A Platform Theory of Nonprofit Pricing and the Nonprofit Platform Lerner Index

Authors

DOI:

https://doi.org/10.20899/jpna.13w90x17

Keywords:

Platform Theory, Nonprofit, Lerner Index

Abstract

This paper develops a novel framework for nonprofit pricing by conceptualizing nonprofits as multi-sided platforms (MSPs) that mediate exchanges between clients and donors. It introduces the Nonprofit Platform Lerner Index (NPLI), a tool that helps nonprofit managers optimize pricing by accounting for both client-price elasticity and donor-side cross-platform effects. The framework demonstrates how nonprofits can strategically leverage donor market power to subsidize client prices, including scenarios where prices fall below marginal cost or become negative. The study reconceptualizes donor engagement activities as core production inputs rather than overhead costs, aligning them with mission-critical objectives. It also explores policy implications, offering insights into antitrust considerations in donor markets. The NPLI provides regulators and managers with a quantitative tool to measure market power across donor and client markets. Future research avenues include empirical validation and applications to nonprofit governance and stakeholder management.

Author Biographies

  • Dr. Jeremy P. Thornton, Samford Unviersity

    Jeremy Thornton, Ph.D. serves as the Dwight Moody Beeson chair of business, professor of economics and the coordinator of the social entrepreneurship program at Brock School of Business. He teaches micro-economic theory, game theory, and social entrepreneurship. Prior to his academic career, Thornton was involved in international economic development. In that role, he facilitated the design micro-finance and anti-poverty programs for civil society organizations in developing countries, primarily Latin America. His projects ranged from micro-lending programs for refugees to medium-sized agricultural and manufacturing operations.

  • Dr. Jennifer Kuan, California State University – Monterey Bay

    Jennifer Kuan is an Associate Professor of Entrepreneurship and Economics at the College of Business at Cal State University Monterey Bay where she teaches entrepreneurship as well as nonprofit management. She earned a PhD from UC Berkeley’s Haas School of Business and studies the role of member nonprofits in structuring innovative industries, including in the history of venture capital and in the promotion of publicly-funded R&D in the semiconductor industry. Dr Kuan is also Executive Director of the Institute for Innovation and Economic Development at the College of Business.

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Published

2025-10-08

Issue

Online First

Section

Research Articles

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