A prominent theme in the modern multidisciplinary nonprofit studies is the commercialization of nonprofit organizations. Public funding goes down; competition with for-profit firms and other nonprofits becomes more intensive, while the tasks to be performed by the nonprofit sector expand ever more. To withstand these pressures, nonprofit organizations initiate commercial ventures intended to provide a more secure resource base for realizing their core mission-related activities (Young et al. 2010). The economic determinants and ef-fects of nonprofit commercialization are the subject of a wide-ranging literature, the significant segment of which raises critical concerns about the effects of commercialization on the ability of nonprofits to deliver their missions. Indeed, commercialization supposedly converts nonprofits into for-profits-in-disguise (Weisbrod 2004), puts civil society at risk (Eikenberry and Kluver 2004), results in mission deflection (Minkoff and Powell 2006), and brings about mission-market tensions (Young et al. 2010).
We utilize a key idea of Ludwig von Bertalanffy’s general systems theory to propose a different vision of nonprofit commercialization. von Bertalanffy (1968) has criticized the mechanistic worldview of classical physics for its inability to explain the attributes of complex organization like those of wholeness, evolution, self-regulation, and equifinality. To him, these phe-nomena could only be accounted for in the open system model. Open systems maintain themselves ‘‘in exchange of materials with environment, and in continuous building up and break-ing down of their components’’ (von Bertalanffy1950: 23). von Bertalanffy (1968) paid much attention to developing the social implications of the open systems model which em-phasize the dangers of applying the mechanistic worldview to human beings and societies. Both, individuals and societies, maintain themselves in ways that are not accountable in terms of the utilitarian calculus and the ‘‘robot model’’.
The key contention of the present study is that the mechanistic worldview criticized by von Bertalanffy has much to do with the modern analysis of the adverse effects of commercialization on the performance of nonprofit organizations. More specifically, commercialization would impair nonprofit performance only if nonprofit organizations are seen as machines transforming the inputs provided by donors and volunteers into mission-related outputs. As Froehlich (1999: 246) argues, ‘‘in an ideal world, we might envision nonprofit organizations … as collections of committed individuals that fervently pursue a cause in such a compelling manner as to attract munificent donations, enabling single-minded attention to their work and mission’’. The real world, however, is different from this ideal vision in two fundamental respects. First, the inflow of resources from donors and volunteers is highly insecure, thus resulting in critical resource dependencies that must be actively managed. Second, even when the supply of donations exists, it is often fused with agendas being imposed on nonprofit or-ganizations in ways causing mission displacement (Froehlich 1999).
In this study, we argue that the highly insecure prospects of survival for nonprofits can be better understood, and hence more likely improved, if nonprofit organizations are viewed as open systems. The main insight that has been thereby gained is that the criticism of adverse consequences of nonprofit commercialization is predicated on the mechanistic view of non-profit organizations. In reality though, commercial activities provide the self-regulatory mechanism that enables, rather than hinders, nonprofit organizations to deliver their missions in an environment where the supply of critical resources is insecure. This argument does not mean that the commercial activities of nonprofit organizations are never driven by opportunistic motives; but it does mean that these motives by no means present the whole truth on this important issue.
References
Eikenberry A, Kluver J (2004) The marketization of the nonprofit sector: civil society at risk? Public Adm Rev 64:132–140.
Froehlich K (1999) Diversification of revenue strategies: evolving resource dependence in nonprofit organizations. Nonprofit Volunt Sect Q 28:246–268.
Minkoff DC, Powell WW (2006) Nonprofit mission: constancy, responsiveness, or deflection? In: Powell S (ed) The nonprofit sector: a research handbook, 2nd edn. Yale University Press, New Haven, pp 591–611.
von Bertalanffy L (1950) The theory of open systems in physics and biology. Science 111:23–29
von Bertalanffy L (1968) General system theory: foundations, development, applications. George Braziller, New York.
Weisbrod B (2004) The pitfalls of profits. Stanf Soc Innov Rev 2:40–47.
Young DR, Jung T, Aranson R (2010) Mission-market tensions and nonprofit pricing. Am Rev Public Adm 40:153–169.
