Keywords: sector convergence, non-profit organisations, social enterprise, financial leverage, financial management, social innovation, endowments, for-profit organisations, social value, economic value creation, decision making
Non-profit and for profit convergence: are non-profits increasingly adopting private sector practices?
The role of the non-profit has traditionally been thought to create social value, while for-profit organisations have been held responsible for economic value creation. However, we now see this dichotomy blurring and organisations marrying social interest and market mechanisms to create both social and economic value (Alter, 2006). In this paper, we examine whether some of the strategic decisions and actions made by non-profits are converging with those being made by for-profits, particularly with regard to four important strategy issues: money, management, mission maximisation and metrics, which we frame as the four Ms. We hypothesise that if the convergence is occurring, non-profits would, over time, be making decisions and implementing subsequent actions increasingly similar to those being made in the for-profit sector. Through the use of a literature review and empirical evidence we show that non-profit decisions and actions are, in fact, becoming increasingly similar to those of for-profit organisations.