Control and Efficiency in the Nonprofit Sector Evidence from a Randomized Policy Experiment

Niklas Bengtsson () and Per Engström

No 2011:8, Working Paper Series from Uppsala University, Department of Economics

Abstract: Results in behavioral economics suggest that material incentives can crowd out effort, if agents are mission-oriented rather than self-interested. We test this prediction on a sample of nonprofit organizations in Sweden. Swedish nonprofit organizations receive tax funds annually to promote global development issues through information campaigns. Traditionally, the contract with the main principal (the Swedish foreign aid agency) has been based on trust and self-regulation. We designed an experimental policy intervention, effectively replacing the trust-based contract with an increased level of monitoring from the principal, along with a threat to cut future funds if irregularities were detected. Our findings are inconsistent with (strong) motivational crowd-out. Overall, using both self-reported and observed measures of outreach, we find that the intervention improved efficiency. Graphical analysis shows that non-monitored organizations exhibit a distinct tendency to maximize expenditure; in contrast, organizations in the treatment group are more likely to return unused grants to Sida. Additionally,we find no crowding out of private contributions and no evidence of a \discouraged NGO"-syndrome.

Keywords: Bureaucrats; NGO; Economics of psychology; Foreign aid; Randomized experiments; Hawthorne effect; Laboratory vs. field evidence; Treatment externalities; Spillover effects; Reference group contamination (search for similar items in EconPapers)
JEL-codes: D03 H83 L31 O19 (search for similar items in EconPapers)
Pages: 24 pages
Date: 2011-05-04
New Economics Papers: this item is included in nep-exp and nep-soc
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
http://uu.diva-portal.org/smash/get/diva2:457473/FULLTEXT01.pdf (application/pdf)

Related works:
Working Paper: Control and efficiency in the nonprofit sector: Evidence from a randomized policy experiment (2011)
Working Paper: Control and Efficiency in the Nonprofit Sector: Evidence from a Randomized Policy Experiment (2011)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hhs:uunewp:2011_008

Access Statistics for this paper

More papers in Working Paper Series from Uppsala University, Department of Economics Department of Economics, Uppsala University, P. O. Box 513, SE-751 20 Uppsala, Sweden. Contact information at EDIRC.
Bibliographic data for series maintained by Ulrika Öjdeby ().