To Profit or Not to Profit: The Commercial Transformation of the Nonprofit Sector

Nonprofit organizations are increasingly resembling private firms in a transformation bringing with it a shift in financial dependence from charitable donation to commercial sales activity. This book, first published in 1998, examines the reasons and consequences of the mimicry of private firms by fundraising nonprofits. User fees and revenue from 'ancillary' activities are mushrooming, with each having important side effects: pricing out of the market certain target groups; or distracting the nonprofit from its central mission. The authors focus first on issues that apply to nonprofits generally: the role of competition, analysis of nonprofit organization behavior, the effects of distribution goals and differential taxation of nonprofit and for-profit activity revenue, the effects of changes in donations on commercial activity, and conversions of nonprofits to for-profits. They then turn to specific industries: hospitals, universities, social service providers, zoos, museums, and public broadcasting. The book concludes with recommendations for research and for public policy toward nonprofits.

Table of Contents:
Preface; Introduction; 1. The nonprofit mission and its financing: growing links between nonprofits and the rest of the economy Burton A. Weisbrod; Part I. Basic Issues and Perspective: 2. Competition, commercialization, and the evolution of nonprofit organizational structures Howard P. Tuckman; 3. Modeling the nonprofit organization as a multi-product firm: a framework for choice Burton A. Weisbrod; 4. Pricing and rationing nonprofit organizations with distributional objectives Richard Steinberg and Burton A. Weisbrod; 5. Differential taxation of nonprofits and the commercialization of nonprofit revenues Joseph J. Cordes and Burton A. Weisbrod; 6. Interdependence of commercial and donative revenues Lewis M. Segal and Burton A. Weisbrod; 7. Conversion from nonprofit to for-profit legal status: why does it happen and should anyone care? John H. Goddeeris and Burton A. Weisbrod; Part II. Industry Studies: 8. Commercialism in nonprofit hospitals Frank A. Sloan; 9. Universities as creators and retailers of intellectual property: life sciences research and economic development Walter W. Powell and Jason Owen-Smith; 10. Commercialism in nonprofit social service associations: its character, significance, and rationale Dennis R. Young; 11. Zoos and aquariums Louis Cain and Dennis Meritt, Jr; 12. Commerce and the muse: are art museums becoming commercial? Helmut K. Anheier and Stefan Toepler; 13. The funding perils of the corporation for public broadcasting Craig L. LaMay and Burton A. Weisbrod; Part III. Concluding Remarks: 14. Commercialism among nonprofits: objectives, opportunities and constraints Estelle James; 15. Conclusions and public policy issues: commercialism and the road ahead Burton A. Weisbrod; References.

Review :
'How can we explain the existence of organisations such as charities and voluntary agencies, which deliberately eschew profit-making? Burton Weisbrod has been in the forefront of the debate on this question, arguing that a combination of market failure and government failure in the provision of jointly consumed goods gives rise to a residual demand that can be met efficiently by the 'third sector'… the puzzles about non-profit behaviour are not just matters for economists. The role of the third sector is very much a matter for public-policy debate and political decision-making … This book reminds us that pressures on the sector to expand its role can ultimately damage the very features that have made it so attractive to politicians in the first place - its ability to respond efficiently to the needs of society's most vulnerable and excluded members.' The Times Higher Education Supplement