ABSTRACT
Growing commercialism among nonprofit organizations has blurred the boundaries between nonprofits and for-profits and raised important questions about the appropriate public policies toward nonprofits. Cross-subsidization is a key fact of life for nonprofits, enabling them to grow and become more diversified, less dependent on government grants and private donations, less at risk and more sustainable. Governments sometimes grant tax exemptions for donations to and income of nonprofit organizations that produce quasi-public services, as a way to let people vote with their dollars about which service should be financed. Commercialism and change of institutional form increase the resources available to nonprofits but pose the danger of changing managerial values, misallocated tax privileges, and a diversion of public funds into private gain. Both the sector and policymakers need to re-evaluate public policies toward nonprofits in light of the benefits and dangers, and careful empirical research can help to point us in the right direction.
