There is an important difference between for-profit and not-for-profit markets. In general, markets are a place or space where people gather to exchange, buy or sell goods or services. In the for-profit context, an organization is motivated to participate in the market for monetary gain and profit. Apple recently re-entered the smart phone market pursuing profits after launching its iPhone 5. In the not-for-profit context, an organization is motivated to participate in the market to fulfill its social mission. Instead of market activity being driven by a profit motive, it is driven by an organization’s commitment to addressing a social need in the community. The Canadian Breast Cancer Foundation raises funds for research to minimize the impact of breast cancer. Although different, NPOs and FPOs participate in a market which implies that they compete for profit (FPO) or funding (NPO).
In order for markets to exist, there needs to be participants. On one side of the counter, there are organizations ‘selling’ their products or social missions. On the other side of the counter there are customers of constituents. Customers purchase a product to satisfy a particular need. Constituents are employees, volunteers, board members, funders, clients, stakeholders connected to a particular social mission. Although this paper will refer to customers as participants in the for-profit context and constituents as participants in the not-for-profit context, the actual dividing line between the groups is fuzzy. For example, social entrepreneurships are organizations that are motivated by their social mission and profit. For example, E4C, an NPO created to alleviate and eliminate poverty in Edmonton Alberta, has a program designed to teach at-risk youth culinary skills. The programs led to the Kids in the Hall Bistro in which the at-risk youths cook and serve people in the restaurant. Are the people that chose to eat in the restaurant customers that are filling a need or constituents that are connected to the social mission of helping at-risk youth?