The Economic Theory of Nonprofit Organizations

The Economic Theory of Nonprofit Organizations explains how these organizations operate within markets differently from for-profit businesses. Nonprofits aim to fulfill social, charitable, or community goals rather than generate profits. They rely on donations, grants, and volunteer work instead of selling products or services primarily for profit. Their focus is on maximizing social impact rather than financial gain, often reinvesting any surplus into their mission. This theory analyzes how nonprofits make decisions about resources, pricing, and services, emphasizing their unique role in addressing social needs that may be underprovided by the private or public sectors.