Competition and collaboration: when are they good for the nonprofit sector?

This chapter delineates a framework for judging the usefulness of collaborative strategy in the nonprofit/nongovernmental sector. Collaboration among nonprofit organizations is often promoted as the dominant strategy for operating under severe resource constraints. Ignoring the influence of competitive forces while promoting preferred collaborative strategies, however, can lead to recommendations for nonprofits that are well intentioned yet impractical. This chapter introduces benefits and potential detriments of both competition and collaboration within the nonprofit industry structure. Because many nonprofit goods are collective, society often pools resources in order to provide these services. These are also the topic areas where we often see duplication of services. However, collaboration is unlikely to occur owing to the separation between funding and direct outcomes. This chapter is therefore intended to inform funders and policy makers how to determine the best situations in which to foster either collaboration or competition among nonprofit organizations.