The agency problem in non-profit corporations: a comparative law and economics study of US and italian systems

It is not a simple task to establish which role is currently played by the non-profit sector. Mainstream economics tend to explain the American burgeoning of non-profit structures on the basis of a market failure theory. In Italy, the non-profit sector seems to be better explained on the basis of a government failure theory. The understanding of the role of the non-profit sector is extremely important to find out which are or which should be the legal interests involved in the activity of these firms. In order to pursue this goal, the discussion is developed through the comparative law method, which basically imposes two perspectives of analysis: a historical analysis and an analysis of the current legislations. The first implies the comparison of the different legal disciplines that have dealt with a certain institute in a given country. Thus, the comparison of the US legal disciplines that have applied to non-profit organizations takes necessarily into account the Old-Country legislations. Similarly, the comparison of the Italian disciplines concerned with non-profit organizations takes necessarily into account the Roman and the Canon Law. The historical comparison is nothing but the most genial way to prepare the legal and economic background where the comparative lawyers can study and discuss the differences of the current legislations in order to suggest better or fairer solutions. Therefore, the research of the interests currently involved in the non-profit activities sets forth an analysis of the concept of corporation that is the legal form adopted by the majority of the US non-profit entities. The investigation attempts to verify how the legal and economic theories developed on business corporations fit into the notion of a non-profit firm, focusing the discussion on the private/contractual and public/institutional dimension of the corporation and on the absence of residual claimants. The study reveals how the approach consisting in the analysis of the concept of corporation would not actually apply to the Italian non-profit organizations unless one conceives the corporation as any firm exerting an economic activity. The result of the research tends to highlight the charitable dimension of the non-profit firm and, therefore, to develop legal reasoning aimed at protecting the social, ethical and altruistic values that these structures have traditionally promoted. As regards the US, such legal reasoning is drawn from the public conception of corporation while, as regards Italy, the legal reasoning is developed from the interpretation of the recent legislation on the “impresa sociale”.