Nonprofit Commercial Revenue

Abstract

This article examines whether there has been an increase in nonprofit commercial revenue and if so whether declines in government grants and private contributions were behind the rise. A number of nonprofit scholars have held that nonprofit commercial activity increased significantly during the 1980s and 1990s. Following on resource dependency theory, they suggest that nonprofits use commercial income as a replacement for lost government grant and private revenue. However, authors for and against this thesis have provided little empirical evidence to test these claims. This study uses the Internal Revenue Services’ Statistics of Income database to track sources of revenue for charitable nonprofit organizations from 1982 to 2002. Trend and panel analysis show that although there was a large increase in commercial revenue, there is little evidence the increase was associated with declines in government grants and private contributions. Findings point to institutional theory and have important implications for policymakers and nonprofit practitioners.