The Public Interest

Why non-profits go broke

Bruce C. Vladeck

Winter 1976

THE great voluntary, non-profit institutions that dominate large sectors of public service in the United States are going broke. Especially in health, higher education, and the arts-the three sectors in which non-profit institutions have played the most critical role-bankruptcy is an ever-increasing threat. According to the Director of the United Hospital Fund, no fewer than 17 of New York Citys major voluntary hospitals, including several of the worlds great teaching/research institutions, face imminent bankruptcy. Private colleges and universities are experiencing the most severe financial crises in history; some smaller colleges have already gone under, and more undoubtedly will follow. The Metropolitan Opera has cut its season, and only largescale federal subsidies will prevent symphony orchestras, dance companies, and smaller theater organizations from going by the boards. The heads of many of these institutions are not without political influence, and bankruptcy may be averted in many cases by the provision of substantial increases in already sizeable federal largesse. Given the state of the federal budget, however, that is hardly an outcome to be looked on cheerfully.

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