Stijn Van Puyvelde

The Governance of Nonprofit Organizations Integrating Agency Theory With Stakeholder and Stewardship Theories

The purpose of this article is to provide a more comprehensive principal–agent theory of nonprofit organizations by combining agency theory with aspects of stakeholder theory, stewardship theory, and empirical literature on the governance and management of nonprofit organizations. First, the use of a stakeholder perspective allows us to identify the principals of a nonprofit organization and to divide nonprofit principal–agent relationships into different categories. Next, we discuss the assumptions and prescriptions of agency theory and stewardship theory and suggest that a complementary use of these theories can contribute to the research of principal–agent relationships. By discussing empirical literature from a stewardship–agency perspective, we are able to address issues of nonprofit accountability. We conclude by giving suggestions for further research and by stressing the importance of a recruitment policy to avoid internal agency problems.

Managerial Objectives and the Governance of Public and Non-Profit Organizations

Abstract By investigating managerial objectives, we test the simultaneous need for both control (agency theory) and collaboration (stewardship theory) in public and non-profit governance. We construct a discrete choice experiment to elicit preferences of managers in Belgian public and non-profit nursing homes. The results confirm that boards of nursing homes may experience pressure to simultaneously control and collaborate with their managers, thereby suggesting that agency and stewardship theory can be combined into a more general internal governance framework. We conclude by providing some policy implications to improve public and non-profit governance.

Capital structure of social purpose companies -- a panel data analysis

This paper examines the determinants of borrowing decisions of social enterprises. Following the streams of research dealing with for-profit firms and non-profit organisations, we apply a panel data analysis of 2228 Belgian social purpose companies over the period of 2004–2013. We find that, in their capital structures, Belgian social purpose companies show a high dependence on financial determinants such as profitability, nature of assets, growth opportunities, size, the probability of agency problem and the previous years leverage. They also demonstrate a high susceptibility to activity domain, legal form, region and evolution over time. Our results are in line with the mainstream literature on both for-profit organisations and non-profit organisations. We conclude that the capital structure of social enterprises mixes features of both research streams.

Optimal membership size and the governance of grassroots associations

Abstract This paper explores the link between membership size and the governance of grassroots associations. The issue of mission preference heterogeneity is highlighted and its effect on membership size is analyzed by developing a model and conducting a numerical simulation. An important finding is that the degree of heterogeneity of mission preferences in the potential member population has a negative effect on the optimal number of members of the grassroots association. The paper ends with a discussion of the use of governance mechanisms to limit mission drift.

Does organizational ownership matter? Objectives of employees in public, nonprofit and for-profit nursing homes

Does organizational ownership matter for employees? We conducted a discrete choice experiment to reveal employees’ objectives in for-profit, nonprofit and governmental nursing homes. The results indicate that differences in objectives among nursing home staff are at least partially related to differences in ownership type. More specifically, we find that employees of public nursing homes are less extrinsically motivated than their for-profit and nonprofit counterparts. However, the results also show that employees of for-profit, nonprofit and governmental nursing homes are trading off output quality and output quantity differently, in line with the view that public providers of elderly care are pursuing a supplier-of-last-resort objective function.

Board Effectiveness in Nonprofit Organizations: Do Interactions in the Boardroom Matter?:

This study explores how perceived interactions in the boardroom are associated with perceptions of board effectiveness in nonprofit organizations. The relationships between board chair leadership, board meeting practices, board group dynamics, and the perceived effectiveness of the board in several governance roles and responsibilities are investigated. The results show that interactions in the boardroom matter: they are generally positively associated with both board chairs’ and chief executives’ perceptions of board effectiveness. Based on these results, several practical implications are formulated for boards seeking to improve their effectiveness.

Testing a Two-Stage Grant Allocation Process: The Case of the United Way

Drawing upon transaction costs economics, we examine the determinants of the two-stage allocation process within the local United Way (UW) system. We use a unique multiyear data set that captures local UW allocations to nonprofit grantees at four points in time (2000, 2004, 2008, and 2010). We find that the first stage is screening, in which organizations’ legitimacy, mission, and financial performance are preliminary determinants of partnership in the UW system. In the second stage, UWs incentivize existing grantees with high legitimacy to stay in the system through larger allocation share. These determinants are stable over time. However, size of these effects varies across size of UW system; this finding suggests that transaction costs influence the likelihood of using performance measures to evaluate grantees in the first stage of the allocation process.