The chapter introduces readers to the major theories of the sector. Those covered include: market-failure theory, government-failure theory, contract-failure theory, voluntary-failure theory, supply-side (or entrepreneurship) theory, social-origins theory, interdependence theory, the commons, mediating structures, and associationalism.

To what extent are contemporary scholars using the ten explanations of the nonprofit sector described in Chapter 2? The authors use scholarship, or published academic articles, as data to answer this question. They find that the ten nonprofit-sector theories continue to be an important foundation for nonprofit studies research. The most commonly used sector theories are associationalism, contract failure, nonprofit/government interdependence, and social origins. However, their analysis suggests that use of the nonprofit-sector theories is merely ceremonial. Nonprofit scholars could do much more to question, develop, and refine the existing sector theories – or to develop new ones. This research highlights the importance of a book like this one to encourage scholars to discuss and question existing sector theories and pose new sector-theory contributions to better understand the nonprofit sector.