Agency costs in environmental not-for-profits

We examine the behavior of not-for-profits using utility maximization. This leads to testable hypotheses regarding the costs of agency associated with the activities of not-for-profits. Our tests are similar to those previous ly employed regarding not-for-profit objectives, but our interpretation is different. Our empirical test uses data on environmental groups. Unlike pre vious studies biased toward a finding of service maximization, we account f or endogenous explanatory variables. A weak statement of our results is tha t managers of environmental groups derive positive marginal utility from ex penditures for purposes other than providing services. There may also be em pirical support for a stronger conclusion.