Though NICAP was a non-profit organization, the group faced financial collapse many times in its existence, due in no small part to business ineptitude among the group’s directors. Following a wave of nationally publicized UFO incidents in the mid-1960s, NICAP's membership spiked dramatically, and only then did the organization become financially stable. However, following publication of the Condon Report in 1968, NICAP's membership declined sharply, and the organization again fell into long-term financial decline and disarray.
Despite these internal troubles, NICAP probably had the most visibility of any civilian American UFO group, and arguably had the most mainstream respectability; Jerome Clark writes that "for many middle-class Americans and others interested in UFOs but repelled by ufology’s fringe aspects, it served as a sober forum for UFO reporting, inquiry, investigation, and speculation". NICAP advocated transparent scientific investigation of UFO sightings and was skeptical of "contactee" tales involving meetings with space visitors, the alien abduction phenomenon, and the like. The presence of several prominent military officials as members of NICAP brought a further measure of respectability for many observers.
Though any UFO-related group attracts a number of uncritical enthusiasts along with a small percentage of cranks, astronomer J. Allen Hynek cited NICAP and Aerial Phenomena Research Organization (APRO) as the two best civilian UFO groups of their time, consisting largely of sober, serious-minded people capable of valuable contributions to the subject.
Until the mid-1960s, NICAP gave little attention to close encounters of the third kind (where animated beings are purportedly sighted in relation to a UFO). However, longtime NICAP member Richard H. Hall related privately that this position was "tactical and not doctrinaire." In other words, NICAP did not necessarily dismiss occupant reports out of hand, but elected to focus on other aspects of the UFO phenomenon which would be perceived by mainstream observers as less outlandish. The attention given to the contactees of the 1950s (who typically claimed ongoing contact with benevolent "Space Brothers") was almost certainly a factor in NICAP’s reluctance to study UFO occupant reports too closely. But with the 1964 Lonnie Zamora UFO encounter — regarded by researchers as one of the most reliable UFO occupant reports — NICAP loosened its restrictions on studying UFO occupant reports.
NICAP was founded on October 24, 1956, by inventor Thomas Townsend Brown. The board of governors included several prominent men, including Donald Keyhoe, Maj USMC (Ret.), and former chief of the Navy’s guided missile program RADM Delmer S. Fahrney USN (Ret.)
By early January 1957, however, Brown had proved so financially inept that the board asked him to step down. Fahrney replaced him, then convened a press conference on January 16, 1957, where he announced that UFOs were under intelligent control, but that they were of neither American or Soviet origin. The press conference received major attention, doubtless aided by Fahrney's stature.