Book contents
- Frontmatter
- Contents
- List of contributors
- Foreword by Kenneth J. Arrow
- Preface
- 1 The nonprofit mission and its financing: Growing links between nonprofits and the rest of the economy
- Part I Basic issues and perspective
- 2 Competition, commercialization, and the evolution of nonprofit organizational structures
- 3 Modeling the nonprofit organization as a multiproduct firm: A framework for choice
- 4 Pricing and rationing by nonprofit organizations with distributional objectives
- 5 Differential taxation of nonprofits and the commercialization of nonprofit revenues
- 6 Interdependence of commercial and donative revenues
- 7 Conversion from nonprofit to for-profit legal status: Why does it happen and should anyone care?
- Part II Industry studies
- Part III Overview, conclusions, and public-policy issues
- Appendix: IRS Forms 990 and 990-T for nonprofit organizations
- References
- Index
2 - Competition, commercialization, and the evolution of nonprofit organizational structures
Published online by Cambridge University Press: 30 November 2009
- Frontmatter
- Contents
- List of contributors
- Foreword by Kenneth J. Arrow
- Preface
- 1 The nonprofit mission and its financing: Growing links between nonprofits and the rest of the economy
- Part I Basic issues and perspective
- 2 Competition, commercialization, and the evolution of nonprofit organizational structures
- 3 Modeling the nonprofit organization as a multiproduct firm: A framework for choice
- 4 Pricing and rationing by nonprofit organizations with distributional objectives
- 5 Differential taxation of nonprofits and the commercialization of nonprofit revenues
- 6 Interdependence of commercial and donative revenues
- 7 Conversion from nonprofit to for-profit legal status: Why does it happen and should anyone care?
- Part II Industry studies
- Part III Overview, conclusions, and public-policy issues
- Appendix: IRS Forms 990 and 990-T for nonprofit organizations
- References
- Index
Summary
Introduction
Competition among nonprofits and between nonprofits and for-profits is a present day reality. What is its impact on nonprofit behavior in the marketplace? To what extent does it lead to commercialization of nonprofit activities? Does it cause nonprofits to alter their organizational structures or for-profits to alter their services to copy nonprofit behavior? What effects does it have on nonprofits' ability to pursue their charitable missions?
This chapter analyzes competition among nonprofits in settings where only nonprofits compete, and in markets where both nonprofits and for-profits coexist. It begins with a definition of competition and then presents five competitive forces and uses these to examine competition in a market where only nonprofits compete. The conditions under which commercialization is likely to occur are discussed, and the nature of competition in settings where nonprofits compete with for-profits is explored. Examples from the health-care industry are used to explore the evolving legal structures that nonprofits are employing in settings where they compete with for-profits. The chapter ends with a discussion of the challenge that these changes pose for public policy: to ensure that the evolving institutional changes, as well as the pressures toward commercialization, do not diminish the unique charitable role of the sector.
The nature of nonprofit competition
Competition, the pursuit of the same objective by two or more firms, creates rivalry among nonprofits for capital, labor, customers, and/or revenues. This rivalry is normally not motivated by a desire for personal acquisition of profits, although equity accumulation may become a goal of an organization (Chang and Tuckman 1990; Brody 1996, 491).
- Type
- Chapter
- Information
- To Profit or Not to ProfitThe Commercial Transformation of the Nonprofit Sector, pp. 25 - 46Publisher: Cambridge University PressPrint publication year: 1998
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