Institutional Dissonance in the Nonprofit Sector

Our political and economic system contains three seemingly distinct sectors: public, proprietary, and nonprofit. This division masks serious issues of who should provide welfare services, schooling and health care; who should build infrastructure; who should control private wealth. The nonprofit law takes a laissez faire approach to permissible nonprofit activities, leading many to lament the increasing 'commercialization' of the nonprofit sector. However, an examination of historical as well as current activities engaged in by firms in all three sectors reveals that the basis terms of the social debate are eternal, while institutions dominant at different times and in different places resolved the sectoral debate in different ways. Rather than amend nonprofit corporate law to lock in 'nonprofit' activity, society might better target subsidies to desired services, provided either in the nonprofit or for profit sector.