Why Do Foundations Follow the Law? Evidence from Adoption of the Uniform Prudent Management of Institutional Funds Act

Employing a large panel of over one million firm‐years, I find evidence consistent with widespread compliance with law among U.S. private foundations despite the absence of many formal deterrence mechanisms. The research design exploits rolling state adoption of the Uniform Prudent Management of Institutional Funds Act, which lifted some existing limits on firm spending for a fraction of firms within each state. This allows the use of triple‐difference estimates that control for changes in local norms and economic conditions. UPMIFA increases firm spending, on average, implying that firms were complying with the pre‐UPMIFA regime. Interacting the triple‐difference factors with other predictors of compliance reveals no correlation between compliance and enforcement intensity, but some evidence that compliance is correlated with firm culture and reliance on accountants. These findings have potentially important implications for the governance of charitable organizations, and may speak more generally to drivers of compliance among other organizational forms.     

The New Public Management, Homeland Security, and the Politics of Civil Service Reform

This article examines the George W. Bush administration's efforts to apply New Public Management reforms to the Department of Homeland Security. The primary focus is the administration's attempt to implement the law. The managerial strategy that Department of Homeland Security and Office of Personnel Management executives used to carry out the law in the massive new department receives attention, with a special focus on the approach used in dealing with the federal courts. The article suggests five general lessons concerning civil service deregulation at the federal level. The case reaffirms the notion that successful administrative reform requires a keen appreciation for the politics that shape it.