words, the idea was particularly in Rome if you want to get ahead and you wanted to be noticed. So let’s say you were in the army and you want to move into politics, you were high up in the army, you would spend stuff, you would spend money on things that the public could enjoy. Like you would build a public bath or perhaps you would pay for a temple to Athena or some small thing of this nature. But the idea was the charity in those days, did the poor didn’t count the poor didn’t exist on anybody’s radar screen. You have a totally different perspective of human nature, human value. And it was for

[00:18:29.70] spk_0:
your own it was very good

[00:18:32.94] spk_1:
for your own good. Every wrong career, right, career development, career development. But the whole idea of what you

[00:18:38.54] spk_0:
Just can spend $400 to go to a conference. Uh, then I would have had to build a temple to Athena

[00:18:41.11] spk_1:
or you could today you could make a big donation to the hospital and I put a plaque on the wall with your name. This is tony-martignetti wink. I’d rather build a temple. But

[00:18:59.64] spk_0:
um, okay, that’s interesting. All right, thank you. So, so let’s go. All right. So now we have uh, our constitution, our bill of Rights, the First Amendment, um, obviously religion, no, no state religion and and separation of church and state. So how did these factor into

[00:20:39.54] spk_1:
these? Factored industry in three different ways. Number one, part of those, The First Amendment is the right of assembly, um, which the british kept an eye on when they, when they were in charge. Well now you could formally have, you could have group meetings, you could organize, you need to worry about perhaps the king’s soldiers would come and say break this up while you six people gathering here. One of the things that people did was they formed organizations de Toqueville Uh wrote back in 1830 something when he wrote his famous uh his famous review of of America based upon his tour that Americans were already organizing for virtually everything you name, the thought, music, culture, politics, something that they thought would be americans were organizing. He has, he has a comment that says, Uh where in England you will find a personal great wealth or prominence heading up an effort or where in France you will find the government doing that in America. You virtually always find it being done by a citizens organization interesting. So this has been a toqueville was here in like the early 21st, 20 years or so of American independence. I mean, I believe he wrote democracy in America somewhere around 1834. Um, and these are already his reflections by 1820, the New England area already had over 2000 of these citizen voluntary organizations. They were the precursors of today’s nonprofits. Yeah.

[00:20:40.54] spk_0:
And how are they structured? What do we know about their, their

[00:21:00.84] spk_1:
organs were structured like they were structured sort of, as you know, an association, they had by laws, they had officers, what they didn’t have was either illegal corporate identity, nor did they have uh any sort of fiscal power. Because the laws that created what we call today, a corporation? Yeah. Didn’t exist back then.

[00:21:06.64] spk_0:
All right, so we’re in the like early to mid 1800s. Are they are they doing their own independent fundraising?

[00:24:28.64] spk_1:
Yes, they were. Well, they were doing yes, they were doing when we would they called us? They would call it a subscription. They would call it a subscription. They put out a subscription player, subscription request, and it was today’s fundraising, but they called it a subscription. But the key things in those days were threefold. Number one. Uh they weren’t incorporated, so they didn’t have a legal standing identity, such as people don’t like about Citizens United. That whole idea that it didn’t exist, secondly, they did not have any uh separate fiscal ability to buy to sell to. They didn’t. And the third thing was that the officers or whoever was there, the officers were the identity. So if mrs smith or jones quit and or died very often the operation would fall apart because there’s no way to keep it going. It was very, very crucial for them to eventually get this right to uh to uh incorporate. And one of the most key points about this was that they eventually incorporated under the state laws, the laws of their home states. Now, who then control them? Did the state legislature because it charted them or allow them to incorporate control them or were they independent? And there was a crucial um, a crucial court case involving Dartmouth University whereby the courts found that even if public money went to these entities and even if in fact these public entities, these entities were incorporated under state law. Legislature couldn’t touch them. The Legislature could not give the money, but the Legislature could not tell them in this case. Specifically Dartmouth University what to do That. Independence was crucial because it allowed these organizations to in many, many, many cases proceed government in various efforts. Whether it was schools for the Children of freed former slaves, Whether it was schools for uh, today you called handicapped the death the blind. Uh They would very often create certain they would call them asylums. Today, you might call them orphanages for Children. There was one in new york city that was specifically for the, shall we say, uh Children of prostitutes who might have been called bastards back then or might be called illegitimate. Nobody. Where did these kids go? What did you do with them? And there were, there was a privately funded asylum was created just for those people. Just those Children for the poor as well. Very old houses. Well, arms houses. They, yes, very, very largely funded by these private entities. But very often, particularly in new york city new york city under Mayor de witt clinton high School in Brooklyn and the Bronx. Yes, right. He, he became, he was governor at one point. Um, he was not only when he was mayor, he was also head of one of the largest charitable efforts in the, in the city and was even back then. We’re talking early immigrants around, I’m guessing here trying to remember 18 20 something like that. I don’t remember the executives of his, uh, his term of office, but the city was already paying well. Today you would call a nonprofit to run the, run the schools for the poor. So in new york state, particularly this tradition of public money going to a not what we today would call a nonprofit to provide a Legislatively desirable and socially desirable end. Think about it Tony, this is 2018, you’re almost 200 years later, we’re still doing the same thing. Yeah,

[00:24:47.44] spk_0:
Yeah. I love that around this period. Let’s take mid 1800s. So what, what’s happening in the, in the rest of the country? Well,

[00:26:13.94] spk_1:
the slavery slavery about it? Well, slavery and civil war are percolating and a tremendous number of, of um Efforts, private government effort, rather private citizen efforts, uh, were trying to have the slave trade stopped because the constitution originally said that the government could not do anything even in the slave trade, not slavery, but the trade for 20 years. So this effort was going on for a long time and it was all being done by, by citizens in 99% of them up north. Um, a lot of them either spurred by or uh inspired by the culture of Yankee dim which was spreading across the country at that point. I mean think about it through from the mohawk valley to the Ohio valley, we spread from east to west and this culture came with us. And uh, the number of people who felt that this was a scar on our national character uh, increased and um, I mean, you’ve heard, you know the Missouri compromise, bleeding Kansas, we all know what all the things that led up to the civil war, but what was while that was going on, there was this tremendous effort to, among other things, abolished slavery, but at the same time penal reform, um, reform to end uh, what’s the biggest show in new york Hamilton? Right, Hamilton and burr dueling outlaw dueling. Um, all season. These

[00:26:17.06] spk_0:
are, these are efforts by the, by their non profit or

[00:26:21.37] spk_1:
These organs by these organizations. Okay, now the term non profit didn’t come along until 1950. Yeah, we’re

[00:26:26.62] spk_0:
gonna get the right, we’ll get to the tax exemption. Okay, but by the penal reform, what else, what else can you think of other examples what they were doing around this time. It was very,

[00:27:10.64] spk_1:
very interesting amongst these subscriptions today. You know, there there’s everybody is familiar with the term five oh one C three. Well the three denotes one level of five oh one C. There are actually 29 of them. Well, one of them. One of the earliest was what was called mutual society sort of mutual aid or mutual. Today there are mutual insurance companies which are non profit They started back then. The idea is you would again have a subscription and if a fire hit your house, this would pay money to you to get you back on your feet. This was another my nonprofit effort that didn’t exist. Benjamin for

[00:27:11.57] spk_0:
every year where I guess I remember Benjamin franklin, but every year I get my subscribers check from us, a right, a mutual mutual benefit uh insurance insurance company and now and bank. Ben

[00:27:53.04] spk_1:
Franklin. Ben franklin uh, is credited with founding amongst the first uh, non profit things in the United States. The Volunteer Fire corps in philadelphia, one of the first libraries, uh, the Juno Society. These were all today you’d call them nonprofit effort efforts uh, that he founded uh, in philadelphia before the revolution. So again, this was, but interestingly enough, not down south. Yeah, not down south. Once you started to get towards around the north Carolina border, you didn’t see it because of the plantation economy because of the culture. They didn’t

[00:27:56.42] spk_0:
have a civic, there wasn’t a civic, the civic sense. We have community sense. There was this my plantation, right? We take care of everything

[00:28:15.54] spk_1:
here. This is why two of the most revolutionary things that happened down there was thomas. Jefferson’s founding of the University of Virginia North Carolina’s founding one of the first state universities in the country because that was unheard of down there. It was just unheard of. So all of these efforts, as I say, we’re primarily northern.

[00:28:22.74] spk_0:
We have about a minute before the break. Um, the tax exemption, I feel like this is a good time. When did that, when did that?

[00:28:26.45] spk_1:
Uh taxes first? Tax exemption started way way way back because you have to ask about which taxes. So it’s probably gonna be more than it wasn’t

[00:28:33.99] spk_0:
religion. Okay. Wasn’t religion the religion

[00:28:39.54] spk_1:
1st Exemption. Religion and can also speak schools and things and things of that nature. So go back to that. Alright.

[00:28:45.74] spk_0:
It broadened but it started with, okay, so we teased it together

[00:28:46.94] spk_1:
and you always do,

[00:28:48.28] spk_0:
thank you very much. Always tease.

[00:31:12.84] spk_2:
It’s time for Tony’s take two truly sharing is caring who can you share. non profit radio with. I’ve been providing suggestions through the weeks. How about the new folks to nonprofits, the newbies there? Like babes in the woods, they’re, they’re jumping to, to avoid the obstacles there. Following the immediate direction. They’re just trying to get from like tree to tree to move forward. The trees are the, the metaphorical trees are the tasks that they’re given either by your office or somebody, you know who they work for, but they don’t see the big forest, they don’t, they can’t take the higher level view. They don’t know where they fit in overall. They’re just produce these labels. Let’s get this mailing uh, do this, query uh, volunteered to do this. Volunteer activity beep boop. But what’s the bigger picture? It will be elucidated, they will get illuminated, they will find their way through the from tree to tree because they’ll see the entire forest through nonprofit. radio There’s the, there’s the, I don’t know what this but the new folks, the new folks, they need some help. Right? Really? How do they fit in their, their, the, the development assistance, the Development associates. Maybe you were there have have empathy for them or maybe you weren’t, maybe you got right in at the director level or the, the Associate VP level or the VP level or have empathy for them. Anyway, non profit radio can help the new movies because we’ve got to bring them along. Right. We’ve had guests talk about this, we all know this, we have to bring them along, get them started on the right path through the forest. non profit radio if you can share. non profit radio with somebody new to nonprofits, it’s going to help them and it will help me. And I say thank you That is Tony’s take two. Now back to how we got here,

[00:31:49.24] spk_0:
bob pen is with me. His new book is braided threads, a historical overview of the american nonprofit sector, just get the book because you know, we can’t do it. Justice. Of course you’re interested in how are sector, our community evolved to what it is now. Um get the book. You know, we’re hitting some threads, some braided threads if you will. But you want the full story. You know, even, you know, bob mentioned something. I was like, oh yeah, the Dartmouth case, you know, I can’t remember at all. Um, just by the thing for Pete’s sake. All right. Um, where were we see now? I’ve ranted about bees and sunshine and all this live love. Where were we?

[00:32:06.24] spk_1:
Well, you well, you also screwed up the whole thing about baseball, but that’s another thing. Well, you have baseball doesn’t have touchdowns. But anyway, that’s different. We’re talking about, we’re talking about taxes and tax exemption and that’s what you would ask about.

[00:32:08.82] spk_0:
Thank you. So, it started religion was the first one. What period are we talking about now? We’re

[00:33:24.74] spk_1:
Going back to probably the 1600s. And that’s the point of the matter is we ask what taxes. Alright, Alright. Federal government levied very very few taxes before that. The state’s levied. Not that many taxes? Most taxes were on property and very early on churches were exempted from paying those taxes. Uh Now it wasn’t just the church building, it also became the the parsonage where the minister lived. Uh then if there was another building library perhaps, then schools obviously we’re not text, be they private or be they public. Clearly, a public government is going to tax itself. So public institutions like a public school would never we’re never uh text, but the idea was that the exemption list grew bigger and bigger. New york state was obviously this was going on in all states. I happened to have a quite an extensive accounting in the book of how the new york state list just kept getting broader and broader and broader and broader. Uh At one point, it was interesting because the law was changed to allow organizations that included in their charter or their mission, the uh the enhancement of the minds of young people or something. That’s how the why got in because the why had tried to get a tax exemption had gone to court. They’ve been turned down, they had to pay the tax bill. But everybody thought gee the why should be in in this. So why is very

[00:33:42.12] spk_0:
interesting to uh in the world

[00:33:43.92] spk_1:
wars? Yeah, well, that’s right in the book, right, that they were also involved. Yeah, this is the book. I know, yeah. But what I’m saying is that the why was not really was was not mentioned organizations like why now you mention New

[00:34:01.84] spk_0:
york State. Yes. Um I love this. Uh one thing I want to read this from 17 99 uh New york state. You you cite new york state has sort of Representative

[00:34:06.11] spk_1:
represent what was happening around there were very issues but it’s very representative. This

[00:34:33.84] spk_0:
Is an act for the assessment and collection of taxes. New York State 1799 Excerpt. I won’t read the whole thing. Of course, no house or land belonging to any church or place of public worship or any personal property belonging to any ordained Minister of the Gospel, nor any college or incorporated academy nor any schoolhouse, courthouse, jail, arms house or property belonging to any incorporated library shall be taxed by virtue of

[00:36:29.73] spk_1:
This act. Right. And that that list just kept going and as I said at one they amended it to include, and I forget the specific wording was something about the betterment of the minds of young men and women because there was the Y. M. C. A. And the Y. W. C. Young young men and young women’s christian association so that the law was changed and basically what the courts said was that these operations were doing good. They were doing good things and were beneficial to society and therefore society. Uh It was in society’s interest, but also as just a smart thing to do. We are going to do our bit by supporting them to the extent that we do so by alleviating them from the tax burden. They were still not called non profits because that concept him way later. Um But these organizations, these voluntary and for a long time it was called the voluntary sector. Uh, these are, yes, that was the name of uh, these organizations increasingly became uh tax free, what we know today as the people call them non profits. I’ll do this relatively quickly. Um, one of the last revenue acts of the 1800s uh included this idea that these kinds of organizations could be, should be exempted from federal taxes. That particular revenue act was found unconstitutional. However, when things started to fall into place and you remember, it was the 16th amendment that made the income tax legal in the United States. When that happened, the recognition that these organizations should be exempt was codified and it had to be three things. Number one, it had to be incorporated as a non profit. What does that mean? Does it mean they can’t make profit They can’t make money. Know what it means. Is that what any excess extra? It has to go back in? Well, it has to go back in. They cannot.

[00:36:31.43] spk_0:
This was contemporaneous with the 16th Amendment

[00:37:26.33] spk_1:
was well, shortly following that. But what does the nonprofit means? That rather mean? Doesn’t mean it can’t make money? No, that doesn’t, that’s not what it means, what it means. It can’t take that profit and distributed to partners distributed to stockholders distribute. It has to go back into the pot. That’s number one. The second thing is that no, none of its activities can make money for any of the officers. Right? And the third of the third idea uh is that the, well the roles and the idea is a nonprofit non distribute orI and doing some sort of civic good and so very often it was charitable and there was a charitable educational and the list got you know bigger now family really machinery. I like that word to me sir. That’s what they believe, believe that is maybe you’re right, maybe you’re right. I remember I come from the Bronx so I’m different pronunciation. Um

[00:37:35.13] spk_0:
well you were wrong about you around baseball

[00:38:21.32] spk_1:
Too. So our president tax liabilities president tax code comes from 1954. That was the first place where they laid out what we have today, this 501C category. And where the general exemption from. Originally the idea was that if these organizations made money they didn’t have to pay a corporate income tax on it. Then it became not legally but in terms of practice that they are basically free from almost all taxes other than things like excise taxes are taxes on gasoline or something that you pay as part of a bill, which is why the local men’s association will go to a restaurant and they’ll have the banquet and they give the the the owner, here’s my tax free by tax free number and they won’t have to pay sales tax on the restaurant. Yeah. Okay. So that’s where all that came from. But it was in terms of its codification. Although the roots go back to the 1600s codification goes back to 1954.

[00:38:31.12] spk_0:
Okay. Is that the 16th amendment? Was that

[00:38:33.10] spk_1:
The 16th Amendment was 1913? That’s what allowed the income permitted

[00:38:44.42] spk_0:
an income federal income tax. Okay, Okay. Um let’s uh were World War One. We saw an expansion. Uh

[00:38:46.74] spk_1:
yes, Yes.

[00:38:49.32] spk_0:

[00:39:20.72] spk_1:
Why? Because really? Well, because there was no functional way for the government to step in. One of the more fascinating things about it, was that the you meant we were talking about the why the why was the first organization to do what today? You think in terms like the Red Cross, you know, POW POW camps, uh, you’re checking on status bringing, you know, prisoners. Nobody did that government. Sure as heck did neither the union or the confederate government. It was the why the YMCA that first started this bringing this service to both sides to the confederates and northern. So they were they were in uh in confederate POW camps, ministering, so to speak to union prisoners and vice versa. You

[00:39:31.28] spk_0:
say that the White was the first large scale service

[00:39:41.52] spk_1:
corps, really, you could say that you can’t say that the other. So comes along World War One. Um there was a need for this, but nobody else to do it.

[00:40:33.81] spk_2:
It’s time for a break send in blue, It’s the all in one digital marketing platform with the tools that help you build end to end digital campaigns that are professional, affordable, organized and keep you organized digital campaign marketing. Most software designed for big companies, you know this and has the enterprise level price tag, send in blue is priced for nonprofits. It’s an easy to use marketing platform that walks you through the steps of building a digital campaign. If you want to try it out and get a free month and a 300,000 emails hit the listener landing page at tony-dot-M.A.-slash-Pursuant in blue. We’ve got boo koo but loads more time for how we got here.

[00:40:37.01] spk_0:
Why the why it was the Y. M. C. A. Initially or was it why it was there? Why?

[00:40:41.96] spk_1:
No. Well there’s two Y. M. C. A young men’s christian association and the young women’s, which came first who I am.

[00:40:49.13] spk_0:
Okay, so first large scale service corps. And

[00:43:29.00] spk_1:
well what happened was this, in other words, when World War One started? And uh, there was a need, when the americans got involved, when there was a need uh, to again uh brain services to this army that was being raised, whether it was, you know, outside of Fort Dix or whether it was, you know, eventually when the A. F. Got across the to the other side across the pond, expeditionary forces, right? American expeditionary force? Uh, the whole idea was somebody had to do the same sort of thing. And why was the first one to step in the Red Cross eventually joined the Salvation Army eventually joined. But all of this was being done privately. Meantime, both prior to America’s entry into the war and after it was a tremendous amount of uh refugee, if you will victims victims relief. I mean, you know, war is terrible whatever word is and there’s always collateral damage. The people who were displaced the homes that are destroyed. Well during war governments don’t stop to worry about taking care of that. They move on, they want to have a war to try to win. So who took care of those people? The refugee problem was tremendous. Belgium became one of the worst sites of it because when the Germans invaded Belgium, the al I said well you have to feed the Belgians because most of the belgians of food came from outside, German said no we’re not gonna be bothered doing that. We’re feeding our troops. You want to give them food, you give them food. Well, it was a relief effort that began in the United States that started working to bring food to Belgium. But it was not government, it was all private. It was all voluntary. It was all what you today would call non profit before our and there’s actually pictures, one of the few pictures that are in the book before the war, before the U. S. Got involved in the war when we were supposed to be officially neutral. Yes, there were organizations raising money for the poor and the suffering and the widows in Belgium and France. And but they were also organizations doing the same thing directing money to the german empire. The Austria Hungarian Empire in Turkey because we were officially neutral. So there are actually a couple of pictures in the book. I would appreciate it more pictures by the way I like, well I’m sorry, next next book of more pictures. But the whole idea was this entire effort was being done privately after the war, massive relief effort run by Herbert Hoover most of it. Not all of it at that point the U. S. Government was committing money but A great deal of it. You know, I don’t know proportion 60% maybe uh was all private.

[00:43:30.25] spk_0:
Today’s USO was formed by a collection of a bunch of the collaboration of a bunch of the organizations. You mentioned the Y. M. Y. W. C. A. Regular.

[00:43:38.50] spk_1:

[00:43:40.28] spk_0:
that’s today’s United Service

[00:45:29.09] spk_1:
organization. Right? And that’s where that’s where it was a coalition that was found was one of the first ever like that. One of the first ever efforts. I mean there are all sorts of things that happened back then that we we today for example, you’ve heard of United Way. Everybody knows United Way. You know where United what came from? I dont Community Chest Community Chest and you know today, most people in the Community chest is a sort of a space in the car. I’m a reporter. Okay. Community chest was local fundraising specifically for disaster, personal tragedy, private relief. So if you lost your job or the factory burned down and five people lost their job. Community chest was, was, was the entity in each individual community that would they would go to for relief. I mean, maybe if they belong to a particular denomination and the church might help them out or as well or you know, temple or you know, there’s a lot of that, I mean both and there’s a whole section in there on both the jewish and catholic specific uh, contributions to what we know today as the american nonprofit sector. That, that’s interesting reading on, on its own, but this isn’t to say the churches were involved, but every community, there was no public relief, there was no public welfare and so if dad died or fell off the roof and broke his leg and couldn’t work, there was no unemployment insurance, there was no workers comp people very often they went to Community Chest. What wound up happening was, uh, one of the transformative events was what we might call a cooperative fundraising. If everybody fun fund rose for fundraising, fundraising, whatever the the past tense that is by themselves, you want with competing appeals and they’re banging into each other. Well, uh, it actually started to believe it was in Cleveland was one of the first ones. Uh, I know there was one in Denver, there was one in uh, in uh Detroit, There was one, I believe it was Cleveland. Was

[00:45:48.69] spk_0:
this around the, was this also the hoover administration were now profit complained were basically testified before Congress were basically running over each other, stepping over each other, trying to, trying to help. Oh yeah. Also also was that the Great Depression or

[00:46:34.48] spk_1:
no? Yes, yes and no. You know, there was what you’re talking about was World War Two, uh, stepping on each other and tripling over. That was World War Two. No, what happened was when the, when the Depression hit, um, sort of the thought was that, uh, this community chest would step up and community chest tried, they would have instead of one annual drive, they were having to annual drives. They tried three. But the problem, as we all know, was much bigger than anybody could have predicted foreseen. And their efforts were just not up to the fact that the entire economy crashed, which is why government had to get in that. It was obviously FDR FDR appointed Harry Hopkins to run the relief effort. Harry Hopkins thought that it really should be local government that was doing this. Local governments sitting off on the side. They’re very happy not to be involved. So what Harry Hopkins did was, he said, okay, we’re gonna do this and it’s going to be federal money, but none of the money can go to what today would call non profits because they got completely cut out.

[00:46:52.78] spk_0:
That was not, that was not to punish phenomenon that was to encourage, that was to

[00:46:57.73] spk_1:
force the states unwilling

[00:46:59.40] spk_0:
states and states that had not taken on public welfare right to do it. Or we’re doing give the money to the state. But we, the federal money won’t go to these community chest. Exactly right. They’re trying to force the hand unwilling recalcitrant

[00:48:06.37] spk_1:
states and localities and localities. But, but yes, that’s and that was Hopkins idea of course. Now what did the nonprofits do? I mean this kind of left them out in the cold. Now, you also have to realize that at this point we were talking about community chest, but this was one, this is not to say that the arts efforts weren’t going on and people weren’t founding zoos and botanical gardens. And a lot of this was originally founded by private garden clubs or a zoological society. But the nation was in crisis and relief was always from the charitable sector, which is why it was called the show. And now they couldn’t do it anymore because it was too big a job and be the federal money couldn’t go to them had, you know, Harry Hopkins said no. So they, we invent themselves. I mean, I said the US made early on what was the theme I keep saying resiliency. And one of the things that one of the earliest tests of this resiliency was after the depression because basically the Fed said you can’t have anybody, you know, more money for you. So,

[00:48:15.77] spk_0:
um, say a little about the, uh, the jewish contribution to what we

[00:49:54.47] spk_1:
Know. I think this is utterly fascinating. There’s a book, believe it guys named wrote it was cale calendar. I don’t know how Taylor County, it’s called the gifts of the Jews. The gift of the Jews book is probably 20 years old at this point. But he makes the point that one of the biggest contributions that the jewish culture, the jewish religion made to us here in the United States was in fact cultural, cultural. It had to do with how human beings were viewed when the jewish immigration here started in large. Think about where these people come from, they were either, you know, they were persecuted in czarist Russia. They were persecuted in Poland, which was part of czarist Russia. They were kicked out of spain. I mean, you know, 1000 years of this, they had an outsider perspective, nobody else had and they brought that here with them and when they got involved in charity and what they were the ones they, they were the biggest analyze of the black civil rights movement because their idea that nobody should be an outsider was central to them. And they brought that to that. You think about today’s nonprofit space, We are concerned about the handicapped were concerned about all sorts of groups that you might call marginalized with semi marginalized and this was antithetical to the jewish world view. So to me, whereas a lot of these other charities were taking care of their own. So for example, there was the irish working in such and such, but you have to be irish. The jews said no inclusive, inclusive.

[00:49:56.57] spk_0:
Excellent. Thank you. The jewish

[00:50:27.16] spk_1:
tradition. I just, I cannot emphasize that enough because I mean truly today, if you look at at the, the whole core of the nonprofit mission, it is inclusivity and I personally feel that without the incredible jewish influence that particularly here in new york and new york became kind of like one of those centers of the nonprofit world. It still is. I cannot emphasize enough how strongly I believe that that, that world view, yeah, that threat, um, truly truly help the imprint. Uh, what we have today.

[00:50:33.96] spk_0:
You got to get the book because there’s some things were not going to be a great depression. Uh, Kennedy’s new frontier. And then uh, johnson, johnson and johnson’s war against four. War on poverty.

[00:50:46.44] spk_1:
We have about 3, 4 minutes. Uh,

[00:50:48.70] spk_0:
five. I want to talk about the future too.

[00:51:41.86] spk_1:
Okay. But then I’ll do very quick. Let me just do johnson All right, johnson set us on the road that we’re on the war on poverty, Right. War right. Great society, war on poverty. We are today farther down that road and that road is being fancied up there are, you know, there are curbs where maybe they didn’t used to be curbs, there’s a newer pavement, nicer pavement and original, but it’s the exact same road. What johnson did was, he said, we’re going to take federal money and we’re going to change poverty, We’re going to eradicate whatever his goal was. But it wound up that it wasn’t the government that was doing it. It was government money going to community action agencies and To nonprofits. Now we don’t time now to go to talk about what happened to non profits during the 50s between World War II and we, you know, to get the book, just get the book as well. I have the book. Oh, you mean that they should be talking to

[00:51:42.99] spk_0:
The 13,013,000 who are joining this

[00:52:29.55] spk_1:
condition, They should get, I should hope to God you have a copy of that, That’s a different story. But the whole point was that it was hard to get for me to get one LBJ LBJ set us on the road that we’re on. We’re on now. And my feet feeling and maybe there are people in the sector would argue, uh, you know, this is my theory is that basically things have not really changed in direction, They’ve changed in degree. Now, the nonprofit sector is not just the partner of government, there’s, it’s dependent upon the government. I mean, look what happened to the sector, during the depression. It wasn’t that individuals stopped giving individuals, even during the worst of the great recession, we’re giving corporate was down. The corporate is not that big. It was government money. The sector today is very, very reliant on. So again, johnson set us on the road that we’re on now and we are just farther down and very much deeper into it.

[00:52:46.75] spk_0:
I want to look, don’t look, don’t look forward. You, you cite generational change and technology change as our biggest, uh, opportunities, opportunities and

[00:53:07.95] spk_1:
challenges. I think, I think two of the two of the three biggest things, because we end the book on what’s happening in the future. That’s the last, the last Third or 25% of the book. I think that the three biggest things that are impacting the sector and sectors largely unaware of it is number one of the growth. We are adding 50,000 a year, Uh, in 1990, there were a couple of 100,000 nonprofits in the United States today. There’s, there’s a startling

[00:53:13.53] spk_0:
Chart in the book, one of the pictures of the picture of

[00:54:35.94] spk_1:
the chart I drew it myself dramatic. Um, now there’s over 1.76 million. Actually, nobody as, as, uh, Lester Solomon, who is one of the stages of the sector says nobody really knows how many there are. And it’s because there’s no registration, there’s reporting a different story. So the growth, this can’t just go on 50,000 new ones a year. Even given 3-4%, you know, uh, dwindling and going away. Talk about technology and technology. Uh, you talked before about making online donations easy. That is changing the paradigm between donors and organizations such as we’ve never seen before. You and I are of an age when we still remember, uh, March of dimes going door to door. All right, That is over the canisters canisters. But think about it now. We are making it so easy for online or text, but we’re also making it very easy to give uninformed donations because it’s impulse. It’s on the second. It’s right there in your finger. The third thing is the generational change. We’re already seeing the statisticians and the demographic demographers already seeing a great, great, great change in terms of values and behavior amongst the millennials and us, but not just us, also the generation right behind us. So these three things churning are Have the power to totally change the nonprofit sector as we know it over the course of the next 15 years. And all I’m saying is we as a sector should be aware of these things and be prepared for what could happen and maybe try to steer the ship instead of just being a cork bobbing along where the tides and the winds take is where they will.

[00:54:54.74] spk_0:
Okay, just get the book for God’s sake bob, penna braided threads, a historical overview of the american nonprofit sector, you’ll find bob and his book at braided threads

[00:55:05.01] spk_1:

[00:55:05.56] spk_0:
com. Thank you very much bob. Thank you.

[00:55:42.34] spk_2:
Next week. Edgar Villanueva returns with a popular archive show de colonizing wealth. If you missed any part of this week’s show, I beseech you find it at tony-martignetti dot com. We’re sponsored by turn to communications pr and content for nonprofits. Your story is their mission turn hyphen two dot c o. And by sending blue, the only all in one digital marketing platform empowering non profits to grow. tony-dot-M.A.-slash-Pursuant in Blue, our creative producer is Claire Meyerhoff shows social media is by Susan Chavez. Mark Silverman is our web guy and this music is by scott Stein,

[00:55:50.86] spk_3:
Thank you

[00:55:52.00] spk_2:
for that information scotty

[00:55:53.74] spk_3:
be with

[00:55:54.07] spk_2:
me next week for nonprofit radio

[00:55:55.92] spk_3:
Big non

[00:56:12.84] spk_2:
Profit Ideas for the other 95% go out and be great. Yeah.

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