‘Putting a Foot in the Door’: Volunteer Hiring and Organizational Form

Abstract

Volunteering often acts as a stepping stone into a paid position. This paper provides an explanation for the fact that non-profit employers are uniquely able to attract volunteers with social concerns and career aspirations and for the related observation that non-profits figure prominently in mission-related activities. The theory is predicated on that—by committing to not distributing profits—non-profit incorporation relaxes the incentive constraint that employers face when implicitly contracting with volunteers. The not-for-profit commitment is shown to be effective only in activities where producers, who can choose to be for-profit or non-profit, care about the level of the service being provided.