Winner of the 2005 Charles Levine Prize for the Best Book in Comparative Policy and Administration This book focuses on the nonprofit organization as a social capital asset and agent in all phases of the public policy process - from influencing political parties, platforms, and choice of candidates to the formulation and implementation of public policy including the facilitation of transactions. This book demonstrates the universal utility of the principal-agent paradigm for analyzing nonprofits in foreign or domestic policy, sectarian or faith-based, scientific or social as well as the regulatory (not just participatory) powers of these organizations over market and nonmarket actions as a matter of public, collective policy. Placing the nonprofit in a principal-agent framework, the book emphasizes such topics as sources of conflict in public expectations and organizational performance, the moral hazard and benefits of organizational self-interest, tax exemption as compensation or a reservation price rather than just a subsidy, the role of social service organizations as managers of adverse social risks, and their inherent competitive advantage (even when faith-based) over firms as agents of choice for social service contracts from a strictly business perspective. It also deals with the role of nonprofits in governance such as over common pool resources, the moral hazard of policy, and the probability that the nonprofit could be an agent of distortions. This book goes beyond the economics of market failure and adds political, policy and administrative sciences, economic sociology, and the theory of contracts to encapsulate these organizations as agents and essential players in any open and democratic public policy process.