Corporate Governance and Social Impact of Non‐Profits: Evidence from a Randomized Program in Healthcare in the Democratic Republic of Congo

Abstract

How can non-profit organizations improve their governance to increase their social impact? This study examines the effectiveness of a bundle of governance mechanisms (consisting of pro-social incentives and auditing) in the context of a randomized governance program conducted in the Democratic Republic of Congo’s healthcare sector. Within the program, a set of health centers were randomly assigned to a governance treatment while others were not. We find that improved governance leads to i) higher operating efficiency and ii) improvements in social performance (measured by a reduction in the occurrence of stillbirths and neonatal deaths). Furthermore, we find that funding is not a substitute for governance — health centers that only receive funding increase their scale, but do not show improvements in operating efficiency nor social performance. Overall, our results suggest that corporate governance plays an important role in achieving the non-profits’ objectives and increasing the social impact of the funds invested.

Keywords: corporate governance, non-profit organizations, social impact, healthcare, Sustainable Development Goals (SDGs), developing countries, randomized experiment

JEL Classification: O, Q01, A1, D1, D2, D6, D8, F63, G3, I1