The Revealed Objective Functions of Nonprofit Firms

Richard Steinberg

RAND Journal of Economics, 1986, vol. 17, issue 4, 508-526

Abstract: Although assertions have often been made about the objectives underlying the behavior of nonprofit firms, there has been no empirical confirmation of these assertions. This article proposes a way to infer a nonprofit organization's objective function by estimating the marginal donative product of its fundraising. Panel data estimates derived by using Hildreth and Houck's (1968) random coefficients model, suggest that welfare, education, and arts firms are "service maximizers," that health firms are budget maximizers, and that the objective of research firms cannot be ascertained within the family of objective functions considered.

Date: 1986
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