In the current (Winter 2004) issue of SSIR, the distinguished economist, Burton Weisbrod, warns against what he sees as an ever-increasing “commercialization” of nonprofits. Whether the YMCAs’ upscale health clubs, the AMA’s endorsement of Sunbeam products, or multi-million dollar proprietary deals struck between research universities and drug companies, his concern is the same: the push for profits can “undermine the nonprofits’ capacity to act in the public interest.”
The article raises a yellow (if not red) flag to the current wave of enthusiasm for generating new sources of income for nonprofits through commercial ventures. It poses a fundamental challenge to those who would argue that it makes little difference what organizational form is used, as long as a social problem is addressed (an argument often voiced by those who champion “social-entrepreneurship”).
I share Weisbrod’s basic concerns and suggest that in the current sector-blurring climate they pose three critical questions for those interested in the future well-being of the nonprofit sector:
- Does the source from which income is generated substantially affect organizational mission, such that increased emphasis on profit-generating activity puts nonprofits in danger of “losing sight of their social goals”?
- Does cross-subsidization work? (I am reminded of a great caption to a cartoon in the current New Yorker magazine: “Remember, we can only afford to do all this pro bono because of how much anti bono pays.”)
- Are Weisbrod’s policy recommendations (to change tax law to discourage all forms of commercial activity for nonprofits and increase incentives for giving) realistic?