Public Funding, Governance and Passthrough Efficiency in Large UK Charities


*University of Liverpool Management School, Chatham Street, Liverpool L69 7ZH. Tel: +44-151-7953508; Fax: +44-151-7953005; E-mail:


This paper provides empirical evidence on how external governance mechanisms (e.g. the reporting and monitoring mandated under government funding contracts) and internal governance mechanisms (e.g. the adoption of corporate governance codes and traditional charity governance mechanisms) are related to the efficiency with which large UK charities meet their charitable spending objects. The evidence indicates that government funding and governance requirements, and traditional charity structures, are positively related to efficiency, whereas the adoption of business-type corporate governance codes is not.