When was the first volunteer organization created in the U.S.? 1736! Were donations to charities always tax-deductible? No! In 2024 and beyond, as our societies and communities absorb dramatic changes in in our democracies, how we orient around social justice, and how technology impacts our daily lives—understanding the history of the nonprofit sector is more important than ever.
There are many questions and facts about nonprofits that may surprise people that work in the sector. While today we take for granted a long and storied history of nonprofits, civil society organizations, and NGOs within the United States, it is important that we reflect on how we arrived at this moment.
While “nonprofit” organizations themselves would formalize around more modern tax codes, social impact organizations actually pre-date the constitution and formation of America. Famously, Alexis de Tocqueville wrote in 1831: “I must say that I have seen Americans make a great deal of real sacrifices to the public welfare; and have noticed a hundred instances in which they hardly ever failed to lend a faithful support to one another”.
Check out these pivotal moments in the history of nonprofits, foundations, and philanthropy throughout American history:
- The Union Fire Company in Philadelphia, founded by Benjamin Franklin in 1736, was the first volunteer-based organization in U.S. focused on fighting fires.
- The Society for the Relief of Free Negroes Unlawfully Held in Bondage, founded in 1775, was one of the earliest abolitionist organizations in the United States. It was later reorganized as the Pennsylvania Abolition Society. It is considered one of the earliest social impact organizations in the United States, though modern nonprofits as tax-exempt entities would come later.
- The first ‘modern’ nonprofit is considered to be The Peabody Education Fund, founded in 1867 with the purpose of integrating poor white and formerly enslaved people in the south.
- In 1881 Clara Barton founded the American Red Cross, pioneering large-scale disaster relief efforts.
- The United Way was founded by religious leaders in 1887 in Denver, originally called the Charity Organizations Society.
- In 1894, the Wilson-Gorman Tariff Act became the first attempt at a federal tax exemption for nonprofit organizations in the United States. It was later ruled unconstitutional by the United States Supreme Court a year later.
- The beginning of the modern IRS tax exemption structure for the nonprofit sector in the via U.S. Tax Code legislation was enacted between 1894 and 1969.
- Revenue Act of 1909 created a Federal Tax Exemption for charitable organizations’ revenue. The act established a federal corporate income tax and provided tax exemption for nonprofit organizations, including those organized for charitable, religious, or educational purposes.
- In 1913, the Rockefeller Foundation is established, marking a new era of strategic philanthropy.
- The Revenue Act of 1917 created the individual income tax deduction for charitable gifts during WW1 when tax rates were rising.
- The first community foundation was established in Cleveland, Ohio, in 1914.
- Among the first nonprofit organizations to be designated as a private foundation by the IRS was the Ford Foundation, which was formally recognized as a private foundation in 1969 by the Tax Reform Act. This Act established requirements for foundations, including but not limited to rules around disbursement.
- Creation of Americorps in 1993 under Clinton administration with the National and Community Service Trust Act of 1993.
- The first National Conference on Volunteering and Service was held in 2010 kicked off in the Obama administration. That same year, The Giving Pledge kicked off by Warren Buffet, Bill Gates, and others encouraged billionaires and the mega-wealthy to give away their earnings.
- First Giving Tuesday launched in 2012 by the 92nd Street Y. The day focused on becoming the largest single day of giving following Cyber Monday.
- Among the first major pieces of legislation specifically addressing the needs of the nonprofit sector was the Nonprofit Revitalization Act of 2013 in New York State, which modernized how the State engages and monitors the nonprofit sector.
- The first White House Summit on Philanthropy was held in 1999 in the Clinton administration.
“The future of nonprofits and social welfare in the United States requires an understanding of the history of how we got here.”
Senior Strategy Manager Nick Azulay