ORGANIZATIONAL SLACK IN SUBSIDIZED NONPROFIT INSTITUTIONS

Informal objectives of managers next to the formal objective of the th e organization can be a source of organizational slack or X-inefficien cy in nonprofit organizations. If the organization is subsidized the d onor can restrain organizational slack by choosing an appropriate subs idy system. Four subsidy systems are discussed: output, input, revenue and lump sum subsidy. Output subsidy reduces slack most. The ranking of input subsidy compared with lump sum subsidy depends on the elastic ity of demand for output. Revenue subsidy equals input subsidy. Change s in the subsidy regime for residential adult educations in the Nether lands turn out to have been inconsistent.