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Essay / Non-profit organizations as a contractual mechanism
Nonprofit organizations represent, on a broader level, institutions of social responsibility aimed at creating social value. Through his theory of public goods, Weisbrod (1974, 1977) defined NPOs as private providers of public goods that meet residual demand unmet by government entities, namely non-governmental organizations. However, according to the theory of contract failure developed by Nelson and Krashinsky (1973, 1977), nonprofit organizations struggle with the information asymmetry existing between consumers and producers of specific services. This is because NPOs are not for-profit entities with an economic rationale. It is therefore unlikely that service quality can be reduced in order to increase profits. Say no to plagiarism. Get a tailor-made essay on “Why Violent Video Games Should Not Be Banned”?Get the original essay Contract failure theory suggests that nonprofit organizations arise when ordinary contractual mechanisms do not provide consumers with adequate means to control producers. Achieving the social missions of NPOs constitutes the reason for their existence, and the commitment and passion expended to fulfill this objective represent the organizations' main asset. The mission is the reason for which the organization was born and operates. It is not simply a statement of intent and objectives, it represents the scope within which the organization can evolve. The mission defines both the starting point and the ending point of the NPO, and the highest degree of involvement of an interlocutor is reached when for him the mission becomes something in which to engage, whatever something worth doing. Working on the mission is useful for several reasons, such as: providing clear direction to the organization; it can be a tool for sharing with stakeholders and a starting point for defining strategies; avoid the dissipation of resources towards non-essential objectives; adopt a common language and values that strengthen integration. Most nonprofit organizations rely on third parties, such as corporations, private donors, governments, and foundations, to obtain the financial resources needed to operate. Funds therefore constitute limited resources that depend on fundraising initiatives and donations from NPOs. Since donors can be considered “fans” of the work, the mission, the cause and therefore the organization as a whole, many of them might enjoy getting involved on multiple fronts. In addition, donors who are also volunteers, or active in certain campaigns run by the organization, have a fairly low level of “dropout” because they feel like they are part of it. Small and medium-sized NPOs rely heavily on volunteers, who can represent the heart of the organization. As pointed out..., to ensure the continuity of voluntary action, volunteers should benefit from "placement in a job corresponding to their skills and passions, supervision and clear communication, good orientation and training, development opportunities, etc. » Keeping up to date and responding to the motivations, needs and interests of volunteers allows the NPO to better retain them, and this can be achieved through informal discussions, observations, short surveys and formal feedback sessions . Identifying the motivations of each volunteer allows us to understand which mission suits them best.”.