The Goverenment and Industry Partnership VS the Motivation for the Non-Profit Organization

A few years ago I read two books:

The Free Agent Nation by Daniel H. Pink

The Non-Profit Economy by Burton Allen Weisbrod

The Free Agent Nation now seems like a relic from our distant past, while the principles in The Non-Profit Economy, which lays out the distinctions and roles that separate the private economy, government, and the non-profit economy, cry for public review.

While I was searching for The Nonprofit Economy, I came upon this paper, which expands upon the work of Weisbrod, published in Munich by Giovanni Cerulli


The redistributive role of non-profit organizations


ABSTRACT

By starting from the consideration that non-profit organizations cover a significant re-distributive function beside that of governmental agencies, the paper questions why government prefers to finance via transfers private entities likewise lucrative and non-lucrative entities rather than produce these goods directly.

By generalizing the Hansmann (1996) theory, we propose a “make or buy” approach in which the choice among three different ownership regimes (governmental, non-profit and for-profit) providing services in public benefit oriented sectors is affected not only by costs reduction (X-efficiency) but also by the level of transfers (degree of “redistribution”) decided at a political level.

QUOTE:


Nonetheless, as suggested by Borzaga (2001), two elements seem to be overlooked by this literature. The first relies on a scarce attention devoted to the internal structure of the non-profit institution that still remains an unexplored black box; the second refers to the fact that this literature has quite completely overlooked the evident fact that non-profit organizations also hold a relevant “redistributive function”, that is, they are set up for and operate with the explicit goal of modifying the distribution of income when the current one is considered as not consistent with social preferences (Borzaga, 2003, p. 39). This aim is particularly distinctive for non-profit organizations working within public benefit oriented sectors where, as we will see, beside the need for efficiency society considers also the need for equity. The paper aims to analyze this second issue by deepening the first one.