In this project we analyze the situation and the reform potential of non-profit-organizations with regard to the modernization of the welfare state from an economic perspective and compare it internationally. Hereto, we analyze the situation as well as the general regulatory framework and the basic conditions relevant for competition for non-profit-organizations which produce goods and services that are important to the welfare state. This analysis is done by means of optimality criteria derived from the fields of welfare economics as well as political economy and it is conducted for selected EU countries. Based on the results, recommended actions are developed, that tell how the potentials of non-profit-organizations can be tapped in Germany from an economic point of view.