Mission-driven firms increasingly rely on purpose, values, and identity to attract and

motivate employees, yet they also face a classic principal-agent problem: effort is costly and

imperfectly observable, and high-powered monetary incentives can be expensive or even counterproductive in high-purpose environments. This paper develops a parsimonious contract-

theoretic framework that treats identity, the deliberate cultivation and activation of shared,

mission-based identities, as an integral element of incentive design. The framework for-

malizes two empirically salient forces: (i) a 'Birds of a Feather' effect in which workers

supply more effort when their identity aligns with the firm's mission, and (ii) a 'Backfire'

effect in which extrinsic incentives may crowd out, distort, or otherwise weaken intrinsically

motivated effort.