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Nonprofits Provide Essential Services Government Does Not: A Historical Perspective

by Guest Blogger

This piece, with minor adjustments, originally appeared in the Kennebec Journal on March 24th. Author Lisa Miller is member of MANP’s board of directors, and serves as the Senior Program Officer of the Bingham Program, a charitable endowment based at Tufts Medical Center in Boston. Lisa was also an elected Representative in the Maine House of Representatives for six years, serving a district of five small rural towns.

Nonprofits Under Attack

Taxing Maine’s nonprofits is currently a very hot topic in press and government circles. The Governor has declared nonprofits “takers not givers” in their communities, while in the same breath stating that they “provide valuable services.” Legislators quickly defend their local nonprofits while acknowledging the need for more revenues for cities and towns from these same organizations.

Specific proposals include the Governor’s plan requiring municipalities to collect tax on nonprofit properties (making Maine the first in the nation to do so). His tax package also zeros out deductions for charitable contributions and broadens sales tax to a number of new services, affecting such nonprofits as museums, historical sites, and summer camps.

Legislators are proposing bills to require more extensive service payments by nonprofits or permit fire districts to charge fees for coverage in their areas. Some are writing editorials questioning the use of public funds by nonprofit organizations. Others are demanding more transparency among organizations receiving public funds.

The Evolving Role of Nonprofits

Where did this nonprofit sector come from and why is it so prominent in Maine? And what is the sector’s relationship to government?

The development of nonprofits in Maine is closely related to our historical and cultural view of government that emerged from colonial times. New England states value governance that is close to the people, hence the emergence of villages and towns as the central units of government. In fact, some localities had laws that no resident could live more than a mile from the center of the village.

Contrast this with larger colonies, such as Virginia or the Carolinas. Settlers and farms were distributed over a vast area. Those states adopted the English concept of the county—a unit of government organized to span broad distances. Later, as even larger western states were added to the Union, the importance of strong county structures grew.

Over time, county governments evolved in complexity and scope, from early roles in police protection, jails, and courts to such functions as highways, public health, welfare services, sewage, garbage, and regional planning. While Maine did develop counties, the functions were limited and the dominance of municipal government remained.

Maine’s villages and towns, however, did not have the resources to provide many services. That’s where nonprofits came in. Since colonial times, churches, universities, hospitals, granges, and private schools in New England have provided needed educational, social, and health services in small communities. The late 1800s and early 1900’s saw further growth in the nonprofit landscape with the appearance of YMCAs, Boys and Girls Clubs, Goodwill, Community Chests, and others.

Fast forward to the 1960’s, when we saw tremendous growth in nonprofits nationally and in Maine. The War on Poverty provided large grants to states and local governments who contracted with nonprofits for services. Eventually, the federal government contracted directly with local nonprofits and the numbers of organizations grew.

We witnessed a huge shift in the mental health system at that time as well. Many states followed Ronald Reagan’s lead in California and closed large, often antiquated, psychiatric institutions, sending the residents out to communities for care. National legislation established community mental health centers but there were never enough to meet the need. Eventually, many county governments stepped in to provide care and some even opened hospitals.

Maine saw its own institutional watershed. Due to legal action in 1975, hundreds of Pineland residents with developmental disabilities were moved out into the community and the institution finally closed in 1996. In 1990, the Augusta Mental Health Institute became legally accountable for setting up a community‐based system of care. Many agencies and residential homes sprung up following those decrees to enable former institutional residents to live productive lives in their communities.

Nonprofits: An Essential Complement + Supplement to Government Services

The theme emerging here is that many nonprofit organizations were formed to perform the work of government, especially in New England, where county government is not prominent. In fact, three New England states appear in the top ten for proportional numbers of nonprofits. The nonprofit sector has largely emerged from Maine’s propensity for smallness.

By choosing to limit the scope of local government we have encouraged a broad system of nonprofits to fill gaps. Let’s therefore embrace their important role in our behalf.

Learn more about why nonprofits matter.

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