The Organizational Architecture of Nonprofit Governance: Economic Calculation Within an Ecology of Enterprises

Abstract

This paper treats nonprofit firms as elements within the ecology of enterprises that constitute an economy. Within this ecological framework, nonprofit governance must to a significant extent be guided by economic signals generated through market competition. After we examine the problems of economic calculation that nonprofit enterprises face, we consider the organizational logic of nonprofit firms as one that is driven by the creation of points of contact with the market economy. The operation of this logic creates some general limit on the range and size of nonprofit firms, and also presents issues of governance that differ from those faced by profit-seeking firms. Subsequently, we use our conceptual framework to illuminate some issues concerning the organization of nonprofit firms.