Volunteer Hiring, Organizational Form and the Provision of Mission-Oriented Goods Job Market Paper

Mission-oriented organizations, such as nonpro\u85t organizations and NGOs, rely critically on volunteer recruitment to achieve their organizational goals. Besides serving as an outlet of altruistic motives, volunteering often acts as a stepping-stone for a paid position in the nonpro t sector. This paper provides an explanation for the fact that nonpro\u85t employers are uniquely able to attract such volunteers with social concerns and career aspirations and for the related observation that nonpro\u85ts \u85gure prominently in mission-related activities. Our theory is predicated on that by committing to not distributing pro\u85ts nonpro\u85t incorporation relaxes the incentive constraint that employers face when implicitly contracting with volunteers, without relying on ex ante di¤erences in workerspreferences over the employers identity or inherent asymmetries between nonpro\u85t and for-pro\u85t providers. The not-for-pro\u85t commitment is shown to be e¤ective only in activities where producers, who can choose to be for-pro\u85t or nonpro\u85t, care about the level or quality of the service being provided. Thus, in the equilibrium of the model developed here nonpro\u85t entry in sectors where missions play a de\u85ning role and the hiring of volunteers arise endogenously due to economic forces. This equilibrium outcome has some desirable welfare properties