Among the first nonprofits in the US were the YMCA (1844), focusing on youth development and the Red Cross (1881), which provided military support and disaster relief.
In 1894 the Tariff Act was signed into law on August 17th, giving nonprofits and charitable institutions special status, providing them exemption from the newly created federal tax. In 2017 the anniversary of the Tariff Act was memorized in the creation of National Nonprofit Day.
As the ninetieth century gave way to the twentieth, more nonprofits established themselves with many expanding their fundraising by collecting donations from corporations and employees. These funds were then distributed to smaller, more local institutions, removing a portion of their fundraising burden. The National Association of Federated Founders (1927) was one of the largest and most successful. In 1970 it changed its name to the United Way.
In the 1940s, the nonprofit world changed when President Franklin D. Roosevelt requested six nonprofit entities come together to create the United Organizations for National Defense, known now as the USO. The six original members were: National Travelers Aid Association, National Jewish Welfare Board, National Catholic Community Services, YWCA, YMCA, and the Salvation Army. Their mandate:
“to aid in the defense program of the United States by serving the religious, spiritual, welfare and educational need of the men and women in the armed forces and defense industries… [and to the] maintenance of morale in American communities…”
They raised millions, created the first war-related blood donation program, and recruited thousands of nurses to the war effort, proving the effectiveness of nonprofits in addressing times of national crisis.
1969’s Tax Reform Act created the 501(c) 3 section of the Internal Revenue Code. The Act allowed 501(c)3 nonprofits to pass on their tax exemption to their donors, increasing their fundraising capacity. In 1976 Congress passed a bill expanding on the 501(c)3 designation allowing these organizations to spend up to $1 million per year on lobbying increasing the roll of nonprofits in American society.
In 2009, with the economy in free fall, the government backed the nonprofit sector, betting they could provide targeted aid to communities struggling with massive recession caused unemployment.
By signing The Serve America Act, President Barack Obama released $1.4 billion of funding for nonprofits. The Act included – the Social Innovation Fund to give organizations assistance in expanding services to low-income communities, the Volunteer Generation Fund to help nonprofits recruit and support more volunteers, and the Nonprofit Capacity Building Program focused on assisting local nonprofits to continue their work in hard-hit communities.
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