Commercialism, Competition, and Collaboration
Competition from business has also taken its toll on the mission and programs of nonprofit organizations. Weisbrod (1998) observes that the search for new resources is increasing competition among all of the sectors to find new markets.11 Increasingly, nonprofits, for-profits and government are competing in the same markets for the same sources of funding and client populations. Commercial activity by nonprofits leads to competition with for-profits already engaged in the same activity. Likewise, competition exists when for-profits engage in activities traditionally carried out by government and/or nonprofits. Such competition has spurred controversy, questioning the fairness of nonprofits' tax exempt status and the motivations of for-profits to deliver public goods. Small businesses argue that, when nonprofits enter the market their tax-exempt status imposes an unfair advantage.
Historically, nonprofits were granted tax-exempt status for three main reasons: 1) they provide goods and services for those not covered under a governmental policy; 2) they provide goods and services for those who would not have access to the same goods or services if they were provided in the market; or 3) they provide goods and services that confer public benefit for which no market would otherwise exist. For example, social service provision has long been the work of the public sector and its contractual relationships with nonprofit organizations. However, with the passage of the most recent welfare legislation, government has conceded this responsibility to the states, which contract out to both nonprofits and the private sector. Like conversions, inter-sectoral competition and privatization of public goods raise serious concerns about the qualitative difference between nonprofit and for-profit outcomes based on the different motivations underlying organizational form.
In an editorial on pending welfare privatization, Barbara Ehrenreich underscores the disconnect between corporate culture and the welfare of our poorest citizens. She cites the corporate ambivalence to social goals, evident in the words of Lockheed senior vice president Holli Ploog, who indicated that "We're approaching this marketplace the way we approach all other marketplaces.'"12 If this is the case, what is the end goal? Quota caseload reduction or long-term employment and self-sufficiency? At whose expense are profits collected? Should healthcare and welfare be considered marketplaces, where progress is a measure of efficiency and profit? And, ultimately, can public and private interests be pursued concurrently?
Dees (1998) proposes that organizations need to find financial structures that fit their mission.13 He classifies the range of commercial activities from purely philanthropic to purely commercial across a 'social enterprise spectrum,' placing activities along a continuum according to the organization's motives, methods and goals in relation to key stakeholders. Recently, nonprofit entrepreneurs have founded new organizations that respond to Dees' definitions. These new organizations vary from socially responsible companies and venture philanthropies that merge profit and mission along Dees' continuum. For example, Gary Hirshberg helped found a for-profit yogurt company when he could not get enough support for his nonprofit organization, the New Alchemy Institute. He found that a corporate form could be more effective in advancing his cause. Frustrated with nonprofits' reliance on the whims of grant makers, Vanessa Kirsch established New Profit, a nonprofit investment fund that channels its resources into nonprofit organizations and mission-driven businesses that show financial promise.14
