An Institutional Theory of the Nonprofit: Toll Goods and Voluntary Action

The evolution of activity within the nonprofit sector (and nonprofit-type activity without the sector) has outpaced the ability of nonprofit theory to describe it. In contrast to legalistic, sector-based theories of the nonprofit, this article proposes an institutional theory of the nonprofit that defines its distinction from public and private institutions through (a) the voluntary (rather than coercive) assignment of roles and (b) the use of the good or service by non-payers. The voluntary and redistributive nature of such nonprofit-type institutions makes them primarily compatible with the distribution of goods that are non-subtractable and excludable (toll goods).