Evaluating economic theories of NPOs: A survey, a case study and some new directions for socio-economics

The contribution economists have made to the multidisciplinary field of non-profit studies is remarkable when one considers that non-profit organizations (NPOs) have traditionally been regarded as “non-economic” institutions that lie outside the scope of economic analysis. However, despite its achievements there has been concern about the emergence of “theoretical inertia” in the economics of NPOs. This paper suggests some ways in which the revisionist approach reflected in economic theories of the supply-side of the voluntary sector could be augmented. In particular it focuses on the emotional basis for stakeholder commitments and the consequent dependence NPOs have on their organizational leadership to foster the development of shared hopes that can sustain these commitments in the face of disappointments. These ideas are discussed in relation to the provision by NPOs of supported employment services to the disabled.