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Organizational design for making a difference

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  • Prendergast, Canice

Abstract

We address organizations that rely on donors, when those donors are motivated by making a difference. We show that when donors care sufficiently about their marginal impact, firms use practices that would normally be deemed inefficient. These include prioritizing less valuable opportunities over better ones, investing most in their weakest initiatives, and benefiting from not identifying the quality of their projects. These all arise from a distinction between marginal and average returns generated by donor preferences.

Suggested Citation

  • Prendergast, Canice, 2023. "Organizational design for making a difference," Journal of Public Economics, Elsevier, vol. 218(C).
    • Handle: RePEc:eee:pubeco:v:218:y:2023:i:c:s0047272722002195
    DOI: 10.1016/j.jpubeco.2022.104817
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    References listed on IDEAS

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