Introduction

Massive change is occurring in the nonprofit sector. Seemingly isolated events touching the lives of virtually everyone are, in fact, parts of a pattern that is little recognized but has enormous impact; it is a pattern of growing commercialization of nonprofit organizations:

1. Nonprofit hospitals are launching health clubs open to the public, with the latest exercise equipment and Olympic-size swimming pools, generating substantial profits and threatening the for-profit fitness center industry (Stone 1997).

2. Nonprofit museums are opening glitzy retail shops, generating revenue that is now a larger percentage of operating income than that from federal funding or admissions and memberships (Dobrzynski 1997; Mullen 1997).

3. Nonprofit universities are engaging in research alliances with private firms and suppressing research findings that are unfavorable to those firms' profit prospects (Altman 1997; Kolata 1997).

4. Nonprofits in various industries are forming for-profit subsidiaries, engaging in joint ventures with private firms, and paying executives compensation at “Fortune 500” levels (Farhi 1997; Gosselin and Zitner 1997; Abelson 1998).

Commercialism in the nonprofit sector sounds like a paradox: Nonprofits are supposed to be different from private firms, for whom commercialism is their very lifeblood. To some people, though, the uniqueness of nonprofit organizations is by no means self-evident; perhaps they are really not different from private firms, but are just as influenced by business motives and opportunities for self-aggrandizement.

Late in 1997 two apparently unrelated events brought front-page headlines.