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.

‘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.’

Source: The Times Higher Education Supplement