In 1966 and 1967, the U.S. State Department brought delegations from Scandinavia, East Asia, and Central America to one of Boston’s poorest, most segregated neighborhoods. There, the foreign delegates toured the Roxbury Multi-Service Center as officials celebrated a new kind of organization that used public funding to deliver goods and services via a private, locally controlled nonprofit organization.^{Footnote 1} Grants from several federal agencies enabled the organization to employ Roxbury residents and offer programs on education, job training, housing, family counseling, and youth activities. On display in Boston was a new method of social welfare provision in the United States: a system of public–private partnership in which the federal government funded and regulated the activities of local nonprofits that deployed programming and resources to urban residents.^{Footnote 2} This system was forged as much on the ground by community residents and staff at organizations like the Roxbury Multi-Service Center, as in Washington, DC, by policymakers and bureaucrats. Though experimental during the 1960s, federal support of private nonprofit organizations eventually became a permanent feature of American governance over the ensuing decades, which has transformed the modern state and had a profound effect on urban neighborhoods and the people who lived in them.^{Footnote 3}

The federal funding that supported the Roxbury Multi-Service Center not only reflected a long tradition of public and private involvement in the lives of poor people in the United States but also marked a departure from earlier models with new levels of federal resources, monitoring, and regulation.^{Footnote 4} My dissertation, Outsourcing Government: Boston and the Rise of Public–Private Partnerships, considers the reasons for and consequences of the growth of federal funding to local nonprofit organizations from its origins under urban renewal in the 1950s through President Clinton’s Empowerment Zone program of the 1990s.^{Footnote 5} It traces the path of federal funding as it moved from initial passage in Congress to federal agencies and lower tiers of government, and into the coffers of nonprofit organizations and underwrote programming, salaries, and rents in urban neighborhoods. It then follows the grant reports, requests, client data, evaluations, and disputes that traveled back to Washington, DC, and informed later iterations of urban and antipoverty policy. This history frames the density of nonprofit organizations in urban neighborhoods today as the product of deliberate policy choices that expanded federal assistance to urban neighborhoods and delivered that aid to private nonprofit partners via decentralized, hidden, and increasingly market-oriented channels.^{Footnote 6}

Over the second half of the twentieth century, policymakers and local residents positioned local nonprofit organizations as responsible for managing the problems of poverty and urban inequality. Proponents in Washington, DC, connected this approach to a mythic history of a robust private charitable sector, championing public–private partnerships as a quintessentially American response to poverty in context of the Cold War, civil rights movement, and urban protest. Proponents on the ground saw new public funding streams as a means of building grassroots power, helping their community, and participating in a political system that excluded many on account of income, race, and gender. From a range of perspectives and political ideologies, these new funding arrangements seemed to have numerous advantages: they affirmed the role of federal aid to municipal governments and to social welfare provision yet also affirmed a need for local control and flexibility; they responded to grassroots protest with grants to private organizations yet vowed to monitor and regulate those entities; they created channels of public investment yet coaxed the philanthropic and corporate sectors to follow alongside; and they generated employment opportunities yet did so at a range of salary levels that remained off the federal payroll. They also created an extensive—if not fragile—infrastructure to address urban poverty that allowed the federal government to take a position of support not responsibility. For all the supposed advantages, whether and how these funding channels improved the lives and neighborhoods of poor people remained uncertain.

The consequences of these public–private partnerships are best seen at the local level, where activists, bureaucrats, and nonprofit staff shaped policy and negotiated its implementation. Boston provides an especially fruitful case as the city became part of the vanguard of social welfare experimentation and lessons learned there shaped subsequent federal programming across the United States. Today Boston boasts a robust nonprofit sector and elite knowledge economy, but in the 1950s it faced escalating poverty rates and fears that the best years were in the colonial past. To revive the city, civic boosters pointed to Boston’s reputation for liberal politics, elite research universities, and prominent charitable institutions to capture the attention of government and philanthropic funders and earn Boston spots in the initial cohort of numerous experimental antipoverty programs during the ensuing decades. The records of the local organizations make clear that while monies came via separate streams for aid related to education, social services, youth programming, housing, job training, or health care, they comingled in any individual organization or neighborhood. What in policy appeared as a list of legislative programs was experienced on the ground as a shifting system of urban governance.

Outsourcing Government begins and ends with the boastful optimism of two Boston mayors who, nearly fifty years apart, believed they had discovered a strategy to solve some of the city’s most pressing problems. Those portraits bookend a narrative that explores the shared logic of their proposals while depicting the frustrations felt by generations of Bostonians who tested, revised, and retested the much-touted partnerships between government and nonprofits. The first iteration of these partnerships emerged in the 1950s when, like most cities in the postwar period, Boston underwent demographic and economic shifts that reshaped the metropolitan area and left the city government with fewer resources and higher needs.^{Footnote 7} In response, federal urban renewal offered municipalities a set of tools to redevelop the physical and economic infrastructure of cities. Not long thereafter, as activists and social reformers critiqued the bulldozing of residential neighborhoods and racialized displacement of families, renewal administrators and newly elected Boston Mayor John Collins began to speak of the “human side of renewal” as a broader effort to incorporate the social alongside the physical and economic.^{Footnote 8} Chapter 1 considers how this new phase carried forward several administrative precedents from the earlier stages of renewal—including preferences for public–private partnerships, talk of “comprehensive” and “coordinated” planning, and grants for experimental programs—and positioned local nonprofit organizations as key agents in managing, mobilizing, and addressing urban poverty. In Boston, a series of public and private grants helped establish a new nonprofit organization, Action for Boston Community Development (ABCD), as the city’s lead antipoverty agency.

ABCD appeared more responsive to community concerns and more participatory than the entrenched politics of the city, particularly as it built and funded a network of neighborhood-based nonprofits. While still reflective of the broader theories about poverty and its purported remedies, the decentralized channels through which funds flowed created new salaries, organizations, and capacity in neighborhoods across the city.^{Footnote 9} ABCD and its grassroots affiliates then benefited from Lyndon Johnson’s War on Poverty, thanks to a provision in the 1964 Economic Opportunity Act that expanded the experimental efforts of the early 1960s and for the first time enabled the federal government to make direct grants to private nonprofit organizations.^{Footnote 10} Under this publicly funded, privately delivered social welfare system, Bostonians found increased access to and roles in programs related to education, social services, economic development, health care, job training, youth development, and neighborhood planning. Chapter 2 considers how this legislation marked a significant change to the welfare state and to federalism by deliberately targeting private nonprofit entities as a means of building the social and organizational infrastructure of poor areas. This was particularly the case for African American residents, whom had long been excluded from formal political power and were targets of inferior municipal services.^{Footnote 11} Still, poor residents felt that public–private partnerships in Boston left promises of community control unfulfilled and, as Chapter 3 recounts, nonprofit organizations in Boston became contested spaces.^{Footnote 12} From a range of positions—consumers, staff, leaders, critics—Bostonians shaped the public–private partnerships that linked the city’s poorest neighborhoods to the federal government and infused these administrative relationships with vocabularies of civil rights, poor people’s rights, women’s rights, and black power.

Although the particular funding channels that transferred public monies to private agencies began to shift toward the end of the 1960s, these were not the kind of decentralization and local controls that Boston activists had called for. Chapter 4 notes that years before President Nixon adopted his version of New Federalism and devolutionary block grants in 1971, the Johnson administration responded to urban uprisings and pressure from city mayors by inserting municipal- and state-level governments in the distribution of federal grants to neighborhood nonprofits via both the Model Cities program and Law Enforcement Assistance Administration.^{Footnote 13} As a result, Boston’s city government began to use federal funds to outsource a number of formerly municipal responsibilities to private nonprofit agencies built up under the War on Poverty. Doing so prompted disagreements over what counted as a right or a privilege, and ultimately redefined the purpose of city government and municipal governance. One arena in which these changes were particularly visible was housing, which, while always the most financialized realm of the welfare state, became all the more so during the 1970s, as community groups, philanthropic funders, and state officials began to adapt the tools and vocabularies of the business sector for the nonprofit sector. Chapter 5 follows a community development corporation founded by Puerto Rican residents in Boston’s South End, and a series of new nonprofit “intermediaries” designed to help grassroots entities win financing and successfully launch redevelopment projects.^{Footnote 14} Rather than distributing aid as traditional grants, intermediaries and the foundations and government agencies that supported them structured aid in increasingly market-oriented ways. New talk of putting “capital to work” and of structuring philanthropy as social and financial investments replaced questions of justice, equality, and community control with ones of portfolio composition and market opportunity, and did so in ways that have continued to shape philanthropic and governmental giving beyond the field of affordable housing.^{Footnote 15}

Many of the changes of the 1970s had increased the access nonprofits had to funding, but made them no less vulnerable to cuts in social welfare spending or to larger political–economic shifts. During the 1980s a series of crises revealed the strengths and weakness of an American welfare system that had become so intertwined with nonprofit organizations. In Massachusetts, a tax-revolt known as Proposition 2½ exacerbated Reagan-era cuts in social welfare and reduced the city of Boston’s financial and administrative capacity to address the onset of HIV/AIDS and rising homelessness in the 1980s. Chapter 6 examines how local nonprofits responded to these challenges with volunteer corps that provided direct services, fundraised, and advocated for those in need. Intended as emergency measures, these efforts instead suggested to some that private charity could compensate for a reduced government role. This logic ignored how government aid and the nonprofit sector had in fact grown together over the preceding decades, and treated temporary stop-gaps as permanent remedies.^{Footnote 16} The reliance on local nonprofits to manage urban poverty continued even as the political tides changed in the 1990s, when Bill Clinton followed his presidential predecessors by embracing and enacting his take on public–private partnerships. Boston Mayor Ray Flynn had sent Clinton a proposal of how best to help American cities prosper in the final decade of the century. As the Conclusion recounts, Flynn spoke of Boston’s history of collaboration between government and nonprofit organizations, and positioned it once again as a veritable City on the Hill of innovative approaches by nonprofit organizations that appeared to harness the best of state and market to address longstanding problems.^{Footnote 17} These decades of efforts recapped by Flynn had indeed produced visible results, and in doing so had expanded yet masked the role of the state in the private delivery of social welfare.

Boston entered the new millennium as a city of contrasts. The city had rebounded from the suburban age and become a desirable place to live. A robust knowledge-economy of high-tech start-ups and bio-medical firms kept the city’s world-class universities and hospitals flush with talent and resources. Local nonprofit organizations continued to win federal funding and earned awards for innovative partnerships between nonprofits, local funders, and city government. It was also a place of generational poverty and growing inequality, in which categories of race, income, gender, and citizenship continued to dictate where and how people lived, worked, and learned. Many of the challenges the city faced in the 1950s persisted, even as antipoverty efforts had improved the lives of many.^{Footnote 18} The coexistence of such prosperity and precarity was not unique to Boston; rather, it reflected a national trend the city had helped create.

It might be a surprise that a project on poverty policy, low income urban neighborhoods, and nonprofit organizations is considered business history.^{Footnote 19} After all, the people whose stories Outsourcing Government recounts were mostly poor, and the organizations that it analyzes were chartered to pursue a public good over private gain. This public orientation of nonprofit organizations has tended to render them sites of political and social historical analysis. In many ways, this project follows in those traditions by engaging questions about the state, cities, and social movements in those literatures.^{Footnote 20} Nevertheless, it also emphasizes that as nonprofits pursued their missions, they made choices about administration, governance, revenue streams, staffing, program delivery, reputation, contracts, and partnerships, and how they raised, invested, allocated, and spent resources. As historians of business, and more recently of capitalism, have demonstrated, seemingly mundane decisions internal to an organization had external consequences that shaped and were shaped by broader historical currents.^{Footnote 21} Outsourcing Government makes the point that this framework applies to nonprofit organizations too.^{Footnote 22}

Doing so continues to diversify the actors in business history, and expands the range of corporate forms, behaviors, motivations, and logics that have steered resources and power in certain directions over others. Day-to-day decisions by nonprofit organizations—and the archival records of them—reinforce that they existed as a particular kind of private entity or corporation distinct from both the state and for-profit corporations.^{Footnote 23} This is not to suggest that nonprofit organizations or the nonprofit sector occupy a place completely separate from “the state” and “the market,” which the term “third sector” typically implies and tends to dominate nonhistorical descriptions of the sector. On the contrary, this project identifies the ways in which nonprofits were deeply intertwined with, shaped by, shapers of, and agents of the state and market, and in the process it brings clarity to what is precisely meant by those terms. It then also provides more specific insights into the political, urban, and social history of the postwar period. For examples, Outsourcing Government ties the flows of public money into and out of local nonprofits to the ways in which urban neighborhoods were governed both from below and from above; and shows why and how nonprofit organizations were deliberately targeted in multiple levels of policy, bureaucratic administration, and local implementation, even as the precise details of their roles remained contested and changing.

As Outsourcing Government traces, the public funding of private organizations and the pairing of market-oriented strategies with socially oriented goals have histories both rich and useful. The current popularity of social enterprise, social innovation, and social entrepreneurship makes identifying these developments as historical processes all the more important. So, too, for that matter, do the continued rise of inequality and poverty despite decades of efforts to halt them. Efforts by funders and practitioners to fine-tune program or revenue models risk missing the larger ecosystem of public funding, private service provision, and philanthropic wealth that has defined the American welfare state over the second half of the twentieth century. The problem is not simply not knowing this history, but rather the failure to recognize that the benefits and shortcomings of the current system are felt most acutely by those least able to shape it. As cities continue to be sites of nonprofit activity and economic inequality, it would be wise to consider the origins of some of these patterns and confront the reality that current approaches have, thus far, fallen short.