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Measuring Concentration and Competition in the U.S. Nonprofit Sector: Implications for Research and Public Policy

Bruce Seaman (), Wilsker Amanda L. () and Young Dennis R. ()
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Wilsker Amanda L.: School of Business, Georgia Gwinnett College, 1000 University Center Lane, Lawrenceville, GA 30043, USA
Young Dennis R.: Department of Public Management and Policy, Georgia State University, Atlanta, GA, USA

Nonprofit Policy Forum, 2014, vol. 5, issue 2, 29

Abstract: In an era of dramatic financial challenges, pressure is growing for U.S. nonprofit organizations to consolidate. Yet, we know little about the current concentration of the sector and even less about the degree of competition in various nonprofit subsectors. In this paper we offer a detailed analysis of concentration patterns across the sector and analyze variations in these patterns by subsector and metropolitan areas. It is well known that measuring concentration is not identical to assessing effective competition and is but a starting point for a more thorough competitive analysis. An important distinction is made between the concentration of resources within larger subsector organizations and inequality in the distribution of resources across those organizations. Some subsectors may be concentrated yet behave competitively because resources are distributed relatively equally among several large organizations. By contrast, other concentrated subsectors may behave less competitively because resources are very unequally controlled by a few organizations. Understanding the patterns of both concentration and inequality in the nonprofit sector is likely a prerequisite to drawing defensible conclusions about the degrees of competition in the sector and the desirability of further consolidation. This analysis has implications for both public policy and philanthropy. It bears on the issues of whether antitrust policy should be forcefully applied to the nonprofit sector, whether government funding programs should encourage nonprofit consolidation or competition, and whether philanthropic institutions should implore nonprofit organizations to consolidate further or to compete more vigorously.

Date: 2014
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DOI: 10.1515/npf-2014-0007

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