Abstract: Based on Holmstrom’s team theory, a team incentive model for nonprofit organizations was established by considering a variable of public utility and ignoring environmental effects. Itwas proved that there is no Nash equilibrium of the game induced by allocation schemes under the conditions of budget balance and some regulatory constraints. The incentive problem of a nonprofit organizational team can be solved and an allocation scheme can be devised by introducing a principal as the budget-breaker into the team.