Purpose: Human services is a broad field of human endeavor to promote the well being of individuals, families, groups, and communities. Mostly delivered by charitable nonprofit organizations in cooperation with the government, human services for a long time has maintained a distance from the market (Gilbert, 1983). This long-established judgment, however, is apparently challenged by a profound transformation in the human service sector in the United States. Since the end of the 1970s, there has been a “creeping revolution” (Grønbjerg, 2001, p.276) that human service nonprofits are becoming increasingly involved with selling services and other commercial activities. Human service nonprofits, as a whole, no longer predominantly rely on charitable contributions (private giving) or government funding but income from commercial sources. This paper aims to develop an understanding of the factors associated with the venturing behavior of nonprofits, with a focus on the organizational characteristics associated with commercialization and organizational outcomes.

Methods: A path model was constructed to understand factors associated with and outcomes of commercialization of human service nonprofits. The model was tested using the data collected from 67 human service nonprofits from the study commissioned by the Pew Charitable Trusts and conducted by the Yale School of Management and the Goldman Sachs Foundation to explore the landscape of nonprofit business ventures (Massarsky & Beinhacker, 2002a). Path analyses were conducted with one outcome variable included each time.

Results: The model shows a statistical fit. It was found that commercial income was negatively associated with donative revenues. Unexpectedly, however, commercial income does not contribute significantly to the organization's self-sufficiency and it has a negative association with the organization's ability to attract donors and volunteers. More interestingly, the nonrecursive model suggested that any perceived success associated with commercial income could lead to an even higher percentage of income from commercial sources.

Implications: There has been a debate regarding whether commercialization could benefit or harm nonprofits in terms of achieving service goals. Due to the lack of empirical evidence of significant positive effects of commercialization, any optimism toward the commercialization of human service nonprofits needs to be tempered with caution. Indeed, it could be dangerous for nonprofits if pursuing commercial income tends to reinforce itself. The commercialization of human service nonprofits is largely attributed to the public policies which increasingly adopt the methods and values of the market (Eilkenberry & Kluver, 2004). Considerations need to be given as to how to facilitate the healthy development of human service nonprofits to serve the society.

References: Eilkenberry, A.M., & Kluver, J.D. (2004). The marketization of the nonprofit sector: Civil society at risk? Public Administration Review, 64(2), 132-140. Gilbert, N. (1983). Capitalism and the welfare state: Dilemmas of social benevolence. New Haven: Yale University Press. Grønbjerg, K.A. (2001). The U.S. nonprofit human service sector: A creeping revolution. Nonprofit and Voluntary Sector Quarterly, 30(2), 276-97. Massarsky, C.W., & Beinhacker, S. (2002b). Nonprofit enterprise: Right for you? The Nonprofit Quarterly, 9(3). 50-55.