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Journal Article
Altruism, Nonprofits, and Economic Theory
1996
Overview
The nonprofit sector is not just a receptacle for charitable donations. Although private charitable impulses are important determinants of nonprofit activity, they are not a sufficient explanation for the size and growth of the sector. Nonprofits also provide government subsidized services and sell their output to the public. The nonprofit form is not in itself a guarantee of high quality, altruistic performance, but neither is it a signal of a slack and inefficient organization. The benefits of the nonprofit form depend on the relative efficacy of alternative control mechanisms and on the benefits to consumers of purchasing from idealogues. Short of policies that simply improve the information available to consumers, the information available to consumers, 2 substitutes for organizational form are important. The first is government regulation with or without public subsidy, and the 2nd is professional training. Either or both can place for-profits on the same competitive plane with nonprofits in markets where customer information is imperfect.
