Nonprofit Sector Assignment 2 Coursework Example | Topics and Well Written Essays - 500 words

Nonprofit Sector Assignment 2 - Coursework Example The theories that will help understand the nonprofit sector include Lohmann (1989) theory of commons, which categorizes goods into three groups namely; public goods, private goods and common goods, entrepreneurship theory, trust-related theories, the interdependence theory and the stakeholder theory. The nonprofit organizations chosen for illustration in this paper include American Heart Association, Salvation Army and the American Red Cross. Due to different multitudes of different organizational components in nonprofit management literature, management concepts suggested by Gomez and Zimmermann (1993) provides a practical step towards the growth of management models that are more in tune with the realities of nonprofit organizations. There are different approaches applied in this field, including the public goods theory. As put by Weibrod’s theory of public goods, public goods theory is an extension of the public choice theories, whereby a collective action is taken by affected individuals to resolve public good problems. This theory states that public goods, which would have been otherwise provided by the government are provided by nonprofit organization through a donor. Services provided by the American Heart Association is a good example of an organization that help fill the gap, if need be. In other words, nonprofit provision is substituted for government provision under conditions of demand heterogeneity fo r the public good in question. Hansmann (1987) points out that the critical weakness in Weisbrod’s theory is that it does not explain why nonprofit and not for profit firms come up to fill unfulfilled demand for public goods, especially when applying to quasi-public goods. Hansmann’s trust-related theory picks up this point precisely. Trust-related theories take a different angle by pointing out information problems inbuilt in the goods and services provided and the