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The American Review of Public Administration
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Article

Mission--Market Tensions and Nonprofit Pricing

Dennis R. Young1*, Taehyun Jung1, and Rick Aranson2

1 Georgia State University
2 Jewish Family and Career Services of Atlanta

* To whom correspondence should be addressed. E-mail: paddry{at}langate.gsu.edu.


  Abstract
Nonprofit organizations must address their social missions while breaking even financially, facing trade-offs between mission responsive and financially rewarding actions, including alternative pricing policies. The paper draws on alternative theories of nonprofit pricing. In one theory, nonprofits price their services to maximize net revenue. In another theory, nonprofits price their services to achieve maximum mission impact within the constraint of financial solvency. These theories are explored through case studies of three multi-service organizations in a local social services federation. Alternative behavioral patterns are found, including pricing to balance financial and mission impacts on a service by service basis as well as differentiated, strategic pricing policies to achieve overall mission impact. In all cases nonprofit managers struggle with pricing-related mission-market tensions and could benefit from a system to help them resolve these tensions. One case is described in depth as an exemplar of how such a system can be developed.

First published on May 8, 2009
The American Review of Public Administration 2009, doi:10.1177/0275074009335411
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