THE MECHANISMS OF GOVERNANCE IN NONPROFIT ORGANIZATIONS

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Cláudio Antonio Pinheiro Machado Filho, Adalberto Fischmann, Luciana Rocha de Mendonça, Sandra Guerra

DOI:10.22495/cocv4i2p8

Abstract

This paper discusses the governance issues in nonprofit organizations (NPO). The theoretical framework of agency theory is used to analyze the relationship between agents and principals (donors and volunteers) in such kinds of organizations. Similarly to the for-profit organizations, the mechanisms of incentives and monitoring are crucial to the alignment of interests among principals and agents. However, considering the NPO’s intrinsic characteristics, due to the difficulty to implement external and internal governance mechanisms, the challenges of alignment are far more complicated. The NPOs are idiosyncratic, being in many situations complex to establish performance comparisons with similar organizations.

Keywords: Governance, NPO, Agency Theory

How to cite this paper: Machado Filho, C. A. P., Fischmann, A., de Mendonça, L. R., & Guerra, S. (2007). The mechanisms of governance in nonprofit organizations. Corporate Ownership & Control, 4(2), 83-88. http://dx.doi.org/10.22495/cocv4i2p8