Not-for-Profit Entrepreneurs

By Edward L. Glaeser, A. Shleifer. 2001

162 citations recorded by the source corpus.

Entrepreneurs who start new firms may choose not-for-profit status as a means of committing to soft incentives. Such incentives protect donors, volunteers, consumers and employees from ex post expropriation of profits by the entrepreneur. We derive conditions under which completely self-interested entrepreneurs opt for not-for-profit status, despite the fact that this status limits their ability to enjoy the profits of their enterprises. When entrepreneurs have a taste for producing high quality products, the incentives are even softer, and, moreover, non-profit status can serve as a signal of that taste. We also show that even in the absence of tax advantages, unrestricted donations would flow to non-profits rather than for-profit firms because donations have more significant influence on the decisions of the non-profits.

Subfields: Accounting, Economics and Econometrics

View Paper: https://www.semanticscholar.org/paper/5ef8459704cbf519b586537955c89e31a5dd065e

Citations in the corpus

• Individual crowdfunding practices (2013, unknown): “Rooted in the contract failure literature, Glaeser and Shleifer (2001) argue that profit incentives might lead to undesirable outcomes from the point of view of donors who value the noncontractible outcome of the entrepreneurial venture.”
• Microfinance Meets the Market (2008, unknown): “From the economics standpoint, the main difference between for-profit and non-profit status is the ability to distribute profits(Glaeser and Shleifer 2001).”
• Retailing public goods: The economics of corporate social responsibility (2007, unknown): “Authors, such as Glaeser and Shleifer (2001) have rightly focused on the comparative opportunities for opportunism between for-profit and not-for-profit providers.”
• The cost of ownership in microfinance organizations (2007, unknown): “Therefore, since NPOs have no owners and implicit fewer incentives to exploit donors; all else being equal, donors prefer contracting with NPOs (Easley and O'Hara, 1983, Glaeser and Shleifer, 2001, Hansmann, 1996).”
• Worker Motivations, Job Satisfaction, and Loyalty in Public and Nonprofit Social Services (2006, unknown): “…nonprofit organizations represent valid alternatives to public organizations and for-profit enterprises in the production of social services are Glaeser and Shleifer (2001) and Ortmann and Schleisinger (2003). at Biblioteca di Ateneo - Trento on March 8, 2016nvs.sagepub.comDownloaded from 4.”
• The Economics of Museums (2003, unknown): “…from entrance fees (p), which is a function of the number of visitors (y); the level of donations and government grants (g), which depend exclu sively on the quality of the museum; and the revenue from ancillary goods from the shop 21 For a similar argument, see Glaeser and Shleifer (2001).”
• Not-For-Profit Provision Of Public Services* (2003, unknown): “Lemma In the event of worker shirking, a nonproÞt Þrm manager provides less remedial effort than a for-proÞt Þrm owner/manager; ea (0) 6 ) and (11).”
• Why Doesn't the United States Have a European-Style Welfare State? (2001, unknown): “Glaeser and Shleifer (2001b).”
• Nonprofit Boards: Size, Performance, and Managerial Incentives (2012, unknown): “7 Past research claims that the non-distribution constraint is both the cause of agency problems that lead nonprofits to be less efficient than for-profits (Alchian and Demsetz, 1972; Fama and Jensen, 1983), and a way to resolve agency problems that would lead for-profit firms to under-supply a good”