Not-for-Profit Organizations.

• Position: Conferences

An NBER Conference on Not-for-Profit Organizations, organized by Edward Glaeser of NBER and Harvard University, took place on January 18-19. The following papers were discussed:

Raymond Fisman, Columbia University; and R. Glenn Hubbard, Chairman, President's Council of Economic Advisers (on leave from NBER and Columbia University), "Endowments, Governance, and the Nonprofit Form"

Discussant: Jerry Green, NBER and Harvard University

Jonathan K. Nelson, Syracuse University; and Richard Zeckhauser, NBER and Harvard University, "A Renaissance Instrument to Support Nonprofits: The Sale of Private Chapels in Florentine Churches"

Discussant: Bruce Weinberg, Ohio State University

Burton A. Weisbrod and Burcay Erus, Northwestern University, "Compensation Structures Across Institutional Forms: Responses to Exogenous Revenue Constraints in the Hospital Industry; 1992-7" Discussant: Sendhil Mullainathan, NBER and MIT

Henry Hansmann, Yale University; Daniel Kessler, NBER and Stanford University; and Mark McClellan, Member, President's Council of Economic Advisers (on leave from NBER and Stanford University), "Ownership Status and Capacity Choice: The Case of Hospitals"

Discussant: David Cutler, NBER and Harvard University

Sharon Oster, Yale University; and William N. Goetzmann, NBER and Yale University, "Valuing Art: Art Museums as Economic-Institutions"

Discussant: Antoinette Schoar, NBER and MIT

Jason R. Barro, NBER and Harvard University, and Michael Chu, Harvard University, "HMO Penetration, Ownership Status, and the Rise of Hospital Advertising"

Discussant: Fiona Scott Morton, NBER and Yale University

Guy David and Anup Malani, University of Chicago. and Tomas Philipson, NBER and University of Chicago, "Theories of Nonprofit Firm Behavior: A Synthesis and Empirical Evaluation"

Discussant: Thomas Hubbard, NBER and University of Chicago

Fisman and Hubbard consider the governance implications for non-profits, defined as organizations with no residual claimants. In for-profit enterprises, shareholders are the residual bearers of risk. Because a nonprofit, by definition, has no residual claimants, something else must act to absorb financial shocks. Nonprofit managers often describe the endowment, or fund balance, as serving this function. However, an endowment can provide managers with unchecked discretionary funds. The authors present a model of nonprofit governance in which the manager may divert funds from the endowment, and as a result, donors face...