Handbook of Research on Nonprofit Economics and Management
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Handbook of Research on Nonprofit Economics and Management

Second Edition

Edited by Bruce A. Seaman and Dennis R. Young

Building on the success of the first edition, this thoroughly revised and expanded edition explores (1) areas of general agreement from previous research; (2) areas of conflicting results and unexplored questions; (3) the relative roles of theory, data availability and empirical analysis in explaining gaps in our knowledge; and (4) what must be done to improve our knowledge and extend the literature. Selected original chapters addressing especially challenging topics include the value of risk management to nonprofit decision-making; nonprofit wages theory and evidence; the valuation of volunteer labor; property tax exemption for nonprofits; when is competition good for the third sector; and product diversification and social enterprise; international perspectives; the application of experimental research and the macroeconomic effects of the nonprofit sector.
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Chapter 13: Product diversification and commercial ventures

Sharon M. Oster


One of the key characteristics of nonprofit organizations is how many different products and services are typically offered by even relatively small nonprofits. While for-profit organizations typically diversify their offerings only after achieving some scale and experience in the core business, nonprofits typically diversify early and often. This chapter explores the factors which drive this diversification, comparing product extensions for mission reasons and those principally to support the budget. We consider some of the challenges of managing a nonprofit with a wide range of product services and goods, including issues of focus and cost accounting. Finally, we look at the special case of the earned-income venture, started explicitly to raise funds to support the core mission of nonprofits. What form do these ventures take and what challenges can arise in their management?

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