Non-profit organizations

Richard Steinberg, Burton Allen Weisbrod

Research output: Chapter in Book/Report/Conference proceedingEntry for encyclopedia/dictionary


Non-profit organizations are hybrids – private but with restricted ownership rights. This defining ‘nondistribution constraint’ reduces incentives to exploit underinformed customers and allows non-profits to depart from profit-maximizing behaviour, although costly enforcement of this constraint limits effectiveness. Non-profits' GDP share in the United States is about 30 per cent of the governmental non-defence share. Worldwide they employ about four per cent of the labour force. Non-profits receive public subsidies potentially justifiable by their provision of public goods. Sales of goods and services constitute the main source of non-profit revenues, but government grants and private donations are also important. Extensive research on the economic behaviour of non-profit, for-profit, and governmental organizations in mixed industries has disclosed systematic differences.
Original languageEnglish (US)
Title of host publicationThe New Palgrave Dictionary of Economics
EditorsSteven Durlauf, Lawrence E Blume
ISBN (Electronic)978-1-349-58802-2
ISBN (Print)978-0-333-78676-5
StatePublished - 2008


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