The Public Interest

The future of the not-for-profit corporations

Bruce L. R. Smith

Summer 1967

The emergence of the not-for-profit corporation, as part of the new “federalism by contract,” is one of the most striking features of America’s postwar government organization. The not-for-profit corporation – the RAND Corporation, Aerospace, MITRE are the most publicized examples – arose when the government found that a number of important tasks had to be quickly performed for which there was no “in-house” capacity, and where civil service regulations made it difficult to recruit a staff. At the same time, such tasks– weapons evaluation, strategic planning, systems engineering and design– could not be farmed out to commercial corporations because the government agency feared a possible conflict-of-interest. The creation of a not-for-profit corporation, nominally independent, working under government contract, and controlled by a board of trustees composed of private citizens was the ingenious answer. But while this kind of corporation has been the most publicized, it is only one of a number of new kinds of social forms, intermediate between commercial and government entities, that have emerged in the last twenty years.

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