The Governance of Nonprofits and Their Social Impact: Evidence from a Randomized Program in Healthcare in the Democratic Republic of Congo

Author:

Fangwa Anicet A.1,Flammer Caroline234ORCID,Huysentruyt Marieke5ORCID,Quélin Bertrand V.5ORCID

Affiliation:

1. Desautels Faculty of Management, McGill University, Montreal, Quebec H3A 1G5, Canada;

2. School of International and Public Affairs, Columbia Climate School, and Columbia Business School, Columbia University, New York, New York 10027;

3. National Bureau of Economic Research (NBER), Cambridge, Massachusetts 02138;

4. European Corporate Governance Institute (ECGI), 1000 Brussels, Belgium;

5. École des hautes études commerciales de Paris (HEC Paris), 78350 Jouy-en-Josas, France

Abstract

Substantial funding is provided to the healthcare systems of low-income countries. However, an important challenge is to ensure that this funding is used efficiently. This challenge is complicated by the fact that a large share of healthcare services in low-income countries is provided by nonprofit health centers that often lack (i) effective governance structures and (ii) organizational know-how and adequate training. In this paper, we argue that the bundling of performance-based incentives with auditing and feedback (A&F) is a potential way to overcome these obstacles. First, the combination of feedback and performance-based incentives—that is, feedback joined with incentives to act on this feedback and achieve specific health outcomes—helps address the knowledge gap that may otherwise undermine performance-based incentives. Second, coupling feedback with auditing helps ensure that the information underlying the feedback is reliable—a prerequisite for effective feedback. To examine the effectiveness of this bundle, we use data from a randomized governance program conducted in the Democratic Republic of Congo. Within the program, a set of health centers was randomly assigned to a “governance treatment” that consisted of performance-based incentives combined with A&F, whereas others were not. Consistent with our prediction, we find that the governance treatment led to (i) higher operating efficiency and (ii) improvements in health outcomes. Furthermore, we find that funding is not a substitute for the governance treatment; health centers that only receive funding increase their scale but do not show improvements in operating efficiency or health outcomes. This paper was accepted by Lamar Pierce, organizations. Funding: This research was supported by the Agence Nationale de la Recherche [Grant Investissements d’Avenir (LabEx Ecodec)]. Supplemental Material: The data files and online appendix are available at https://doi.org/10.1287/mnsc.2023.4846 .

Publisher

Institute for Operations Research and the Management Sciences (INFORMS)

Subject

Management Science and Operations Research,Strategy and Management

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