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Competition between non-profits and for-profits: entry and growth

Published online by Cambridge University Press:  01 January 2026

Susan Rose-Ackerman
Susan Rose-Ackerman*
Affiliation:
Yale University, New Haven, Conn., USA
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Abstract

The non-profit sector in the United States relies on fee-paying individuals for a high proportion of its revenue. Given this fact, non-profits and forprofits coexist in the same industry when each type of firm can find a stable market niche that rewards its own special strengths: ideological commitment in the non-profit sector; access to capital and the profit motive in the for-profit. Coexistence is also possible when the non-profit form is superior but there is a shortage of non-profit entrepreneurs. The paper next considers the entry of non-profits into sectors dominated by for-profits. Here one must distinguish between purely commercial activities and those designed to further the charity's basic mission. In the former, non-profits should behave no differently than their for-profit competitors unless subsidies designed for mission-related activities are diverted to these activities. In the latter, the non-profits may have an advantage which reflects not ‘unfair competition’ but a judgement that their activities are worthy of subsidy. In evaluating competition between non-profits and for-profits, one must separate the issue of the appropriateness of an organisation's tax-exempt status from the impact of its actions on for-profit firms.

Résumé

Résumé

Le secteur sans but lucratif aux Etats-unis dépend de la perception des cotisations pour une importante proportion de ses fonds. Ceci étant, les organisations avec ou sans but lucratif coexistent dans la même activité lorsque chaque type trouve une part de marché stable qui reconnait ses aptitudes particulières: c’est à dire l’engagement idéologique pour les organisations sans but lucratif; l’accès aux capitaux et la poursuite du gain pour les organisations à but lucratif. La coexistence est également possible lorsque l’économie sociale offre un service supérieur, mais il y a un manque d’entrepreneurs qui ne recherchent pas le gain. Cette étude considère ensuite l’entrée les organisations sans but lucratif dans les secteurs dominés par les firmes à but lucratif. Il faut ici faire une distinction entre les activités purement commerciales et celles destinées à promouvoir une mission humanitaire. Dans le premier cas, le comportement des organisations sans but lucratif ne devrait pas différer de celui de leurs concurrents à but lucratif, sauf si on détourne des subventions vers les activités liées à leur mission d’intérêt public. Dans ce dernier cas, les organisations sans but lucratif pourraient avoir un avantage qui ne traduit pas ‘la concurrence déloyale’ mais qui refléterait plutôt l’opinion que leurs activités méritent une subvention. En évaluant la concurrence entre les organisations avec ou sans but lucratif, on doit séparer la question de la légitimité d’un statut d’exemption d’impôts de celle de l’impact des actions de l’organisation qui bénéficie de l’exonération fiscale sur les firmes à but lucratif.

Zusammenfassung

Zusammenfassung

Die Einkommen von Nicht-Erwerbsbetrieben in den Vereinigten Staaten entstammen zu wesentlichen Teilen aus Erträgen und erhobenen Gebühren für die Bereitstellung sozialer Dienstleistungen. Dabei finden sich dann erwerbswirtschaftliche als auch nicht-erwerbswirtschaftliche Betriebe innerhalb einer Branche, wenn es Anbietern gelingt, Marktnischen zu finden, die auf ihren spezifischen Wettbewerbsvorteilen beruhen: der ideologischweltanschaulichen Verbundenheit bei Nicht-Erwerbsbetrieben einerseits und dem Zugang zu Kapital und dem Gewinnmotiv der Erwerbswirtschaft andererseits. Koexistenz kann auch dann bestehen, wenn die nicht-erwerbswirtschaftliche Form vorteilhafter erscheint, da eine chronische Angebotslücke an Unternehmern in diesem Bereich zu erwarten ist.

Die Studie beschäftigt sich anschließend mit dem Eintritt von NichtErwerbsbetrieben in erwerbswirtschaftlich dominierte Branchen. Hierbei muß zwischen rein erwerbswirtschaftlichen und gemeinnützigen Zwecken unterschieden werden. Im ersten Fall besteht nur dann ein Verhaltensunterschied zwischen beiden Betriebsformen, wenn Subventionen für - gemeinnützige Zwecke in erwerbswirtschaftliche Untemehmensbereiche einfließen. Im zweiten Fall haben nicht-erwerbswirtschaftliche Betriebe einen Vorteil, der nicht auf unfairem Wettbewerb, sondern auf dem Erhalt von Subventionen beruht, die als förderlich und notwendig angesehen werden. In der Beurteilung von Konkurrenz zwischen erwerbswirtschaf- lichen und nicht-erwerbswirtschaftlichen Betrieben muß daher zwischen der Angemessenheit der Steuererleichterung und derem Einfluß auf die Erwerbswirtschaft unterschieden werden.

Information

Type
Research Article
Information
Voluntas: International Journal of Voluntary and Nonprofit Organizations , Volume 1 , Issue 1 , May 1990, pp. 13 - 25
Copyright
Copyright © International Society for Third-Sector Research 1990

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Footnotes

*

Prepared for the Research Conference on the Commercial Activities of Non-profits, New York University, November, 1988. I wish to thank Anne Buckholtz for helpful research assistance, and Woody Powell and Brad Gray for useful comments.

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