Small is Beautiful: Motivational Allocation in the Nonprofit Sector | Zendy

Gani Aldashev | Zendy; Esteban Jaimovich | Zendy; Thierry Verdier | Zendy

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Small is Beautiful: Motivational Allocation in the Nonprofit Sector

Author(s) -

Gani Aldashev,

Esteban Jaimovich,

Thierry Verdier

Publication year - 2017

Publication title -

journal of the european economic association

Language(s) - English

Resource type - Journals

SCImago Journal Rank - 7.792

H-Index - 93

eISSN - 1542-4774

pISSN - 1542-4766

DOI - 10.1093/jeea/jvx024

Subject(s) - nonprofit sector , business , private sector , public economics , public sector , government (linguistics) , economics , preference , microeconomics , economic growth , public relations , economy , linguistics , philosophy , political science

We build an occupational-choice general-equilibrium model with for-pro t rms, non-pro torganizations and endogenous private warm-glow donations. Lack of monitoring on the use offunds implies that an increase of funds of the non-pro t sector (because of a higher incomein the for-pro t sector, a stronger preference for giving, or an inflow of foreign aid) worsensthe motivational composition and performance of the non-pro t sector. We also analyze theconditions under which donors (through linking donations to the motivational composition of thenon-pro t sector), non-pro ts themselves (through peer monitoring), or the government (usinga tax- nanced public funding of non-pro ts) can eliminate the low-e¤ectiveness equilibrium. Wepresent supporting case-study evidence from humanitarian emergencies and developing-countryNGOs.

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