Abstract
By adopting mainly the “principal-agent theory”, the study analyses how non-profit organizations (NPOs) corporate governance structure could increase the trust of the donors and therefore affect their ability to receive donations from taxpayers. Starting from a literature review we concentrated our attention on the non-profit sector where NGOs represent the largest category. In Italy, starting from 2006, all NPOs could receive funding deriving from taxes paid by citizens when making tax returns with the so called ‘5 per thousand’ of the personal income tax. We analyzed the corporate governance disclosure practices of the first Italian 100 NPOs that received the highest donations from 5 per thousand. In particular, we elaborated a CGI index that includes governance and informativeness. This paper shows how an efficient and transparent corporate governance structure motivates the donors to donate 5 per thousand to NPOs that demonstrate good corporate governance. The findings suggest that taxpayers are inclined to allocate 5 per thousand to organizations where the information level, from a governance point of view, is high, easily available and clear about the purpose in the specified field of research.
Highlights
The "third sector" in Italy has an annual turnover that exceeds 60 billion euros per year and includes all non-profit organizations (NPOs), of which non-governmental organizations (NGOs) represent the most numerous category (Gazzola et al, 2019a)
To analyze this information and these hypotheses we have selected a sample of Italian NPOs with a set of financial, economic, social and corporate governance data, as well as prominent indicators to carry out an efficient descriptive statistics and an econometric analysis
Following our two hypotheses are aiming to verify if the extracted data has any direct or indirect relation with the corporate governance variables, or if there are other external elements that potentially interact with the researched ones
Summary
The "third sector" in Italy has an annual turnover that exceeds 60 billion euros per year and includes all non-profit organizations (NPOs), of which non-governmental organizations (NGOs) represent the most numerous category (Gazzola et al, 2019a). NPOs represent an important pillar in advanced economic systems as they carry out a significant economic activity (Gazzola, Ratti & Amelio, 2017; Gazzola & Amelio, 2015; Peng, 2019). An important and common NPO aspect is the collection of contributions, donations and concessions, which guarantee their business survival. In Italy, the presence of NPOs reduces direct intervention of the state. They receive concessions compensating the costs that the State would otherwise have to bear directly (Airoldi, Brunetti & Coda, 2005). NGO funding has grown considerably since the 1980s (Moore & Stewart, 1998)
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