As for-profit entities continue to enter spaces historically occupied by nonprofits, organizations face a strategic choice that is often framed too narrowly: compete or collaborate? In reality, the landscape is more nuanced. The options are not binary, and the implications of each path are more complex than they appear at first.
A more useful framing is this: How should we position ourselves within an ecosystem that is becoming increasingly diverse, dynamic, and interconnected? This shift in perspective opens the door to a broader set of strategic possibilities—competition, collaboration, and convergence.
Competition is the most intuitive response. When a for-profit entity begins offering similar products or services, the instinct is to defend market share. This can lead to investments in marketing, pricing adjustments, or enhancements to existing offerings. There is nothing inherently wrong with this approach. In some cases, it is necessary. But competition alone is rarely sufficient, and it can sometimes be counterproductive. If the basis of competition is purely functional, faster, cheaper, and more convenient, nonprofits may find themselves at a disadvantage. For-profit organizations are often structurally better positioned to optimize for these attributes.
This is where differentiation becomes critical. Nonprofits must ask: What do we offer that cannot be easily replicated? The answer may lie in trust, community, advocacy, or a deep understanding of stakeholder needs. But these attributes must be actively cultivated and clearly communicated. Simply assuming that stakeholders will recognize and value them is not enough.
Collaboration offers another pathway. Rather than viewing for-profit entrants solely as competitors, nonprofits can explore partnership opportunities. This might involve co-developing programs, leveraging complementary strengths, or creating integrated solutions that neither organization could deliver on its own. In the area of non-dues revenue, Bruce Rosenthal at BJASolutions.com has offered a perspective you may want to explore.
For example, a nonprofit association with deep subject matter expertise might partner with a technology company to deliver a more sophisticated learning platform. The nonprofit contributes credibility and content; the for-profit contributes infrastructure and user experience. When structured thoughtfully, such collaborations can create mutual value while advancing the nonprofit’s mission. However, collaboration is not without risks. Power dynamics, incentive alignment, and governance structures must be carefully managed. Without clear agreements and shared understanding, partnerships can drift away from their intended purpose. This is where governance and leadership discipline are essential.
Convergence represents a third, less frequently discussed option. In this model, the distinction between nonprofit and for-profit becomes less rigid, giving rise to hybrid structures or new organizational forms. Examples include social enterprises, benefit corporations, and mission-driven subsidiaries. These models seek to blend purpose and profit in ways that leverage the strengths of both sectors. For some organizations, convergence may offer a way to expand impact while maintaining alignment with core values. For others, it may introduce complexities that outweigh the benefits. The decision to pursue convergence should not be taken lightly. It requires careful consideration of legal, financial, and cultural implications.
What all three pathways, competition, collaboration, and convergence, have in common is the need for clarity. Clarity about purpose. Clarity about value. Clarity about boundaries. Simon Sinek’s “Start With Why” framework is particularly relevant here. If an organization is clear about why it exists, it can evaluate strategic options through that lens. Does this choice bring us closer to our purpose, or pull us away from it?
Jeff De Cagna’s emphasis on foresight adds another dimension. Strategic choices should not be based solely on current conditions. They should be informed by an understanding of how the environment is likely to evolve. For instance, if digital platforms continue to reshape how people access information and connect with communities, what does that mean for the organization’s role? Should it invest in building its own capabilities, partner with existing platforms, or rethink its value proposition altogether? These are not one-time decisions. They require ongoing reflection and adaptation.
There is also an internal component to consider. Strategic positioning is not just about external relationships. It is about internal alignment. Leadership teams and boards must be aligned on the organization’s direction and the rationale behind it. Staff must understand how their work contributes to the broader strategy. Members or stakeholders must see how the organization continues to create value for them. Without this alignment, even well-conceived strategies can falter in execution.
Communication plays a critical role here. Organizations must be able to articulate not only what they are doing, but why they are doing it. This is particularly important when making changes that may challenge expectations or traditions. For example, entering a partnership with a for-profit entity may raise concerns among stakeholders. Clear, transparent communication can help build understanding and trust.
It is also important to recognize that different strategies may apply to different parts of the organization. An association might choose to compete in one area, collaborate in another, and explore convergence in a third. The key is to ensure that these choices are coherent and aligned with the overall purpose. This requires a level of strategic sophistication that goes beyond reactive decision-making. It requires intentional design.
One practical approach is to map the organization’s portfolio of activities and assess each on strategic importance, differentiation, and vulnerability to external competition. Which areas are core to the mission and highly differentiated? These may warrant continued investment and protection. Which areas are important but less differentiated? These may be candidates for collaboration. Which areas are peripheral or increasingly commoditized? These may require rethinking or even divestment. This kind of analysis can help organizations allocate resources more effectively and make more informed strategic choices.
Ultimately, the presence of for-profit entities in the nonprofit space is not a problem to be solved. It is a condition to be navigated. Organizations that approach this condition with rigidity or defensiveness may struggle to adapt. Those who approach it with clarity, curiosity, and a willingness to experiment are more likely to find pathways that not only sustain their relevance but also enhance their impact. The question is not whether to engage with this new reality. The question is how.
Reflection for Part 3
- Where should we compete, where should we collaborate, and where should we reconsider our role entirely?
- Which programs or services are core, differentiated, and worth deepening?
- Which offerings are vulnerable to commoditization and may need redesign or partnership?
- Are we choosing a strategy intentionally, or simply reacting to pressure?
