What do nonprofit organizations seek? (And why should policymakers care?)

The objectives of nonprofit managers are not immediately apparent. Indeed, nonprofits may seek to maximize their level of service or their budgets, or they may have undefined or unstable objectives. This paper presents a theoretical model of managerial objectives that yields testable hypotheses, which I test using 2001 data on 190,000 American nonprofits. While there is substantial variation between different types of nonprofits, they generally approach a service maximization objective, but maintain fundraising budgets that are insufficient to meet this objective. These findings have significant implications for policy and nonprofit management. © 2005 by the Association for Public Policy Analysis and Management