Outside In was founded in June 1968 by Dr. Charles Spray, Arnold Goldberg, and Mary Lu Zurcher as one of the first free community health clinics in the U.S. and one of the earliest on the West Coast, along with the Haight Ashbury Free Clinics and the Los Angeles Free Clinic. The organization was founded to serve Portland's "alienated youth", some of whom had substance abuse problems and most of whom had mental health issues. It initially rented its Downtown Portland space from the First Unitarian Church of Portland. Spray helped found the organization after learning that the Unitarian church's youth coffeehouse space, Charix, was in danger of being shut down by the city and a group that had successfully shut down the Crystal Ballroom music venue because of its association with the 1960s drug culture. It was told by its insurance carrier that all of the organization's policies would be cancelled if they were to start a needle exchange. It took the clinic a few years to find a replacement insurance carrier. The needle exchange program started in July 1989 as the first authorized exchange in the United States and it was started as a pilot project involving 125 drug addicts. Bud Clark, the mayor at the time express concerns that it maybe seen by some as encouraging drug use. In September 2002, "Portland Business Journal" reported some prospective donors refuse to donate to Outside In, because of its needle exchange program.