Sector Failure

Sector failure is related to the existence and roles of nonprofit organizations in a mixed economy of a three sector society- government, for-profit and nonprofit. Nonprofit organizations can be very efficient at addressing unmet needs, especially when the market and government sectors fail to provide for public goods and respond to the diverse demands of communities. This creates the opportunity for nonprofit organizations to take on necessary roles. Likewise, if the nonprofit sector fails, government and business take care of public needs.