Jeff Trexler


September 11, 2001. The disintegration of the Twin Towers has left "something empty in the sky," and almost immediately charities rise to fill the void. The Red Cross, the Twin Towers Fund, the countless other businesses and civic groups supporting the relief effort-each strives to reunite a shattered country with a healing message for these troubled times:

"As a nation, we can minimize the effect of network externalities, reduce transaction costs, and provide an optimal equilibrium solution to this particular coordination game by aggregating capital in nonprofit firms, while utilizing signals that enable for-profit providers to maximize shareholder value through strategic pseudo-altruism."

Of course, no one actually said this. There is a reason why real-life charity does not sound like a law review article or a business plan: style matters. A group's name, the way it asks for money, its office space, the timing and look of its programs-perhaps the most difficult challenge of nonprofit design is to acquire needed resources while giving the appearance of a form beyond finance.

The specter of capitalism haunts nonprofit rhetoric. For many laypeople and nonprofit advocates, talk of nonprofit "business" and the nonprofit "firm" seems to be an oxymoron - a nonprofit is supposed to embody a higher form of spiritual truth, moral virtue, public-mindedness, or other values outside the state or economy. Yet academics, nonprofit managers, and business competitors tend to view nonprofits just like any other market actor: a nonprofit is an intersection of agreements and rules "about property rights, governance structures, rules of exchange, and conceptions of control," and tax privileges are coherent only to the extent they reflect the essential utility of nonprofit enterprise.