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The Governance of Not-for-Profit Organizations

Not-for-profit organizations play a critical role in the American economy. In health care, education, culture, and religion, we trust not-for-profit firms to serve the interests of their donors, customers, employees, and society at large. We know that such firms don’t try to maximize profits, but what do they maximize?

This book attempts to answer that question, assembling leading experts on the economics of the not-for-profit sector to examine the problems of the health care industry, art museums, universities, and even the medieval church. Contributors look at a number of different aspects of not-for-profit operations, from the problems of fundraising, endowments, and governance to specific issues like hospital advertising.

The picture that emerges is complex and surprising. In some cases, not-for-profit firms appear to work extremely well: competition for workers, customers, and donors leads not-for-profit organizations to function as efficiently as any for-profit firm. In other contexts, large endowments and weak governance allow elite workers to maximize their own interests, rather than those of their donors, customers, or society at large.

Taken together, these papers greatly advance our knowledge of the dynamics and operations of not-for-profit organizations, revealing the under-explored systems of pressures and challenges that shape their governance.

255 pages | 8 halftones, 6 line drawings, 48 tables | 6 x 9 | © 2003

National Bureau of Economic Research Conference Report

Economics and Business: Business--Business Economics and Management Studies, Health Economics

Table of Contents

Acknowledgements
Introduction
Edward L. Glaeser

1. Ownership Form and Trapped Capital in the Hospital Business
Henry Hansmann, Daniel Kessler, and Mark McClellan

2. Does Governance Matter? The Case of Art Museums
Sharon Oster and William N. Goetzmann

3. HMO Penetration, Ownership Status, and the Rise of Hospital Advertising
Jason R. Barro and Michael Chu

4. Objective Functions and Compensation Structures in Nonprofit and For-Profit Organizations: Evidence from the "Mixed" Hospital Industry
Burcay Erus and Burton A. Weisbrod

5. A Renaissance Instrument to Support Nonprofits: The Sale of Private Chapels in Florentine Churches
Jonathan Katz Nelson and Richard J. Zeckhauser

6. Theories of Firm Behavior in the Nonprofit Sector: A Synthesis and Empirical Evaluation
Anup Malani, Tomas Philipson, and Guy David

7. The Role of Nonprofit Endowments
Raymond Fisman and R. Glenn Hubbard

Contributors
Author Index
Subject Index

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