The Performance of Fund Management of Non-Profit Organizations

We measure the fund performance based on the realized return of fund investment and the proportion of fund invested in risky assets. Hence, the return and the risk are the criteria for fund performance measurement. Moreover, it is more important to explore the factors that affect the fund performance of NPOs.

Theoretically, agency theory and labor market mechanism are the causes for fund performance of NPOs. We find that the major factor for the return of fund investment is the employment of professional agents. A foundation employing professional agents for the management of fund experiences higher investment return.

Further, the motives for investment influence the fund performance also. If the foundation is lack of capital, it pays more attention to the fund investment and experiences higher performance. Nevertheless, the fund performance is not significantly related to the labor market and the proportion of free capital such as donation from the government.

Based on the agency theory, without the labor market mechanism, the employees tend to less risky investments for the sake of job entrenchment. Finally, we also show that the size but not the source matters for fund performance.