The Emergency School Aid Act (ESAA) of 1972 authorizes grants or contracts to nonprofit organizations (NPOs) and local education agencies (LEAs) to support the LEAs' efforts to desegregate or to reduce minority group isolation or its effects. The NPO program is a small component of ESAA which provides financial assistance to community organizations to support the LEAs' efforts. NPOs are funded on the assumption that certain activities related to school desegregation can be effectively performed by organizations outside the regular school district structure. Part I of this study focuses on the Federal level implementation of the NPO program, and explores the political context of NPO program development, the rationale for the community groups provision of the legislation, and the relationship between aspects of Federal program implementation and local NPO operations. The second part of the study reports on the criteria used in awarding grants under the ESAA's NPO program and analyzes these criteria for their performance in accomplishing the proper targeting of grant funds. (Author/RLV)