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How nonprofits grow: a model.

E James

    Journal of Policy Analysis and Management : [The Journal of the Association for Public Policy Analysis and Management]
    |January 6, 1984
    PubMed
    Summary
    This summary is machine-generated.

    Nonprofit organizations, unlike government or for-profit entities, strategically subsidize valued services by undertaking less desirable activities. This unique financial model shapes their service offerings and pricing distinctively.

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    Area of Science:

    • Nonprofit Management
    • Public Economics
    • Organizational Behavior

    Background:

    • Nonprofit organizations often operate in sectors traditionally served by government or for-profit entities, such as education, healthcare, and cultural institutions.
    • These organizations face unique operational constraints, primarily relying on voluntary revenue streams to sustain their activities.
    • Understanding the distinct motivations driving nonprofit decision-making is crucial for analyzing their role in the service sector.

    Purpose of the Study:

    • To analyze the distinctive factors motivating service delivery decisions in nonprofit organizations.
    • To compare the operational and financial strategies of nonprofits with those of government and for-profit organizations.
    • To elucidate how nonprofit financial structures influence their service mix and pricing strategies.

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    Main Methods:

    • Comparative analysis of organizational motivations and financial structures.
    • Examination of service delivery models in nonprofit, government, and for-profit sectors.
    • Qualitative assessment of decision-making processes within nonprofit entities.

    Main Results:

    • Nonprofits engage in cross-subsidization, performing less desirable activities to fund highly valued services.
    • The service mix and pricing strategies of nonprofits differ significantly from government and for-profit counterparts.
    • Operational decisions are driven by a unique blend of mission-driven goals and financial break-even requirements.

    Conclusions:

    • Nonprofit organizations exhibit unique strategic behaviors driven by their reliance on voluntary revenue and a dual focus on mission and financial sustainability.
    • Their distinct operational model results in a different approach to service provision and cost recovery compared to other organizational forms.
    • Further research into nonprofit strategy can inform policy and enhance the effectiveness of these vital organizations.