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Science 5 May 1989:
Vol. 244. no. 4904, pp. 541 - 546
DOI: 10.1126/science.244.4904.541
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Articles

Rewarding Performance That Is Hard to Measure: The Private Nonprofit Sector

BURTON A. WEISBROD 1

1 Evjue-Bascom Professor of Economics and Director, Center for Health Economics and Law, University of Wisconsin-Madison, WI 53706.

The private nonprofit form of institutions is large and growing. Its role in a mixed economy is the subject of this article. Nonprofits differ from private enterprises primarily in the constraints on them. The key element is that nonprofits may not distribute profits to anyone associated with the organization, a restriction that is in sharp contrast to the freedom that private firms have to reward owners and managers for generating profit. The theoretical case that such a constraint can be useful when consumers are poorly informed is examined. Also, the available empirical evidence on differences in behavior between nonprofit and for-profit organizations is presented.


THIS ARTICLE HAS BEEN CITED BY OTHER ARTICLES:
Philanthropy, Nonprofits, and the Fiscal Health of Cities.
M. Przybylski, L. Littlepage, and M. S. Rosentraub (1996)
Nonprofit and Voluntary Sector Quarterly 25, 14-39
   Abstract »
Public Policy and the Performance of Nonprofit Organizations: A General Framework.
R. Steinberg (1993)
Nonprofit and Voluntary Sector Quarterly 22, 13-31
   Abstract »
Storming and catastrophic system failures.
W. W. Radell (1992)
Organization Environment 6, 295-312
   Abstract »    PDF »
A mechanism for social selection and successful altruism.
H. Simon (1990)
Science 250, 1665-1668
   Abstract »    PDF »


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