When Are Commercialized Nonprofits Less Likely to Offer Free Access? Evidence from the Performing Arts Subsector

Abstract

Previous studies have found that commercialized nonprofits may be less likely to offer free access to programs and services. This study draws on theoretical insights from the literature on nonprofit efficiency, the principal-agent problem, and nonprofit professionalism, going a step further to examine when commercialization leads to the exclusion of those unable to pay. Studying performing arts nonprofits in the United States from 2008 to 2016, the results suggest that the observed negative effects of commercialization on free access are not due to commercialized nonprofit leaders leaning towards efficiency through a cost-benefit mentality or pursuing their interests, but due partially to commercialized nonprofits moving toward professionalism. The findings have important implications for nonprofit professionalization, co-creation, and revenue portfolio management.