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Weisbrod (Economics/Univ. of Wisconsin) offers a careful and thought-provoking analysis of the role of nonprofit organizations in our economy. The growing importance of the nonprofit sector is underscored by the tripling of tax-exempt and tax-deductible organizations in the last 20 years, to more than 1,250,000. The total revenues of charitable nonprofits increased from $115 billion in 1975 to $314 billion in 1983. Weisbrod divides nonprofits into three types: clubs (country clubs, chambers of commerce); collective-types (museums, aid to poor); and trust-types (nursing homes, day-care centers). He analyzes how the federal tax structure influences the behavior of nonprofit organizations, and looks at how they ""compete"" with proprietary and governmental organizations. He argues that nonprofit organizations are the institutions of choice when one seeks to provide a collective good to a minority of consumers rather than to society as a whole: e.g., cultural institutions. Also, nonprofit organizations have less incentive to behave opportunistically toward uninformed consumers than do similar profit-making institutions, since nonprofit managers cannot distribute to themselves any surpluses they amass. Weisbrod concludes with a number of policy recommendations on the handling of nonprofit institutions, including: the replacement of tax deductibility with tax credits to donors; restricting their profit-making activities; and replacing the IRS as the chief regulator of the nonprofit sector with a new agency. Although intended for a general audience, Wesibrod's dry, painstaking and useful study of the nonprofit sector will be of most interest to economists, federal policy-makers, and those engaged in nonprofit activities.

Pub Date: May 1st, 1988
ISBN: 0674626265
Publisher: Harvard Univ. Press