Rewarding performance that is hard to measure: The private nonprofit sector

Burton A. Weisbrod*

*Corresponding author for this work

Research output: Contribution to journalArticle

48 Scopus citations


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.

Original languageEnglish (US)
Pages (from-to)541-546
Number of pages6
Issue number4904
StatePublished - Jan 1 1989

ASJC Scopus subject areas

  • General

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