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 history is told by Dr. Robert Penna, author of the book, “Braided Threads.” (This originally aired August 3, 2018.)
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Welcome to Tony Martignetti nonprofit radio. Big nonprofit ideas for the other 95%. I’m your aptly named host and the pod father of your favorite abdominal podcast. It’s good to be back home. My studio mic should sound much better than the previous couple of weeks. Oh, I’m glad you’re with us. I’d come down with ichthyosis if you dried me out with the idea that you missed this week’s show. Here’s our associate producer, Kate with the highlights. Hey, Tony, we have how we got here. It’s the story of the unpredictable trajectory that led to today’s us nonprofit sector. How did we come to be what we are? The history is told by Doctor Robert Penna, author of the book Raided Threads. This originally aired August 3rd 2018 on Tony’s Stake two tails from the plane. The overhead bins we’re sponsored by donor box, outdated donation forms, blocking your supporters, generosity, donor box, fast, flexible and friendly fundraising forms for your nonprofit donor box.org. Here is how we got here. I’m very glad to welcome uh Doctor Robert M. Penna 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 non profit organizations and associations across the US. 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.com. Welcome back, Bob Penna. Thank you very much for having a little closer having. Thank you very much for having me. My pleasure. Thank you for coming to the studio. Um This uh braided threads uh overview, overview. Um I think that I think you make the point. There’s just not enough of an appreciation among those of us in the nonprofit sector. It’s, it’s not where we, where we came from, where we came from. Well, I, 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 stop to think about where it all come from and uh like so much else around us. Uh We Americans are notorious for a lack of a historical sense generally. Uh We just kind of accept that, uh you know, OK, that mall was built for my convenience right before I was born, forgetting about what was there before being a farmer got in those, what the same thing with the sector. Um, people just accept it for what it is today and even though they don’t know, the real size or the real dramatic, uh, you know, economic impact and, um, I thought that that story ought to be told. It actually started, uh, uh, as a, what I thought it 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. What’s the thread that you think is most important resiliency through the history of resiliency? In other words, it is changed. The reason it’s called braided threads is because it is not uh one unbroken series of events uh that uh took place in sequential honor and all in one line for the history and, and the strength I thought both of the 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, it’s a story of uh before it was a formal sector such as it is today. It still was a movement. It was a, it was a things that people were doing and it ricocheted off of reacted to but also impacted events for over 200 years. You’re, you’re clear to point out that it’s not a history of nonprofits. No, it’s how the nonprofit sector evolved because of discrete events in history. Well, that’s why it’s called an overview. In other words, I, I didn’t start out with day one and then 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 uh uh happened during or to the history of the sector. And those are the things I wrote about. Now. Um I’m not sure if we’re gonna go strictly chronological. We, we made the book isn’t actually strictly chronological. There are places where I have to double back. Um Now, when you were on last time we talked about uh Queen Elizabeth, Queen Elizabeth the first. But I know Martin Luther uh piques your interest. I thought he’s pre by about 60 by about 60 years. I, I particularly thought it was interesting because if you look at the sector today, it is largely secular uh 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 or uh organizations and affiliations, but it is a very humanistic secular. In some cases, you might say liberal, I don’t know uh uh movement and yet its roots were distinctly religious. So how did that break happen? Why did that break happen? Where did, and personally, I trace it back to Martin Luther and the reformation. So you are because up until then, uh I mean, again, and this is not to be uh 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 of Christianity, the official uh uh religion of the Empire in 330 Ad Europe was Catholic and then comes along Martin Luther and he initiates along with a few other people, 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 was Sola fide faith alone. He split them and he said you can do all the good works you want, they’re not gonna get you into heaven. Faith is and he divided it at that point. And that crack, that infinitesimal airline crack got wider and wider and wider and wider people began to realize over time, maybe they never even articulated it, but 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 theretofore and that’s why I peg one of the 1st, 1st steps towards what we have today and particularly in the United States with Martin Luther. And now uh so, and then Queen Elizabeth, Queen Elizabeth was important. Now, if listeners want to go back, you can go back to uh 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 can go to uh Tony martignetti.com, Search Bob’s last name Penna Pe Nn A and that June 2016 show last time he was on uh we, we’ll appear to you very quickly. Um Queen Elizabeth, Queen Elizabeth in 1601 issued something that was called a uh statute of charitable Uses. And what she did was um and this not to say this had never happened before, but she codified 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 b she was putting into the charitable pot things that theretofore had not been considered charity, charity, but charity was always personal to help the poor. Now she’s moving far away from help the poor bridges, bridges and ransoming hostages or also uh putting together a sort of a charitable pot for the dowry for poor maidens, ok? Um There were things that today you might call either 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 to 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 as personal charity. Putting the uh the coin in the beggar’s hand beyond Martin Luther uh religion, the, the evolution of religion has been tremendous, particularly in the United States. We’re probably gonna hit religion a bunch of times. But give us an overview of why, why you say tremendous. Well, I would say two reasons first off because of the impact of puritans. Um I if you wouldn’t mind me mentioning another author, Colin Woodard’s book American Nations, he makes the, what’s his name? Colin Woodard American Nations. He’s in your, in the introduction. And he makes the point that uh they were founding cultures here in the United States and one of these founding cultures he calls yanked basically the Puritan culture. And uh the thing of it is that, that had a tremendous impact because their world view, 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 DNA of that colony. And what it became eventually in terms of, one of the, I would say dominant cultures of the United States was this concept that we have a responsibility, a civic, civil un responsibility for helping each other. We’re gonna come back to Winthrop. 01 of the New England Puritans, right? It’s time for a break. Imagine a fundraising partner that not only helps you raise more money but also supports you in retaining your donors, a partner that helps you raise funds both online and on location. So you can grow your impact faster. That’s Donor box, a comprehensive suite of tools, services and resources that gives fundraisers just like you a custom solution to tackle your unique challenges, helping you achieve the growth and sustainability, your organization needs, helping you help others visit donor box.org to learn more. Now, back to how we got here. So let’s jump ahead. You know, we may come back like I said, we may not stick chronological, but you mentioned Winthrop, uh New England Puritan the New England Puritans were different than, in terms of their, their uh concept of charity than the Southern. It was also ok. The pioneer was also, it had a lot to do with was the, the, the way they set their society up if you think of the South. Um The first off there was the Tidewater South, the uh Maryland, Virginia, uh uh Northern North Carolina, that was one society. But then there was what we came to know for better or ill as the South. Eventually the confederacy et cetera 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 and the poor didn’t matter. They need education, neither white nor black, it didn’t matter. So all of the things that we take now as thinking of they are earmarks of society. They’re 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 gonna be at one end, the congregational, of course, uh the, the school is gonna 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 uh a charitable efforts. They didn’t exist in the South since religion is a thread that you, it’s very important the congregationalists. And in that time they were the, they were the, they were the state religion in Massachusetts. Oh, just in Massachusets? Mass in Massachusetts, Rhode Island, Connecticut. As you went for the South, it became the Anglicans. In fact, the Anglicans were a minority in, in Massachusetts. And what, what became of the p you don’t, you don’t see a pilgrim church or a Puritan church anymore. They became the congregationalists which were supported by taxes. So, 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 in, in every, every colony, some of the northern state, every colony not know, including eventually, you know, as things got more settled down south, the Anglican, the Anglican, the church of England was the state church. So for example, uh in uh uh Virginia had to deinstitutionalize the Anglican church. So taxes wouldn’t go to it anymore. But it did have this thread Tony of uh o of how religion impacted it. It goes through this whole story because uh when the ministers 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, the 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, uh they didn’t need a 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 what, like what some of these traditions that, well, for example, the 1st, 1st nationwide survived the first nationwide uh uh charities if you wanna call it 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, the precursors of all the big ones, you know, today, they were the first ones who were like coast to coast. What else? Is there another tradition that uh you can, you can, I think, I think another tradition I would, I would connect is uh uh the activism of uh many, many uh 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 what a lot of the quote, charitable work that was done down there amongst the freedmen, amongst the freed slaves, et cetera was done by Northern Methodists and Northern Baptists. So this, this threat, this involvement, but they weren’t doing it necessarily uh for the, for the same reasons that going back to, you know, the 14 hundreds, the, the Catholic slash Christians were giving money to the poor that was trying to buy their way into heaven. It was slowly completely different. This was, this was a uh uh a contribution to society. Exactly. It was, it was like a secular, the nation beyond. It was a secular act being done by people who, who belong to uh a, 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 they were Baptist. This strain never went away. What was uh I’m jumping way ahead now. We’ll come back to the constitution and separation of church and state. But uh um ancient uh Greek uh Greece, Rome, Egypt. What was, what, what was the conception of charity that well, Egypt does it vary by Empire or generally speaking? I mean, even in Egypt, there are, there are higher hieroglyphics that have been found and uh have been translated that roughly say that uh you know your place in the afterlife and dependent upon how you treated pe 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 want to be noticed. So let’s say you’re 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 that charity in those days did the poor didn’t count, the poor didn’t exist on anybody’s radar screen. You had a totally different perspective of human nature, human value and it was for your own. It was for your own, good, for your own good, your own career, career, career development. But the whole idea you could just, I could spend 400 bucks to go to a conference. Uh Then I would have had to build a temple to Athena or you could today you could make a big donation to a hospital and then put a plaque on the wall with your name. This is Tony Martignetti Wink. I’d rather build a temple. But um ok, that’s interesting. All right. Thank you. So, so let’s go. All right. So now we have uh uh our constitution, our bill of Rights, uh its first amendment. Um obviously religion. No, no state religion and, and separation of church and state. So how did these factor into these factored in three different ways? Number one part of those, those, the first amendment is the right of assembly, um which the British kept an eye on uh when they were, when they were in charge. Well, now you could uh formally have, you could have group meetings, you could organize, you didn’t have to worry about perhaps the king’s soldiers would come and say break this up while you six people was gathering here. One of the things that people did was they formed organizations de Tocqueville um wrote back in 1830 something when he wrote his famous, uh his famous review of Ame of America based upon his tour that Americans were already organizing for virtually everything. You name the thought, music, culture of politics, something that they thought would be done. And Americans were organizing. He has a, he has a comment that says, uh where in England you will find a uh uh uh a, a person of 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 citizen’s organization. Interesting. So this could have been a De Tocqueville was here in like the early 20 you know, the 1st 20 years or so of American independence. I mean, I believe he wrote Democracy in America somewhere around 1834. Um, and these were already his reflections. Uh by 1820 the New England area already had over 2000 of these citizen voluntary organizations. They were the precursors of today’s nonprofits. Yeah. And how were they structured? W what do we know about? Their, their organization was structured like they were structured, sort of as, uh, you know, an association. They had uh bylaws, 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 didn’t exist back then. Uh All right. So we’re in the, like, early to mid 18 hundreds. Are they, are they doing their own independent fundraising? Yes, they were doing well. They were doing, they were doing, we would, they would, they would call a subscription, they would call it a subscription. I put out a, a subscription subscription request and it was today’s fundraising but that they called it a subscription. But the key things in those days were threefold. Number one, 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, uh, separate fiscal ability to buy, to sell to, they, 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 was no way to keep it going. It was very, very crucial for them to eventually get this right to uh to uh 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, 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, legis couldn’t touch, 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 precede government in various uh efforts, whether it was uh schools for the Children of Freed uh former slaves. Whether it was schools for uh today you’d call it, you know, handicap the deaf, the blind. Uh it, 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, um, um, 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 they were, there was a privately funded asylum that was created just for those people, just for those Children, for the poor as well. Very well almshouses. They, yes, very, very largely funded by these private entities, but very often, particularly in New York City, New York City under Mayor Dw Clinton High School in Bronx, Clinton in the Bronx. He became, uh, 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, in, in the city. And it was even back then. We’re talking early, I’m gonna say around, I’m guessing here, I’m trying to remember 18 twenties, something like that. I don’t remember the exact years of his, uh, his term of office, but the city was already paying what 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. And think about it, Tony, this is 2018. You’re almost 200 years later. We’re still doing the same thing. Yeah. Yeah, I love that. Well, well, around this period, let, let’s take like mid 1800 or so. What, what’s happening in the, in the rest of the country with very well. Slavery and the civil war are, are percolating and a tremendous number of, of, of um efforts, private government effort or rather private citizen efforts uh were trying to have the slave trade stopped because the constitution originally said that the uh uh the the government could not do anything even to end, end 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 and 99% of them up north. Um A lot of them either spurred by or uh um uh inspired by the culture of yanked do, which was spreading across the country at that point. I mean, think about it from the Mohawk Valley to the Ohio Valley. It’s we spread from east to west and this culture came with us. And uh the number of people who felt that this was a uh uh 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 abolish slavery. But at the same time, uh penal reform, um uh uh reform of, to, to, to end of what’s the biggest show in New York Hamilton, right. Hamilton and Burr dueling, outlaw dueling. Um all these are, these are, these are efforts by the, by the nonprofit organ by these organization organizations. Ok. Now, the term nonprofit didn’t come along until 1950. Yeah, we’re gonna get, well, the right, we’ll get to the tax exemption. Ok. But by these or penal reform, what else, what, what can you think of other examples, what they were doing around this time? Well, it was very, very interesting, uh, amongst these subscriptions today. You know, there, there’s, everybody’s familiar with the term 501 C three. Well, the three denotes one level of 501 c, there are actually 29 of them. Well, one of them, one of the earliest was, uh, what was called mutual society, sort of mutual aid or mutual. Today. There are mutual insurance companies which are nonprofit. They started back then. The idea is you would again have a subscription and if, uh, a fire hit your house, this would pay money to you to get you back on your feet. This was another nonprofit effort that didn’t exist, uh Benjamin for every year. Well, I guess that was, remember Benjamin Franklin, but every year I get my uh subscribers check from uh USA a right, a mutual mutual uh benefit uh insurance insurance company. And now, and bank, uh Ben Franklin, uh Ben Franklin, uh uh is credited with founding amongst the uh first uh uh for nonprofit 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, effort uh that he founded uh in, in Philadelphia uh 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 have a civic there. There wasn’t a civic, a civic sense. We have community sense. It was this my plantation. We take care of everything here. This is why two of the most revolutionary things that happened down there was uh Thomas Jefferson’s founding of the University of Virginia and North Carolina’s founding of one of the first state universities in the country because that’s was unheard of down there. It was just unheard of. So all of these efforts, as they say were northern. We have about a minute before the break. Um The, the tax exemption, I feel like this is a good time. When, when did that, when did that, uh, the tax exempt tax exemption started way, way, way back because you have to ask about which taxes. So it’s probably gonna be more than a minute. Wasn’t religion, wasn’t religion, the religion first, exemption, religion and then also schools and things, things of that nature. So I go back to that. It broadened but it started with religion. Ok. So we teased it together and you always do. Thank you very much. Always tease. It’s time for Tony Steak Two. Thank you, Kate. I have another tale from the plane. Yeah, about the overhead bins. Uh, regrettably last week’s civility on deplaning and how humane and polite everybody is, uh doesn’t quite carry over to the overhead bin courtesy. Uh, it, we’re, we’re, we’re, we’re doing some things not very polite uh, in the overhead bins for instance. And I’m, I’m just seeing this more recently too, like, I don’t know, just within the past six months, even that just that recent putting small bags like backpacks or a shoulder bag in the overhead bin, that smaller stuff belongs underneath the seat in front of you. That’s courtesy. So that the overhead bins, which are bigger obviously and can accommodate the bigger bags. That’s where the bigger bags are supposed to go. But I’m seeing more people putting smaller bags in the overhead bin and, and I’m checking these same people. It’s not like they have two small bags. They got one under. No, it’s not one under the seat and one in the, in the overhead, they’re not using the space underneath the seat in front of them so that they can stretch their legs out and put their feet there. Well, that’s not really the way the plane is designed. That’s not the most courteous thing to do. So, please your, your smaller bags use the space under your seat and how, I mean, how many people can fit their feet under the uh in the underneath the seat in front of them anyway, although, well, although maybe in the main section, it it does go, it can get a little tight but you, you still, it’s being discourteous. So please not the not the smaller bags in the overhead bins, the smaller bags in the seat underneath you and save the space up ahead, up, up over for the bigger bags. And then when also when you’re putting your bigger bags in, you know, again, just politeness put them in so that the top or the bottom of the bag is facing the aisle, not the side of the bag. So don’t put it in long ways, put it in short ways so that more people can fit their bag. And even if it’ll stand up on its end like a book, if it stands up on its side, that’s what I mean on its side, then stand it up so more bags can stand up and then the final thing you’re supposed to check to make sure the bin will close before you walk away because it may look like your bag fits, but it could be, it’s a little too tall. The bin is not gonna close. If that’s the case, then we’re just gonna have to go. The flight attendant is gonna have to find you later on and you’re gonna have to end up checking the bag uh at the gate anyway, or you know, plain side anyway. So it’s not like you’re getting away with something just you know, the the the courteous thing make sure the bin closes so that uh we don’t have a problem later on, right? Delayed flights. Nobody wants that delayed flights. Ok. A little bit of a rant. I know but uh the overhead bin space, you know, let’s be civil. Let’s be courteous like we are with the planning, with the, with the, with the deplaning it works out so well, it’s so smooth, please. We, we can carry that over to the overhead bin, courtesies. I know we can. That’s Tony’s take two Kate. So we talked about this last week, I’ve never flown. So maybe this is a dumb question. Does each row have their own hubby? Uh No. Uh it’s, it’s pretty much a free for all except uh first class. It’ll say, you know, these are for first class bags only but when it gets really crowded in the back you then they’ll use the, they’ll use the, the, um, the first class space doesn’t matter. So it’s not by row but sometimes by cabin. Uh, or, you know, um, uh, uh, it’s, uh, service service or even Delta calls it, which experience like is it first class or is it comfort plus or is it main cabin? So there might be divided space by service but no, not by row. We gotta get you on a plane. We gotta, we gotta, we gotta get you, we gotta get you on a plane. This I feel bad that you’re asking this question. I feel like there’s an experience that everyone needs to like have at some point. Well, yeah, eventually you’re gonna get on a plane. It’s gonna be just be too far for you to drive or walk. Uh I don’t think you walk to walk in like 650 miles, but you could drive, you could drive it. All right. We got to get you on a plane. That’s, that’s all, that’s all. Well, we’ve got VU but loads more time. Here’s the rest of how we got here with Doctor Robert Penna Bob Penn 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 our sector, our community evolved to what it is now. Um Get the book you know, we, we’re hitting some threads, some braided threads if you will. But, um, you want the full story, you know, even, you know, Bob mentioned something. I was like, oh, yeah, the Dartmouth case, you know, I, I can’t remember at all. Um, just buy the thing for Pete’s sake. All right. Um, where were we? See now, I’ve, I’ve, I’ve ranted about bees and sunshine and all this live love. Where were we? You also screwed up the whole thing about baseball. But that’s another thing. Well, yeah, baseball doesn’t have touchstones. But anyway, that’s a different story. We’re talking about, we’re talking about taxes and tax exemption and that’s what you, you had asked about tax exemption. Thank you. So, it started religion was the first one. What period are we talking about? Now? Going, go, going back to probably the 16 hundreds. And the point of the matter is you ask what taxes, what taxes, federal government levied very, very few taxes. Before that the states 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, uh, the, the parsonage where the minister lived. Uh, then if there was a set, another building, a library perhaps, then schools obviously were not taxed, uh, be they private or be they public, uh, clearly the public government is gonna tax itself. So public institutions like a public school would never, we were never uh uh taxed. But the idea was that it, the, the, 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, uh, 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 why had tried to get a tax exemption, they had gone to court, they’ve been turned down, they had to pay the tax bill. But everybody thought gee the y should be in, in this. So why is very interesting too uh in the World Wars? Yeah. Well, that’s right in the book, right? That they were also involved. This is the book I know. Yeah, but what I’m saying is that the, the, the, the, the why was not really was not mentioned or organizations like the, why now you mentioned New York State? Um I love this. Uh theres one thing I want to read, this is from 1799 uh New York State. You, you, you cite New York State as sort of representative of what was happening around there. There were very issues but it was very representative. This is an act for the assessment and collection of taxes, New York State 1799 excerpt, uh 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, alms house or property belonging to any incorporated library shall be taxed by virtue of this act, right? And that, that list just kept going. And as I said, at one point, 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 MC A and the YWC A young, you know, young men and young women’s Christian Association. So the 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 gonna 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 nonprofits cause that concept came way later. Um But these organizations, these voluntary and for a long time, it was called the voluntary sector of these or yes, that was the name of it. Um, these organizations increasingly became, uh, tax free, what we know today as the people call them nonprofits. Um, I’ll, I’ll do this relatively quickly. Um, one of the last Revenue Acts of the 18 hundreds, uh, included this idea that these kinds of organizations could be, uh, should be exempted from federal taxes. That particular Revenue Act was found unconstitutional. However, when things started to fall into place and you’ll 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 nonprofit. What does that mean? Does it mean they can’t make a profit? They can’t make money? No, what it means is that what any excess extra either has to go back in? Well, it has to go back in. They can, this was contemporaneous with the 16th amendment. It was, well, it was shortly following the record, but what is a nonprofit means? That really mean? Does it mean it can’t make money? No, that doesn’t. That’s not what it means. What it means is it can’t take that profit and distribute it to partners, distribute it 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, the, the, the, the third idea uh is, is, is that, um, the, uh, well, the, the role was saying the, the idea is that nonprofit, non distrito 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, fairly Mazin. I like that word. That’s what I believe that is. But maybe you’re right, maybe you’re right. Um, remember I come from the Bronx, so I’m different pronunciation. Um, well, you were wrong about, you were wrong about baseball too. So, our, our, our, our present tax, a tax code comes from 1954. That was the first place where they laid out, uh, what we have today, this 501 c category and where, uh, the general exemption from. And 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 or 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, my tax free number and they won’t have to pay sales tax on the restaurant meal. Yeah. Ok. So that’s where all that came from, but it was in terms of its codification. Although the roots go back to the 16 hundreds codification goes back to 1954. Ok. Is that the 16th amendment? Was that the, uh the 16th amendment was 1913? That’s what allowed the income permitted an income tax, federal income tax, right? Ok. Ok. Um, let’s, uh, I don’t know where World War One, we saw an expansion. Uh Yes, yes. Uh Why, why, why? Because, because, well, because there was no functional way for the government to step in. One of the more fascinating things about it was that uh the, you mean we talk about the, why? The, why was the first organization to do? What today? You think in terms like the Red Cross, you know, powspow camps, uh you’re checking on status, bringing pre, you know, prisoners, pre nobody did that. This government sure as heck did neither the union nor the Confederate government. It was the Y the Y MC A 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 say that the Y was the first large scale service corps? Really? You could say that you could, you could, you can say that the other. So it comes along World War One. There was a need for this but nobody else to do it. The, why the, why it was the Y MC A initially or was it, why was there a Y? No, well, there’s two, there’s one Y MC, a young men’s Christian Association and the young women’s which came first. Ym. So, um, first large scale surface corps and, and, well, well, what happened was this, in other words, when World War One started? And uh, uh there was uh a need when the Americans got involved, when there was a need to again bring 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 EF got, got across to the other side, across the pond, expeditionary forces, right? Uh American expeditionary force, uh The whole idea was somebody had to do the same sort of thing. And the y 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 there was a tremendous amount uh of uh um refugee, if you will uh victims, victims, relief. I mean, you know, war is terrible, whatever war it is and there’s always collateral damage, the people who are 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 they have a war to try to win. So who took care of those people? The refugee problem was tremendous. Belgium became uh one of the worst uh sites of it because when the Germans invaded Belgium, the, the allies said, well, you have to feed the Belgians because most of the Belgians of food came from outside. Germans said, no, we’re not gonna be bothered doing that. We’re, you know, feeding our troops. Do 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 nonprofit before our and there’s actually pictures, one of the few pictures that are in the book before the war, before the US 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 there 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 have shared more pictures by the way, I like pictures. 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 US government was committing money but a great deal of it. You know, I don’t know, proportion, 60% maybe uh was all private. Today’s U. So was formed by a collection of a bunch of the collaboration of a bunch of the organizations, you mentioned the YMYWC A Red Cross. Uh that’s today’s United Service organization, right? And that’s where, that’s where it was a coalition that was found. It 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, do you’ve heard of United Way? Everybody knows United Way, do you know where United Way came from? Community chest? Community Chest? And you know, today most people know community chest is a sort of a space in the car on Monopoly board. OK. Community Chest was local fundraising specifically for disaster, personal tragedy, uh private relief. So if you lost your job or the factory burned down and five people lost their job. Community chest was the, 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 in the church might help them out or as well or the, you know, temple or, and you know, there’s a lot of that. I mean, both and there’s a whole section there on both the Jewish and Catholic specific uh um con contributions to what we know today as the uh uh um American nonprofit sector. And that, that’s interesting reading on it on its own. But this isn’t to say the churches weren’t 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 worker’s 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 uh cooper fundraising. If everybody fund fund rosed for, for fundraise, fundraise, whatever the, the, the past tense of that is by themselves. You want it with competing appeals and they’re banging into each other. Well, uh it actually started, I believe it was in Cleveland. It was one of the first ones. Uh I know there was one in Denver, there was one in uh uh in, in, in uh Detroit. There was one I believe it was Cleveland. Was this around the, was this also the Hoover administration where nonprofits complain where, where we’re basically testified before Congress, we’re basically running over each other, stepping over each other, trying to, trying to help? Oh, yeah. That was also, was that the Great Depression or no? Yes. Yes. And No, no, there was what you’re talking about was World War Two, stepping on each other and over that was World War Two. No. What happened was when the, uh, when the depression hit, um, sort of the thought was that, uh, uh, the community chess would step up and community chess tried, they would have, instead of one annual drive, they were having two annual drives, they tried three. But the problem, as we all know, was much bigger than anybody could have 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. Well, it was obviously FDRFDR appointed, appointed Harry Hopkins to run the chief effort. Harry Hopkins thought that it really should be local government that was doing this, local government sitting off of the side, they’re very happy not to be involved. So what Harry Hopkins did was he said, ok, we’re gonna do this and it’s gonna be federal money. But um, none of the money can go to what today would call nonprofits they got completely cut out. That was not right. That was not to punish the nominee that was to encourage, that was to force the states unwilling states and states that had not taken on public welfare to do it or do we give the money to the state? But we, the federal money won’t go to these community chests. They were trying to force the hand of the unwilling recalcitrant 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 keep, we’re talking about community chess, 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 char. And now they a couldn’t do it anymore because it was too big a job and b the federal money couldn’t go to them. How did you know Harry Hopkins said no. So they re invent themselves. I mean, I said to USB 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 Feds said you can’t have any of you no more money for you. So um say a little about the uh the Jewish contribution to, to, to what we know. I think this is utterly fascinating. Uh There’s a book I believe the guy’s name wrote. It was Cahill K, I don’t know how Cale or K 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 March. Think about where they, these people had 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 a 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 allies 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 uh space. We are concerned about the handicap, we’re concerned about all sorts of groups that you might call marginalized or 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 workingman such and such, but you had to be Irish, the Jews said no inclusive inclusive Excellent. Thank you, the Jewish tradition. Uh I, I just, I, I cannot emphasize that enough because I mean, truly, today, if you look at, at, at, at the, the whole core of the nonprofit mission, it is inclusivity. And I personally feel that without the uh uh incredible Jewish influence that, that uh particularly here in New York and New York became kind of like one of those centers of the nonprofit world. But still is, I, I cannot emphasize enough how strongly I believe that, that, that worldview, that thread um truly, truly helped to imprint of what we have today. You gotta get the book because there’s uh some things we’re not going to be the Great Depression. Uh Kennedy’s uh New Frontier and then uh Johnson and Johnson’s war against four war on poverty. We have what, 34 minutes five, I want to talk about the future too. Ok. Then I’ll do very quickly. Let me just do Johnson Johnson set us on the road that we’re on there. War on poverty, war, right? The Great Society. War on Poverty. We are today farther down that road and that road has been 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 than originally, but it is the exact same road. What Johnson did was, he said we are gonna take federal money and we’re gonna change poverty. We’re gonna 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 have time now to go to talk about what happened to nonprofits during the fifties between World War Two. And we, we, you don’t just get the book. Well, I have the book. Oh, you mean they should get to the 13,000, 13,000 who are joining this conversation? They hope to God, you have a copy of it. 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 fe feeling and maybe there are people in the sector who 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. Uh the nonprofit sector is not just the partner of government. There’s, it’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, of the great recession were giving corporate was down. The corporate is not that big, it was government money. The sector today is very, very reliant on, on. So again, Johnson set us on the road that we’re on now and we are just farther down. It and very much deeper into it. I wanna, I wanna look, I wanna look forward you uh you cite uh generational change and technology change as our biggest uh opportunities, opportunities and 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 uh the last uh third or 25% of the book. I think that the three biggest things that are impacting the uh the sector and sectors, largely unaware of it is number one, 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 chart in the book. One of the pictures, one of the pictures of the chart I drew I drew that myself dramatic rise. Um Now there’s over 1.76 million actually nobody as, as uh Mr Solomon, who’s one of the SAGES of the, of the, of the sector says nobody really knows how many there are. And it’s because there’s no registration, there’s reporting the different story. So the growth, this can’t just go on 50,000 new ones a year, even given 3 to 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 that we’ve never seen before you and I are of an, of an age when we still remember uh uh March of dimes going door to door. Right. That is all the chemist 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 and it’s right there in your finger. The third thing is the generational change. We’re already seeing the statisticians and the demographic. The demographers are 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 us where they will just get the book for God’s sake. Bob Penner braided threads, a historical overview of the American nonprofit sector. You’ll find uh Bob and his book at braided threads.com. Thank you very much, Bob. Thank you next week, Veronica La Femina with your one page strategic plan. Finally get Veronica on if you missed any part of this week’s show, I beseech you find it at Tony martignetti.com were sponsored by donor box. Outdated donation forms blocking your supporters, generosity. Donor box, fast, flexible and friendly fundraising forms for your nonprofit donor box.org. Fast, flexible, friendly fundraising forms for your nonprofit. Love that I I uh it’s such a brilliant alliteration. It’s so much fun to say. Like week after week, our creative producer is Claire Meyerhoff. I’m your associate producer, Kate Martinetti. The show’s social media is by Susan Chavez. Mark Silverman is our web guide and this music is by Scott Stein. Thank you for that affirmation. Scotty be with us next week for nonprofit radio. Big nonprofit ideas for the other 95% go out and be great.
