The Nonprofit Sector: Ethics And The Principal-Agent Problem.

1345 WordsApr 13, 20176 Pages
The Nonprofit Sector: Ethics and the Principal-Agent Problem Alongside philanthropy, nonprofit offers a way for people to cultivate compassion and advocate altruism in society. A nonprofit is a word used by the IRS to define tax-exempt organizations that benefits the public interest at no cost. In the nonprofit sector, there are a number of ethical dilemmas that tend to decelerate the progress of these socially innovative organizations. The way majority of modern society considers nonprofit organizations harmonize with imbruted overhead. Some entrepreneurs believe that the aversion of overhead dampens nonprofits’ success in ending things like world hunger, homelessness, breast cancer, and other things residing in the realm of world…show more content…
For instance, doctors are motivated by the desire to help people rather than having a monetary motive. This reputation will make the money follow after the initial motivation of altruism. “If you say our goal is to help people…in a non-profit setting, that is to make the most money,” (Roberts 2010). On the other hand, if a nonprofit were to make the claim that it would like to make the most money, it wouldn’t do well. For-profits industries can make as much money without the concern of damaging its reputation. Advertising and marketing are deemed as another area of discrimination because for-profit sectors can spend as much as they’d like on advertising and in turn, they receive an abundance of money. Yet, with the dehumanization of overhead and an evident ignorance of morality with frugality amongst the masses, charities ought to spend less in fundraising. In turn, they don’t make as much money as a corporation like McDonald’s would. The old saying, “in order to make money you have to spend money” correlates into the breakdown that without a budget allocated to fundraising, the nonprofit can’t make money. If a nonprofit cannot make money, then it cannot grow. Lastly, if it cannot grow then the goal to end big problems is diminished. There are people who would disagree by claiming that nonprofits are not underinvesting in

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