Date of Graduation

1995

Document Type

Thesis

Degree Name

Master of Nonprofit Administration (MNA)

Abstract

This study examines the income-generating activities of nonprofit organizations. Since the early 1980s, income-generating activities have been increasing due in part to: government funding cut-backs; encouragement from government and big business; incursion into traditional nonprofit areas by for-profit business; and, more recently, economic recession. The increase in activities has apparently cut into for-profit terrain, and small businesses in particular have reacted negatively.

In the last decade the commercial income-generating activities of nonprofits have been cited by small business as a primary concern. Debates over the issue have been waged in Congress between small business advocates and nonprofit supporters. As few studies have been conducted on the impact of commercial income generating activities on for-profit business, both Congress and the IRS appear reluctant to make significant changes in legislation or tax laws.

This study attempts to secure data on the prevalence, extent, and type of income-generating activities that nonprofit organizations have conducted in recent years or are planning for the future. By ascertaining the extent and prevalence of income generating activities this study may shed some light on the larger issue: whether or not the small business sector suffers a legitimate threat from the income-generating activities of nonprofit organizations.

A mail survey of 200 nonprofit organizations in Marin and Sonoma counties that had annual revenues of $100,000 or more was conducted in April 1995. Results showed that income-generating activities were prevalent and generated substantial portions of the organizations' bottom-line revenues. Almost 90 percent reported conducting at least one income-generating activity and on average, 38 percent of their bottom-line revenues were generated by income generating activities. Fee-for-service was listed with most frequency as the largest source of funding. Of particular interest is that an average of 22 percent of the organizations' bottom-line revenues were generated by commercial income-generating activities and 72 percent of all of the income-generating activities conducted in the last five years were profitable. Although the results of the survey provide only a small part of the necessary data on the issue, the data do support the assertion that income generating activities by nonprofit organizations are prevalent and profitable, and that their impact on for-profit business warrants more investigation.

Download

Share

COinS