Nonprofit organizations play a distinct role in society. They are quasi-public agencies in that they fulfill a partial business and a partial public role. Typically, their business purposes include functioning as a conduit for resources passing from donors and other funding sources, through the organization, to various constituent and stakeholder groups served as members, clients, parishioners, participants, students or customers. Another business purpose is to function as a resource magnet, attracting new resources to accomplish organizational purposes. They also act to funnel human energy into galvanized effort focused on special interests as well as quality of life perks for private (e.g., memberships) and the broader “public” good. And, they play a substantial role as significant members of the infrastructure, which drives the economic engine of the nation in the forms of research, development and innovation (where it is too costly for business to produce and requires greater efficiencies than government can produce); finance (e.g., foundations, credit unions, associations and community development corporations); and in education and training.

Boards of directors lead the strongest nonprofit organizations with members representing some of the most powerful businesses and community families. Among other things, these boards provide policy direction, financial development resources (human and capital), executive support, political access and influence and substantial expertise. Often by virtue of board leadership, many nonprofits also look and feel like for-profit business enterprises. In fact, the combined assets of some of the largest nonprofits in the United States place them among Fortune 500 companies. Among the advantages enjoyed by the largest nonprofits is the ability to spread expenses, revenues, and assets across many cities. Another important ability is to provide high level, quality training in their most advanced techniques across all organizational levels through organized “program and management schools.”

In today’s operating environment, community programs and departments confront social, economic and political pressures that result in decreased funding from traditional sources. To compound the problem, conservatism espoused in the form of privatization places additional pressure on public agencies to reinvent themselves as smaller images of what they once were — complete with new missions and statements of purpose. The increased pressures produce driving forces and an ensuing declination of funding that negatively impacts service delivery capacity. This decline forces publicly funded departments and agencies to seek new ways to fund their programs. To increase resources, these public entities turn increasingly toward linkages with nonprofit organizations in two significant ways. The first is to create alliances in the form of coalitions, collaborations and partnerships; and the second is to create their own nonprofit organizations as mechanisms for gaining direct access to hundreds of millions of dollars in donations and grant funded contributions available to nonprofit organizations but not to public agencies. Regardless of their selected strategy, public officials can benefit from a deeper understanding of the institutional nature of nonprofit organizations and improve their collective ability to forge meaningful, mutually beneficial, and long-lasting alliances with nonprofit organizations.