Nonprofits are Not Alike: The Role of Catholic and Protestant Affiliation

There are no generally accepted results regarding the objectives, decisions, and economic outcomes of nonprofit organizations, as compared to for-profit or public firms. We posit that this inconclusiveness is due to a too broad definition of nonprofits and that different types of nonprofits exist. This conjecture is investigated by constructing a model in which nonprofits differ by religious affiliation and testing the resulting hypotheses on the observed behavior of German nonprofit hospitals. We find that Catholic and Protestant nonprofits adopt significantly different strategies in the market. This confirms our conjecture and the importance of religion for economic outcomes.