Abstract

In Chapter 9 we focus on the modeling of nonprofit behavior starting with the structural components of model design that frame the organization’s behavior, followed by the theoretical issues associated with the choice of organizational form. We then consider the empirical evidence to reveal the goals of nonprofit organizations in specific industries and how the observed behavior of organizations corresponds to the various theories of nonprofit organizations posited in the literature. Theory predicts a bias towards higher quality provision by nonprofits that are organized for the public benefit and adhere to the non-distribution constraint. There is empirical evidence of systematic differences in the behavior of nonprofit and for-profit organizations in mixed industries consistent with these predictions. While there are some common characteristics that define specific industries, identifying the underlying goals of the organizations is not possible.