New Competitors for Small Business: The For-Profit Mentality of Nonprofit Organizations


  • Karen A. Froelich North Dakota State University


This paper seeks to raise awareness of the increasing competition small business firms are experiencing due to commercialization of the nonprofit sector. The traditional notion of the nonprofit organization is one supported by· donations,  grants, and government funds. However, commercial revenue has grown from 25 percent of total sector income in 1980 to 39 percent by 1996. These statistics suggest the folly of ignoring the for-profit strategies and commercial activities of nonprofit organizations.

Characteristics of small business firms and nonprofit organizations are described to highlight their competitive similarities. An empirical exploration of the emerging for-profit mentality of nonprofit organizations suggests that nonprofits are becoming more capable rivals in the competitive marketplace. The paper concludes by considering the implications of this new competition for small business firms.


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