Are all nonprofits becoming more ‘business-like’?

Ben Suykens, Filip De Rynck & Bram Verschuere, Ghent University

As previous posts on this blog demonstrate, recent nonprofit management research is preoccupied with the idea that nonprofit organizations (NPOs) are increasingly becoming ‘business-like’ by incorporating corporate norms, values and practices. Scholars are generally critical of this supposed trend, highlighting that NPOs may well gain resources, influence and the opportunity to deliver more services but at great cost to mission, values and voluntary contribution. While such criticisms are common, there has been little ‘testing’ of if and how NPOs have turned toward the market outside of the Anglo-Saxon context. This leaves us with important and unanswered questions relating to the geographical and empirical substance of this phenomenon, i.e.

• How widespread are business practices in a ‘non-Anglo-Saxon’ nonprofit setting?
• Do different business practices co-occur?

Our study addressed these questions through a survey of 496 NPOs in Flanders (the northern region of Belgium), a typical example of a post-corporatist welfare state. We focused on three key manifestations situated on interlinked, yet different organizational levels. In terms of income, similarity with the market materializes through a strong dependency on income resulting from the profitable sale of goods and services. In terms of governance, NPOs can become more business-like by consciously recruiting board members because of their corporate management expertise. Lastly, in terms of management, similarity with business firms is reflected through a strong reliance on multiple management tools and performance measurement.

What did we find? First, we observe that business practices are on the rise, yet not prominently present in the Flemish context. Second, we find that the often-assumed coherence of this phenomenon corresponds with a more fragmented reality. Specifically, extensive use of corporate management tools and performance measurement does not necessarily imply the presence of a business model focusing on revenue generation through the profitable sale of nonprofit services and products. A strong presence of business-like board members however, is positively associated with the extent to which NPOs use management tools and measure their performance. Here, we suggest that the gradual diffusion of managerial norms, values and knowledge in the nonprofit domain might be the underlying explanation. On the one hand, the coming of age of nonprofit management as a distinct research field leads to an ever-growing supply of professionals trained in ‘management’. On the other hand, corporate management tool use is increasingly promoted (e.g., Ashoka) or demanded (e.g., donors) by external stakeholders.

So what? Our study nuances the widespread view that virtually no aspect of nonprofit organizing is free of the expectation to become more business-like. We show that different variations of ‘NPOs becoming business-like’ holds true for different research contexts. Accordingly, the predominant portrayal of this phenomenon as a monolithic threat to the distinctiveness of the nonprofit domain needs adjustment, and more particular, contextualization. This insight gives rise to challenging questions for future research: Do different variations of to which NPOs (can) become business-like lead to different effects on nonprofit functioning? What are the preconditions necessary to reap potential opportunities while avoiding potential pitfalls? We believe that a more contextualized approach constitutes an appropriate point of departure when addressing these questions, which can contribute to more evidence-based recommendations for nonprofit practitioners when engaging with expectations to become more business-like.

Featured article: Suykens, B., De Rynck, F. & Verschuere, B. (2020). Examining the Extent and Coherence of Nonprofit Hybridization Toward the Market in a Post-corporatist Welfare State. https://doi.org/10.1177/0899764020908344.