The economics of nonprofit organisations' governance

We determine theoretically when we can expect agency problems amenable to shirking agents to arise in nonprofit organisations and derive the conditions for governance measures to remedy these. Agents' private benefits of shirking need to be considered combined with the effect of their efforts o...

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Bibliographic Details
Published inManagerial and decision economics Vol. 40; no. 7; pp. 862 - 868
Main Author Jegers, Marc
Format Journal Article
LanguageEnglish
Published Chichester Wiley Periodicals Inc 01.10.2019
Subjects
Agency theory
Economic models
Fund raising
Governance
Nonprofit organizations
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Summary:We determine theoretically when we can expect agency problems amenable to shirking agents to arise in nonprofit organisations and derive the conditions for governance measures to remedy these. Agents' private benefits of shirking need to be considered combined with the effect of their efforts on the probabilities of being successful in fundraising and production. If this effect is large, agency problems can more easily be avoided. Sufficient conditions for governance measures to reduce agency problems are derived. The empirical literature fits a number of the results derived and shows important gaps, especially w.r.t. the role of success probabilities.
ISSN:0143-6570
1099-1468
DOI:10.1002/mde.3054