My take:
Scholarly studies on organizational effects of nonprofit commercial activity are divided in their conclusions. Some consider any commercially-derived income as having negative effects such as mission dilution and loss of public legitimacy (see Lester Salamon's State of Nonprofit America
). Others argue that there is no corollary between commercial revenue and damaging organizational effects (see Massarsky and Beinhacker's excellent piece for Yale School of Management). The scholars engaged in the debate agree on both the underlying theory and the causes of nonprofit commercial ventures. Both camps rely on resource dependency theory and organizational isomorphism theory to explain why nonprofits are lured into what has historically been the domain of the for-profit. The scholarship also agrees that federal fiscal retrenchment and the ideological shift that accompany it force many nonprofits, if not the sector as a whole, to look to profit-making enterprise as a financial cure-all.
In my work with nonprofits engaged in for-profit activity, I find specific variables that impact the degree to which organizations are effected by commercial ventures. There are five variables that influence organizational effects:
- the age of the organization (or combined experience of the executive staff);
- the degree of reliance on homogenous resources;
- the degree of environmental turbulence each experience;
- the leadership of the executive and board; and
- the agenda of funding sources.
Properly managing these variables makes it possible and even probable that nonprofits can look to commercial activity without threatening core mission or other attributes necessary for organizational survival. Further, the variables show that organizational context is critical when making conclusions about the positive or negative effects of commercial activity. Each organization, even as they structurally resemble one another and are pushed into commercial ventures for similar reasons, respond to such activity differently.
