Nonprofit Competition Research Articles

A behavioral reasoning theory of nonprofit competition for grant acquisition

ABSTRACT This study examines nonprofit competition for grant acquisition from the behavioral reasoning theory. The study was conducted in 2 phases. Personal interviews were conducted with the senior managers of 44 Nonprofit Organizations (NPOs), and information was processed using a coding technique to find out the ‘reason for’ and the ‘reason against’ nonprofit competition for grant acquisition (study 1). Post that, responses were collected from 377 senior NPO managers and the information was processed using confirmatory factor analysis and structural equation modeling (study 2). The ‘reason for’ nonprofit competition was the reputational benefit and sustainability benefit, and the ‘reason against’ nonprofit competition was the organizational barrier, knowledge barrier, and image barrier. The ‘reason for’ positively impacted and the ‘reason against’ negatively impacted the motive and intention of nonprofit leaders for grant acquisition. The motive for grant acquisition positively impacted the intention for grant acquisition in nonprofit leaders.

Comparing Government Social Welfare Service Acquisition Regimes: Marketisation and Bases for Competition in Canadian and English Homelessness

AbstractWhen governments acquire third-party social welfare services (SWS), they create institutions of acquisition. The rules and practices that governments adopt define who is able to participate, on what basis, and how prices are determined. This paper conceptualizes the institutions of SWS acquisition, their variations, and implications, in order to contribute to a deeper understanding of the link between contracting and nonprofit commercialisation. Institutions of SWS acquisition include rules of entry, participation, and assessment. Resulting acquisition regimes can be marketised to a greater or lesser extent, and this is influential through its effect on nonprofit competition. Drawing on interviews with public servants and nonprofit staff, the paper compares acquisition regimes for homelessness services in England, a regime that closely resembles a market, and Canada, a regime which is not marketised. In contrast to their non-marketised counterparts, this paper finds that marketised SWS acquisition regimes create incentives for participants to reduce prices by loss-leading or ratcheting down service quality.

The theoretical foundations of nonprofit competition: a resource-advantage theory approach

ABSTRACTCompetition in the nonprofit sector has dramatically intensified in the past two decades because of (1) the increased number of nonprofit organizations (NPOs), (2) the decline and diffusion of governmental support, and (3) the entry of for-profit companies into markets that traditionally have been the domain of nonprofits. In an attempt to enhance the understanding of nonprofit competition, the authors apply resource-advantage (R-A) theory, a dynamic theory of competition adapted from the for-profit business literature, to commercial nonprofits and explain how commercial nonprofits can leverage their various resources to successfully compete and deliver social value. Contributing to the understanding of nonprofit competition and the challenge that NPOs face in balancing mission and money, this paper provides a foundation for a theory of nonprofit competition that can guide future research in the area and help NPO managers as they maneuver in today’s increasingly competitive environment.

Increasing the Size of the Pie: The Impact of Crowding on Nonprofit Sector Resources

AbstractThe number of nonprofit organizations is rapidly increasing, which has led nonprofit practitioners to complain of funding scarcity, nonprofit scholars to closely study nonprofit competition, and policymakers to consider increasing nonprofit barriers to entry. Underlying each of these perspectives is an assumption of limited financial resources. We empirically examine this assumption using county-level panel data on nonprofit human services organizations from the National Center for Charitable Statistics. Contrary to the limited resources assumption, our fixed-effects models show that increasing nonprofit density, at its current levels, has the effect of increasing sector financial resources in each county. We suggest that these findings prompt a tradeoff for policymakers. A sector with free market entry results in a nonprofit sector with more, smaller nonprofits, but such a sector may have the capacity to serve more people because it has more total sector financial resources. Conversely, a sector with higher barriers to entry would translate to a sector with fewer, larger nonprofits with less overall capacity due to fewer sector financial resources.

Nonprofit Identity Framing: Evidence of Local Variation across United Ways

The United Way is an important resource provider in many local communities and has traditionally garnered the majority of donations made during workplace giving campaigns. Over the past thirty years nonprofit competition for contributions made during workplace giving campaigns has increased dramatically. In the face of increasing competition, the United Way Worldwide is attempting to re-frame its organizational identity through its Community Impact initiative. Local United Ways, however have some discretion over implementation of the Community Impact initiative. This study draws upon classic theories of organizational adaptation and research on workplace giving to examine organizational-level variation in identity framing across a large sample of local United Ways. Specifically, data on organizational purpose statements, philanthropic market consolidation, and peer influence are analyzed using text mining and social network analysis (SNA) techniques to study variation in organizational identity framing across 710 local United Ways across the U.S. Findings suggest that: 1) local United Ways are both maintaining core dimensions of their organizational identity while integrating new components; and 2) local field consolidation, and peer influence are associated with the identity framing choices of local United Way organizations. The implications for practice as well as future research on identity focused organizational adaptation are discussed.

Exploring the Dimensions of Nonprofit Competition through its Supplementary, Complementary, and Adversarial Relationships with Government

AbstractNonprofits contribute to communities and society through service delivery, innovation, knowledge-building, and civic engagement. They frequently partner with and push government to better serve its citizens through relationships that have been characterized as supplementary, complementary, and adversarial (Young 2006). In all of these roles and relationships, nonprofits must compete for resources, time, and attention with other nonprofits, government entities, and for-profit organizations within communities, nationally, and internationally. Competition sometimes shapes and sometimes is shaped by public policies that affect the rules of the game. In this conceptual paper, we explore the dimensions of nonprofit competition and the implications for the nonprofit–government supplementary, complementary, and adversarial relationships.

Editors’ Note to Special Symposium Issue on Nonprofit Competition

Editors’ Note to Special Symposium Issue on Nonprofit Competition

Overcoming the Cause of Failure and the Role of Issue Salience: Toward a Comprehensive Theory for Nonprofit Activity and Competition in a Three-Sector Economy

AbstractThis paper extends the theoretical framework of nonprofit activity in three-sector economies. Perspectives from existing theories on nonprofit organizations and the agenda setting literature are simultaneously considered. The nonprofit form provides one solution to the causes of market failure that are inherent to the different classes of goods discussed by previous theory. However, issue salience can lead to public policies that correct market failures. Such policies can lead to greater competition for tax-supported funding and to for-profit entry. This combined framework allows for the integration of the various theories on the existence of nonprofit organizations under one theoretical lens. It also yields a framework to empirically analyze industry dynamics and inter-organizational competition specifically within nonprofit and mixed-sector markets. The temporal variation and relative strength of issue salience in various mission areas in which nonprofits participate are particularly considered. This theoretical perspective leads to several important implications for industrial structure, nonprofit competition for resources and market share, public policy, advocacy, contracting, and public–private partnerships as the issues nonprofits address evolve over time.

Nonprofit competition in the grants marketplace

AbstractIn this study, we test the impact of nonprofit financial health and financial efficiency ratios on the grant amount awarded by foundations using the Georgia grants marketplace as a case. Using hierarchical linear modeling analysis, we can understand the effects of these ratios both within and across foundation grant portfolios. We found statistically significant evidence that grantees with higher debt ratios and higher fundraising ratios receive lower grant amounts. We did not find statistically significant impacts for administrative ratios, revenue diversification, and surplus margin.

Balancing Margin and Mission

Competition in the nonprofit world has intensified in recent years, and nonprofit managers are challenged to devise strategies that will serve both organizational needs and public interest. We propose a framework for thinking about nonprofit competition based on the intersection of two dimensions: the domain of competition, which can be either fee-based or donative activities; and the competitive strategy, which can be either price- or differentiation-based. The experience of the American Red Cross, a prominent nonprofit organization facing competition in both fee-based and donative domains, provides data for the elaboration of the framework and for tentative conclusions about the implications of nonprofit competition for both margin and mission.

Balancing Margin and Mission: Nonprofit Competition in Charitable Versus Fee-Based Programs

Competition in the nonprofit world has intensified in recent years, and nonprofit managers are challenged to devise strategies that will serve both organizational needs and public interest. We propose a framework for thinking about nonprofit competition based on the intersection of two dimensions: the domain of competition, which can be either fee-based or donative activities; and the competitive strategy, which can be either price- or differentiation-based. The experience of the American Red Cross, a prominent nonprofit organization facing competition in both fee-based and donative domains, provides data for the elaboration of the framework, and for tentative conclusions about the implications of nonprofit competition for both margin and mission.

A Typology of Nonprofit Competition: Insights for Social Marketers

A Typology of Nonprofit Competition: Insights for Social Marketers

The new medical-industrial complex.

The most important health-care development of the day is the recent, relatively unheralded rise of a huge new industry that supplies health-care services for profit. Proprietary hospitals and nursing homes, diagnostic laboratories, home-care and emergency-room services, hemodialysis, and a wide variety of other services produced a gross income to this industry last year of about $35 billion to +40 billion. This new "medical-industrial complex" may be more efficient than its nonprofit competition, but it creates the problems of overuse and fragmentation of services, overemphasis on technology, and "cream-skimming," and it may also exercise undue influence on national health policy. In this medical market, physicians must act as discerning purchasing agents for their patients and therefore should have no conflicting financial interests. Closer attention from the public and the profession, and careful study, are necessary to ensure that the "medical-industrial complex" puts the interest of the public before those of its stockholders.