The Corporatization of Nonprofit Pay and Managerial Autonomy

We examine whether the corporatization of nonprofit pay varies based on who influences the pay-setting process, and in turn, whether pay practice choices shape managerial actions. We find that nonprofits without a clientele of sophisticated donors, with corporate-interlocked directors, and with entrenched executives are also more likely to use incentive pay. These results suggest that governance actors who strongly monitor nonprofits, play multiple roles, or have mixed motives influence the corporatization of nonprofit pay. Further, we find evidence consistent with nonprofits that use incentive pay being more likely to exercise greater financial autonomy over core and commercial initiatives and greater personnel autonomy to professionalize functional activities. Our findings are of interest to governance actors who set, regulate, or evaluate nonprofit executive pay choices and outcomes