First-(beta) and second-order (gamma) hyperpolarizabilities of substituted benzenes and polyene oligomers are calculated by applying density functional theory (DFT) at the local (LDFT) and nonlocal (NLDFT) levels with field induced polarization (FIP) functions augmenting the basis sets. It is found that the LDFT method without the FIP functions gives beta and gamma values which are too small as compared to experimental ones, whereas inclusion of the FIP functions at the LDFT or NLDFT level leads to an increase in the beta and gamma values giving good agreement with the experimental values. It is also found that inclusion of nonlocal corrections improves the accuracy of the calculated beta and gamma values although the improvement is not large. From comparison with ab initio molecular orbital theory values obtained by others, it is found that the NLDFT/FIP calculations yield values which are comparable to those at the MP-2 level.