The economics of non-profit organisations' governance

We determine theoretically when we can expect agency problems amenable to shirking agents to arise in nonprofit organisations and derive the conditions for governance measures to remedy these. Agents' private benefits of shirking need to be considered combined with the effect of their efforts on the probabilities of being successful in fundraising and production. If this effect is large, agency problems can more easily be avoided. Sufficient conditions for governance measures to reduce agency problems are derived. The empirical literature fits a number of the results derived and shows important gaps, especially w.r.t. the role of success probabilities.