Nonprofit organizations can be thought of as businesses with social missions. On the one hand, nonprofits are privately governed entities which must be financially solvent in order to survive and grow.
Nonprofits participate in markets and compete for resources, just like businesses do.
On the other hand, nonprofits must not gauge their performance primarily in terms of financial success. Financial success is only a means to those ends, not an end in itself. This mixed public-private organizational character raises interesting challenges for the manager of a nonprofit organization. Sound principles of business and economic analysis must be applied to decision-making, but these principles must be properly adapted to the nonprofit context. Conventional business principles help organizations to run efficiently and effectively, but they are built on the underlying assumption that the purpose of the organization is to make as much money as possible.