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Trust but Verify? Voluntary Regulation Programs in the Nonprofit Sector
Abstract
In this article we examine how information problems can cause agency slippages and lead to governance failures in nonprofit organizations. Drawing on the principal–agent literature, we provide a theoretical account of an institutional mechanism, namely, voluntary regulation programs, to mitigate such slippages. These programs seek to impose obligations on their participants regarding internal governance and use of resources. By joining these programs, nonprofit organizations seek to differentiate themselves from nonparticipants and signal to their principals that they are deploying resources as per the organizational mandate. If principals are assured that agency slippages are lower in program participants, they might be more likely to provide the participants with resources to deliver goods and services to their target populations. However, regulatory programs for nonprofit organizations are of variable quality and, in some cases, could be designed to obscure rather than reveal information. We outline an analytical framework to differentiate the credible clubs from the “charity washes.” A focus on the institutional architecture of these programs can help to predict their efficacy in reducing agency problems.
... From this theoretical lens, peer regulation is effective in terms of strengthening a mission-oriented strategy. However, despite the praise such initiatives receive for being promising mechanisms to influence organizational behavior and strategy better mission achievement (Gugerty, 2008), there is other scholarship questioning the actual effect of such initiatives (Goncharenko, 2019;Prakash & Gugerty, 2010). This critical scholarship is typically rooted in resource dependence theory. ...
... This critical scholarship is typically rooted in resource dependence theory. Resource dependence theorists argue leaders of INGOs will engage in peer regulation initiatives as a means to indicate responsible behavior to funders to attract more resources (Goncharenko, 2019;Prakash & Gugerty, 2010). From this theoretical perspective, the engagement in a peer regulation initiative can be understood as strategic choice to secure resources that will ensure organizational survival. ...
... From this theoretical perspective, the engagement in a peer regulation initiative can be understood as strategic choice to secure resources that will ensure organizational survival. Although these scholars argue that peer regulation can be effective in terms of strengthened resource security, they are much more skeptical as to whether peer regulation actually strengthens learning processes to improve mission orientation (Goncharenko, 2019;Prakash & Gugerty, 2010). The common critique holds that the engagement in such initiatives is aimed at sending out a signal for more responsible behavior to funders (economic constraint) and regulatory authorities (political opportunity constraint), without actually engaging in learning from peers and implementing new behavioral standards (Goncharenko, 2019;Prakash & Gugerty, 2010). ...
International non‐governmental organizations (INGOs) operate in competitive funding markets and face political pressures, which can incentivize their leaders to compromise their mission‐oriented strategy for more resource security. This article empirically investigates whether INGO leaders perceive peer regulation as an effective governance mechanism that allows them to strengthen their mission‐oriented strategy to withstand these economic and political constraints. In particular, we assess whether peer regulation is perceived to promote organizational learning processes. We test a partial least squares structural equation model (PLS‐SEM) based on a unique data set from an international survey among 201 INGO leaders from 21 countries. Our findings suggest that INGO leaders indeed perceive that peer regulation strengthens their mission orientation, despite the economic competition and political opportunity constraints their organization faces. This effect is partially mediated by organizational learning processes. Our findings are based on a constructivist perspective that emphasizes the learneffect of peer regulation on INGOs' strategic orientation, and allows the derivation of several managerial recommendations to foster INGOs' strategic autonomy.
... Notably, crises and scandals have become increasingly noticeable in the general public's view through news and social media coverage | 1 (Robert & Lajtha, 2002;Scurlock et al., 2020). In recent years, nonprofit or charitable organisations such as the Wounded Warrior Project, Oxfam, Time's Up or the National Rifle Association have endured crisis and the consequential reduction in financial and social capital (donations, funding and general support) and increased scrutiny by stakeholders (e.g., donors, volunteers, government and general public; Christensen, 2004;Hrywna, 2020;Lee, 2021;O'Neill, 2021;Prakash & Gugerty, 2010;Seck, 2019). These are nonprofits that rely on a combination of donations (of cash, grants and other gifts) and volunteer labour (e.g., in the case of shelter management) and any reduction in those potential assets can have damaging shortterm and long-term consequences. ...
... In the 21st Century alone, several prominent crises have occurred in the non-profit sector such as the Wounded Warrior Project, Oxfam, Time's Up and the National Rifle Association. These crises and scandals have focused attention on the non-profit sector as a whole, highlighting the bad lemons in a very diverse basket of organisations (Christensen, 2004;Hrywna, 2020;Lee, 2021;O'Neill, 2021;Prakash & Gugerty, 2010;Scurlock et al., 2020;Seck, 2019). ...
... There are several reasons why nonprofits are concerned about crises across the sector, which have highlighted an 'an erosion of faith' leading to a decrease in donations and less support for the non-profit sector (Bekkers, 2003;Hansmann, 1980;Prakash & Gugerty, 2010;Rose-Ackerman, 1996;Steinberg, 2006). Negative media coverage alone can damage non-profits' reputations and dry up oft-utilized funding sources (Cottle & Nolan, 2007). ...
Non‐profit organisations operate with the advantage of a generally positive social image. Workers and managerial employees of nonprofits are commonly thought of as altruistic, trustworthy and respectable actors who assist their communities. However, the non‐profit sector has faced several notable scandals and crises that have tested this positive social image. This paper reports on an analysis of the positive social image, which we call a sector ‘halo’ and its durability in the face of organisational crisis. Based on a sample from Amazon's Mechanical Turk, the analysis confirms the general positive social image of non‐profit organisations when compared to their private for‐profit and government sector peers, who possess lower levels of trust. However, a survey experiment reveals that given a crisis scenario regarding a data breach incident, the ‘halo’ entirely disappears. Our study improves on the literature regarding trust and organisational reputation and highlights the importance of sector ownership and perceived differences pre‐ and postcrisis.
... Hard accountability means that demands for changes from various stakeholders as a result of being transparent need to be implemented, but also that a CSO needs to have the necessary capacity to deal with such demands. If not, an important consequence of hard accountability could be a reduced level of support from stakeholders, for which the organization also should be prepared (Cordery and Baskerville 2011;Prakash and Gugerty 2010;Sargeant and Lee 2002). However, reduced or cancelled stakeholder support as a rather final and drastic outcome is but one end of a continuum of consequences. ...
... A concept crucial to the instrumental perspective on transparency and accountability is stakeholder trust, which, in turn, has been extensively discussed as a major mediator in the specific relationships that CSOs have with their supporting stakeholders (Farwell et al., 2019;Gandía 2011;Prakash and Gugerty 2010;Sargeant 1999;Sargeant andLee 2002, 2004;Saxton and Guo 2011;Willems et al., 2016). For example, Tremblay-Boire and Prakash (2015) suggested that the nondistribution constraint that defines many nonprofit organizations might itself not be a sufficient signal for stakeholders to completely trust the organization, and therefore, by being accountable and transparent, the organization aims to maintain and increase stakeholder trust levels (Radbournes, 2003;Sarstedt and Schloderer 2010). ...
... This means that CSOs need to make strategic decisions about which information to provide about themselves to the outside world in anticipation of stakeholders' needs (push), as well as reacting when their environment requests or demands information (pull). For instance, a special 58 stream in the area of proactive accountability examines the use of seals or certificates that provide outside stakeholders insight into the processes of the organization, and how these processes conform to a set of rules proposed by a third party as 'good practice' (Becker, 2018;Bodem-Schrötgens and Becker, 2019;Prakash and Gugerty, 2010;Saxton et al., 2012;Saxton et al., 2014;Saxton and Zhuang, 2013). ...
Despite the vast repertoire of practitioner and scientific literature since the early 1990s on how civil society organizations (CSOs) should be governed, we continue to regularly hear stories of severe organizational crises. Even well-respected, internationally active CSOs sometimes find themselves in the middle of a media storm (Archambeault and Webber, 2018; Cordery and Baskerville, 2011; Harris et al., 2018; Willems, 2016; Willems and Faulk 2019). It is naïve to assume that such events will cease in the future or at least stop endangering the sustainability and continuity of CSOs. Nevertheless, an explicit evaluation of how crisis situations can be avoided and how their devastatingly negative effects can be mitigated through CSO governance processes makes it necessary to focus on CSO accountability and transparency. As a result, the clarification and elaboration of the concepts of accountability and transparency can strengthen theoretical and practical insights as to how CSOs can become more crisis-resistant and resilient (Brown, 2005; Helmig et al., 2014). In addition, insight into the inherent trade-offs that CSO leadership teams need to consider in their governance decisions can help both practitioners and researchers to (1) avoid more CSO crisis situations in the future, (2) more effectively overcome such crises when they occur and (3) identify the contextual and organizational factors affecting leaders' governance decisions. Against this background, the aim of this chapter is threefold: 1. Provide an elaborated definition of CSO transparency and accountability that takes into account the nature and role of CSOs in contemporary societies. After highlighting the uniquely defining characteristics of CSOs, the chapter identifies from the inter-disciplinary literature a set of circumstances that underpin the need for a multidimensional elaboration of transparency and accountability specific to CSOs. 2. Document governance responsibilities that CSOs have with respect to transparency and accountability. The chapter explains why transparency and accountability are necessary elements of the CSO governance function. 3. Develop propositions for further scientific elaboration and validation of how CSO governance practices encompass but also support and lead to CSO transparency and accountability. The output of the first two research aims is juxtaposed with five dimensions of a governance quality index, highlighting how governance quality dimensions include and relate to various aspects of CSO transparency and accountability.
... Nonprofit organizations are prohibited by law from distributing profits to private parties, and unlike their commercial counterparts, they do not have legal owners with residual claims [5,9]. The nonprofit character accordingly provides signals of trust that help the public and other nonprofit stakeholders to overcome uncertainty caused by agency problems regarding the organizations' behavior and quality [4,5,10]. In view of some of the most recent nonprofit scandals (e.g. ...
... In view of some of the most recent nonprofit scandals (e.g. SOS-Children Villages or Oxfam's scandals of misconduct), scholars yet question the effectiveness of Hansmann's [9] nondistribution constraint alone to mitigate these scandals' effects [10]. Where the nonprofit character by itself cannot offer assurance regarding the organizations' good intentions, and the public has difficulties assessing the organizations trustworthiness, additional trust signals are vital [2,11,12]. ...
... In view of recent nonprofit scandals, the reputation of nonprofit organizations has been tremendously threatened because it is influenced through monitoring problems. According to Prakash and Gugerty [10], "[i]t is not an exaggeration to say that the negative reputational effects of a few 'bad apples' are beginning to undermine the reputation of the sector as a whole", and the organizational reputation has distinct impacts on public trust [31]. In the nonprofit sector, reputation is conceptualized primarily with respect to the organization's competences and its likeability that accordingly acts as a basis for public trust [29]. ...
Trust in the nonprofit domain has been subject to a large interest both among scholars and practitioners over the past few years. Today, we differentiate between a range of different forms of trust, namely, organizational and sectoral trust as well as more generalized and institutional trust. Another differentiation in nonprofit literature relates to the subject that forms trust towards a nonprofit organization, reflected by the strength of the individual-organizational-relationship. In that, two forms of trust, namely, a narrow form of relational trust and broader trust among the public have evolved. While previous research provides varying conceptual approaches for explaining public’s trust in the nonprofit sector, most scholars, however, approach public trust from a rather narrow relationship management perspective. This chapter conceptualizes and operationalizes public trust from a broader perspective and emphasizes that to get public support to ultimately further their missions, nonprofit organizations should strive for building, maintaining, and restoring public’s trust. This chapter accordingly presents five mechanisms that are associated with public’s trust in nonprofit organizations: 1) promise of mission and values, 2) organizational reputation, 3) transparency and accountability, 4) performance and social impact, and 5) use of contributions. Thereby, recent trends in academic literature are identified—nonprofit branding and nonprofit accountability—that have great ability to address these mechanisms to successfully improve public trust. Results from this chapter provide nonprofit scholars with insights into a broader conceptualization and operationalization of public trust in nonprofit organizations, and with future research ideas. Nonprofit managers may benefit by gaining insights into how to sustainably improve trust among the general public by focusing on nonprofit branding and accountability strategies.
... Charitable giving refers to any act of providing money, time, or goods with no value or monetary return for the donor [88]. Donors face a dilemma as they have to trust a charitable organization while not being fully able to monitor their performance and quality [67]. The actions of charities and outcomes of donations are perceived as highly intangible [65]. ...
... With media reports on charity scandals claiming donations not being used for their cause, the public increasingly demands greater accountability and transparency [24]. Donors face a dilemma as they have to trust a charitable organization while not being fully able to monitor their performance and quality [67]. Donor questionnaires increasingly state that charitable organizations should go beyond the (legal) required minimum of reporting to increase public trust [91]. ...
... Charitable giving refers to any act of providing money, time, or goods with no value or monetary return for the donor [88]. Donors face a dilemma as they have to trust a charitable organization while not being fully able to monitor their performance and quality [67]. The actions of charities and outcomes of donations are perceived as highly intangible [65]. ...
... With media reports on charity scandals claiming donations not being used for their cause, the public increasingly demands greater accountability and transparency [24]. Donors face a dilemma as they have to trust a charitable organization while not being fully able to monitor their performance and quality [67]. Donor questionnaires increasingly state that charitable organizations should go beyond the (legal) required minimum of reporting to increase public trust [91]. ...
The voluntary carbon market is an important building block in the fight against climate change. However, it is not trivial for consumers to verify whether carbon offset projects deliver what they promise. While technical solutions for measuring their impact are emerging, there is a lack of understanding of how to translate this data into interface designs that mediate the establishment of trust. With interaction between users and offset projects mainly happening online, it is critical to meet this design challenge. To this end, we designed and evaluated interfaces with varying trust cues for carbon offset projects in a randomized online experiment (n=244). Our results show that content design, particularly financial and forest-related quantitative data presented at the right detail level, increases the perceived trustworthiness, while images have no significant effect. We contribute the first specific guidance for interface designers for carbon offsets and discuss implications for interaction design.
... The virtue narrative fails to adequately appreciate that NGOs face principal-agency issues like any other organization (Berle & Means, 1932). As locally rooted actors, NGOs are supposed to work for the community (Prakash & Gugerty, 2010a). If local rootedness is assumed to hold, NGOs should view the communities they serve as their true principals (Tocqueville, 1969(Tocqueville, [1835. ...
... Another important NGO innovation is the emergence of accountability clubs (Bies, 2010;Prakash & Gugerty, 2010a). NGOs seek organizational survival and growth. ...
An extensive literature identifies conditions under which markets and states work efficiently and effectively towards their stated missions. When these conditions are violated, these institutions are deemed to show some level of failure. In contrast to the study of market and government failures, scholars have tended to focus on non-governmental organizations’ (NGOs) successes instead of failures. This is probably because they view NGOs as virtuous actors, guided by principled beliefs rather than instrumental concerns, not susceptible to agency conflicts, accountable to the communities they serve, and working cooperatively with each other. A growing literature questions this “virtue narrative.” When virtue conditions are violated, NGOs could exhibit different levels of failure. In synthesizing this literature, we offer an analytic typology of NGO failures: agency failure, NGOization failure, representation failure, and cooperation failure. Finally, given NGOs’ important role in public policy, we outline institutional innovations to address these failures.
... 7 Additionally, the fundraising regulator (funded by "voluntary levies" from large charities) works independently to examine charities' practices. 8 Few UK-specific alternative regulatory schemes exist, despite a number of self-regulatory and third-party nonprofit regulatory functions globally; see, for example, Crack (2018), in humanitarian NGOs-Deloffre (2016), accountability clubs discussed by Prakash and Gugerty (2010), and Sidel's (2005) US and Asia studies. Tremblay-Boire et al. (2016) find clubs in OECD countries or with global membership are less likely to incorporate monitoring and sanctioning mechanisms than others. ...
Charity regulation is increasing internationally, leading to divergent views on what might constitute “better regulation.” The purpose of a charity regulator and appropriate regulation may also be contested. Many modern charity regulators are required to maintain public trust and confidence in charities in order to bolster ongoing charity support from funders and the donating public. Nevertheless, public trust and confidence is precarious. At its nadir, in England and Wales “the person in the street” was deemed more trustworthy than charities, with donations diminishing in the current environment and the charity sector close to crisis. Further, charities contribute to crises when they incite negative media interest in their operations, fail to comply with regulatory filing deadlines, and/or manipulate their accounts. Charity regulators must maintain legitimacy within a changing regulatory space, despite often being resource-constrained themselves. Yet, some suggest regulators could “do more” to increase sector-wide resilience and to increase public trust and confidence. Hence, this raises the question of how charities should be regulated and whether (and how) a regulator could build resilience. We depict charity-sector crises as a vehicular incident and ponder: should the regulator act as a “Guardian Angel” to prevent crises through interventions to build and maintain sectoral resilience, or should it appear postincident as a “Tow Truck” to clear the road for other traffic through closely bounded regulatory action focused on sanctions and deregistration. We address this question by analyzing publicly available regulatory data from the Charity Commission of England and Wales and semistructured interviews, which provide additional “behind the scenes” depth to our analysis and findings. We contribute to literature on charity regulation and expected regulatory responsibilities within a confined but permeable regulatory space.
... Moreover, our study highlights the guiding influence of meta-organizations (Ahrne & Brunsson, 2005;Gulati et al., 2012) in hybrid board governance. While joining sector-specific meta-organizations can help social hybrids extend their fundraising capacities (Nicholls, 2009;Prakash & Gugerty, 2010;Shahid, Becker, & Kundi, 2022), in our study, the vast majority of the boards exposed to two different meta-organizations struggled with and, in some instances, became trapped in short-term, compliance-seeking activities rather than exploring innovative solutions to emerging developments. We believe that exploring such developments will provide important insights into the overarching regulatory practices concerning hybrid organizations. ...
This paper focuses on hybrid board governance and the challenges faced by the board of directors when implementing social impact measurements. Interviews with 36 board chairs and general secretaries in social hybrids in Sweden show that while boards support social impact measurements, they face obstacles in implementing them. Drawing on the institutional logics framework, we identify three main reasons for these implementation problems. First, amid field level regulations focusing on cost efficiency, boards find it difficult to switch to a social impact that lacks a single metric that can be measured annually. Second, board members struggle to find sufficient time when they serve on a pro bono basis, and it is difficult to hold them accountable when limited progress occurs. Finally, acknowledging board practice variation, we highlight the need to distinguish between “beneficiary-driven” and “membership-driven” social hybrids. In the former, boards face the challenge of operationalizing the long-term benefits for end beneficiaries; in the latter, interactions with members are so operationally focused that boards struggle to maintain a long-term agenda for implementing social impact measurement. Given these challenges, we propose that future research should explicitly incorporate the board level in theorizing how hybrid organizations manage institutional logics and performance measurement.
... Whereas for-profits that engage in social and environmental initiatives have been accused of using altruism as a strategic means to an end (negatively referred to through labels such as greenwashing, rainbow-washing, pink-washing, feminismwashing, social-washing, and blue-washing (Bernardino, 2021;Pope & Waeraas, 2016;Sailer et al., 2022)), CSOs instill more trust among stakeholders because altruism is an end in itself (Chapman et al., 2021). This does not mean that CSOs do not engage in imageand reputation-building activities on the basis of their social and environmental value creation (Sepulcri et al., 2020), nor does it mean that CSOs never commit unethical acts (Prakash & Gugerty, 2010) or never engage in costbenefit thinking. Nevertheless, creating altruistic social value by serving the greater good is an essential aspect of CSOs' organizational identity orientation -it is what they do and who they are (Brickson, 2007). ...
Civil society organizations (CSOs) that deliver services on behalf of public authorities operate under increased competitive and standardization pressures. Given this background, many CSOs experience a need to justify why public authorities should continue to fund them. In this article, we underpin and develop a new understanding of added value, proposing it to be the perceived social value of services or programs provided by a CSO that differs positively from the perceived social value of services or programs provided by other organizations and can be identified as functional, altruistic, emotional, or social. We elaborate on these four forms of added value and discuss the theoretical and practical implications of this understanding.
... However, effective brand management in the not-for-profit/public context is complex, as its organisations are mainly motivated not by instrumental concerns (Prakash and Gugerty, 2010). In this regard, communication of the values of the organisation as well as image and reputation management play a key role (Polonsky and Macdonald, 2000). ...
This paper analyses how a public institutional sponsor can benefit
from sponsoring an international sporting event – a marathon – among its territorial policy targets. The heterogeneity of the local participants is considered from two perspectives: their level of involvement with the event and their type of participation, i.e., spectator/runner. Based on a sample of 507 local respondents (spectators and runners) and using structural equation modelling,
the paper concludes that the higher the involvement with the sporting event, the higher the sponsor perceived reputation, and the higher its brand equity in each of the following four dimensions: sponsor perceived image, trust, perceived
quality, and brand personality. However, being a runner or a spectator does not moderate the positive relationship between the involvement with the event and the sponsor perceived reputation. These results highlight the relevance that
sports sponsorship can have in terms of public branding.
... The nature of the products offered by NGOs makes their quality difficult for donors to verify, as they are not beneficiaries of these NGOs' actions, which usually occur abroad. Thus, donors must make decisions based on certain cues as they have limited means by which to verify the quality of NGOs' services (Prakash & Gugerty, 2010), affirming the importance of trust in these organizations. ...
The increasing participation of nongovernmental organizations (NGOs) in addressing developmental issues has resulted in a surge of NGOs globally and, consequently, intensified the competition among them for donations. NGOs, a type of nonprofit organization (NPO), have a distinctive characteristic: promoting a particular cause, which often pertains to social and political issues in an international context. The enhanced brand equity of NGOs can result in increased donor attraction, leading to a rise in both their amount of donations and donor loyalty. Conceptualizations of NGO brand equity, however, are scarce. This study thus critically reviews the current literature on NPO brand equity and proposes some guidelines for future, distinctive donor‐based brand equity models for NGOs. Our results also have important managerial implications for NGOs, highlighting relevant aspects in the brand equity building process that suggest future lines of research.
... It is found that engaging more closely with beneficiaries allows to better identify and address their needs and creates a sense of ownership, which can lead to more effective programs and collaborations (Cavill & Sohail, 2007). Comprehensive INGO accountability therefore addresses a broader set of stakeholders and is driven by a moral obligation, the need for Andrews, 2014;Boyer & Kolpakov, 2018;Breen et al., 2018;Brown et al., 2012;Cordery & Sim, 2018;Ebrahim, 2003a;Elbers & Schulpen, 2013;Gugerty, 2008b;Jegers, 2008;Jeong & Kearns, 2015;McConville & Cordery, 2018O'Dwyer & Unerman, 2008;Pallas & Guidero, 2016;Sofronova et al., 2014;Thrandardottir & Keating, 2018;Townsend & Townsend, 2004 Tool to gain trust of donors to ensure future funding, and ensure regulatory freedom Goncharenko, 2019;Gutterman, 2014;Hielscher et al., 2017;Prakash & Gugerty, 2010;Van Puyvelde et al., 2012 Tool to demonstrate organizational performance (financial, and non-financial) Cordery et al., 2019;Crack, 2016;Liket & Maas, 2015;McConville & Cordery, 2018;Mitchell, 2013;Schmitz et al., 2012;Traxler et al., 2020 Tool to assess organizational performance (financial, and non-financial) Liket et al., 2014;Prentice, 2016;Sowa et al., 2004 Strategic tool to create organizational effectiveness Brown et al., 2012;Cavill & Sohail, 2007;Crack, 2018;Ebrahim et al., 2017;Ebrahim, 2003b;Harris et al., 2009;Hengevoss, 2023;Hume & Leonard, 2014;Mitchell, 2015 Process of dialogue and negotiation to understand different stakeholders' interests Albrecht, 2019;Benjamin, 2008;Berghmans et al., 2017;Christensen et al., 2009;Coule, 2015;Crack, 2013;Deloffre, 2016;Egels-Zandén et al., 2015;Footitt, 2017;Hengevoss, 2021;Herman & Renz, 2008;Jordan & Van Tuijl, 2000;Kennedy, 2019aKennedy, , 2019bKnapp & Sheep, 2019;Pallas et al., 2015;Williams & Taylor, 2013 Means to ensure organizational legitimacy Beagles, 2022;Hengevoss, 2021;Pallas et al. 2015;Thrandardottir & Keating, 2018 democratization of these organizations, and a strategic interest for the organization. This, in turn, requires a more deliberate approach to accountability. ...
International nongovernmental organizations (INGOs) face greater accountability demands from various stakeholders, and from their beneficiaries in particular. This has initiated an academic discourse on a more comprehensive approach to INGO accountability to maintain their legitimacy. This article addresses two research questions: What is the current understanding of accountability of INGOs? And what are theoretical venues to strengthen future research on comprehensive INGO accountability? It does so by offering a systematic literature review of the current academic discourse on INGO accountability, and advances four propositions on what comprehensive INGO accountability entails. The review further highlights that INGO accountability is dynamic and complex. The article therefore suggests a theoretical foundation that accounts for these aspects to support researchers interested in further developing comprehensive INGO accountability. It demonstrates how an institutional logics approach allows conceptualizing INGO accountability relationships to a wider set of stakeholders, including to beneficiaries. It further allows advancing an effectiveness-oriented conceptualization.
... Nesse sentido e dependendo das regulamentações de cada país, uma variedade de diferentes códigos de conduta, sistemas de autorregulação, certificação e credenciamento, evoluíram como ferramentas para apoiar a boa governança no Terceiro Setor em todo o mundo (Prakash & Gugerty, 2010) e como forma de endosso e influência positiva para as ações das ESFL e para as decisões dos doadores. ...
O objetivo desse artigo é verificar o comportamento das receitas auferidas pelas ONGs, a partir do selo de aprovação, Prêmio 100 Melhores ONGs, edição 2017. A busca de informações foi realizada nos websites oficiais das ONGs dos anos de 2017 a 2020. A regressão linear múltipla foi aplicada, após a análise descritiva. Esta pesquisa visa contribuir no entendimento do uso de selos de aprovação como sinal de confiança às ONGs, assim, a discussão contribui para a evolução e ampliação dos sistemas de autorregulação já existentes, ou mesmo o despertar para a criação de programas involuntários de avaliação do Terceiro Setor no Brasil, como sendo um mecanismo para melhorar a imagem, a legitimidade, a transparência e a credibilidade do setor e, um agente menos oneroso e mais eficiente de ajuda na divulgação das informações e consequente aumento da arrecadação de recursos para continuidade dessas instituições. A sugestão da divulgação mais ampla dos selos de aprovação na mídia pode contribuir para o aprendizado, para a divulgação dos selos e das ONGs. Os achados apontam aumento das receitas médias totais para a maioria das ONGs (52 do total de 72) ao longo dos anos. Pode-se afirmar que as receitas têm relação positiva com a IDADE organizacional, sendo que para cada ano completo, se tem um aumento de 0,02% no logaritmo natural da RECEITA. As variáveis FORMA e REGIÃO não apresentaram significância estatística e os resultados não são generalizáveis.
... Nesse sentido e dependendo das regulamentações de cada país, uma variedade de diferentes códigos de conduta, sistemas de autorregulação, certificação e credenciamento, evoluíram como ferramentas para apoiar a boa governança no Terceiro Setor em todo o mundo (Prakash & Gugerty, 2010) Esta pesquisa visa contribuir no entendimento do uso de selos de aprovação como sinal de confiança às ONGs, assim, a discussão contribui para a evolução e ampliação dos sistemas de autorregulação já existentes, ou mesmo o despertar para a criação de programas involuntários de avaliação do Terceiro Setor no Brasil. Esse selos podem agir como um mecanismo para melhorar a imagem, a legitimidade, a transparência e a credibilidade do setor e, um agente menos oneroso e mais eficiente de ajuda na divulgação das informações e consequente aumento da arrecadação de recursos para continuidade dessas instituições. ...
O objetivo desse artigo é verificar o comportamento das receitas auferidas pelas ONGs, a partir do selo de aprovação, Prêmio 100 Melhores ONGs, edição 2017. A busca de informações foi realizada nos websites oficiais das ONGs dos anos de 2017 a 2020. A regressão linear múltipla foi aplicada, após a análise descritiva. Esta pesquisa visa contribuir no entendimento do uso de selos de aprovação como sinal de confiança às ONGs, assim, a discussão contribui para a evolução e ampliação dos sistemas de autorregulação já existentes, ou mesmo o despertar para a criação de programas involuntários de avaliação do Terceiro Setor no Brasil, como sendo um mecanismo para melhorar a imagem, a legitimidade, a transparência e a credibilidade do setor e, um agente menos oneroso e mais eficiente de ajuda na divulgação das informações e consequente aumento da arrecadação de recursos para continuidade dessas instituições. A sugestão da divulgação mais ampla dos selos de aprovação na mídia pode contribuir para o aprendizado, para a divulgação dos selos e das ONGs. Os achados apontam aumento das receitas médias totais para a maioria das ONGs (52 do total de 72) ao longo dos anos. Pode-se afirmar que as receitas têm relação positiva com a IDADE organizacional, sendo que para cada ano completo, se tem um aumento de 0,02% no logaritmo natural da RECEITA. As variáveis FORMA e REGIÃO não apresentaram significância estatística e os resultados não são generalizáveis.
... As emphasized in the Regulator-Intermediary-Target (RIT) model of regulatory capture (Abbott et al., 2017a(Abbott et al., , 2017bHavinga & Verbruggen, 2017) intermediaries affect the behavior of the capturing organization and its reception by policy makers in at least two ways. First, sector self-regulation bodies set standards of conduct, including for disclosure and transparency, and accreditation may be interpreted by policy makers as a signal of the quality and capacity of an organization (Marques, 2019;Prakash & Gugerty, 2010;Prakash & Potoski, 2007). Second, an intermediary that positions itself as a peak association and "policy voice" for the sector can build consensus among diverse organizations and may be seen as a source of expertise by policy makers, thus reducing the odds that a "rogue" organization with contrary views would be taken seriously (Abbott et al., 2017b). ...
Celebrity is a form of policy influence that can occur under distinctive circumstances. This paper draws on the regulatory/policy capture literature to develop a model of celebrity capture that explains how interest groups can affect policy in the absence of economic clout or constituency mobilization. We posit that the likelihood of celebrity capture increases when several factors align: (1) a context open to change; (2) reduced oversight in decisionmaking processes; (3) organizations that have credibility and a halo effect due to their celebrity status; and (4) an uncoordinated sector with weak intermediary organizations. The analysis applies process tracing to account for the success of one celebrity‐founded and celebrity‐led organization, WE Charity, in shaping the design and being awarded sole‐source implementation of the CAD $543 million Canada Student Service Grant (CSSG) program during COVID‐19. The CSSG, which proposed to pay up to 100,000 students to “volunteer” in nonprofits over the course of a summer, quickly failed and became a public ethical scandal.
... Hence, NGOs need to differentiate from their "competitors" and that differentiation can be achieved through accreditation, transparency, and demonstration of a clear accountability to ensure the NGO's credibility (O'Dwyer & Unerman, 2010;Ospina et al., 2002;Schmitz et al., 2012). NGOs accountability also serves to build trust by demonstrating transparency in the use of financial resources and responsible and ethical behavior that meets stakeholders' expectations (Agyemang et al., 2019;Bryce, 2006;Prakash & Gugerty, 2010;Sloan, 2009).Thus, accountability and reporting instruments could therefore be used to measure the quality of NGO and its reputation (Burger & Owens, 2010;Tremblay-Boire et al., 2016) enabling donors to evaluate the performance and compare the quality of different NGOs. ...
The growing involvement of non-governmental organizations (NGOs) in solving development problems has led to an increase in the number of NGOs around the world and therefore in their visibility and influence. Although concerns about the role and responsibility of NGOs have been raised from more than 20 years, there is still a need to ensure good practices in NGOs and to determine what measures will improve NGOs’ accountability to their stakeholders. Our study aims to contribute to this initiative from the donor accountability approach. To achieve this goal, we conducted a systematic literature review and bibliometric analysis to analyze the constraints and needs that donor accountability pose to NGOs. Our findings suggest that donor accountability could interfere with NGOs’ activities, leading them to generate short-term results, focus more on financial results, and feel increased pressure on overhead costs. The most recent literature opens an opportunity, however, to make upward accountability more useful for NGOs. Following this trend, we propose that donor accountability be considered as a dimension to assess NGO quality so that it becomes a powerful marketing tool to attract and retain donors.
... International nongovernmental organizations (INGOs) have become important societal actors. They provide public goods and services in regions where state agencies lack capacities (Berghmans et al., 2017) and shape international policy outcomes across a wide spectrum of political issues (Mitchell & Schmitz, 2020;Prakash & Gugerty, 2010). With their accentuated influence, the implementation of stringent accountability practices has become crucial to maintain INGOs' legitimacy as private organizations that represent the public's interest. ...
The accountability of international nongovernmental organizations (INGOs) has come under closer public and academic scrutiny. Critics call for a more comprehensive approach to accountability—one that addresses a wider set of stakeholders, and beneficiaries in particular. There is an increase in empirical evidence suggesting that comprehensive accountability has positive implications for the organizational performance. This article develops a framework for comprehensive INGO accountability and tests its implications on program effectiveness. The framework describes three accountability meta-logics: the resource logic, outcome assessment logic, and discursive logic. Applying partial least squares structural equation modeling, the impact of these meta-logics on perceived program effectiveness as well as their drivers is tested. The analysis is based on a unique data set from an international survey among 201 INGO leaders from 21 countries. The findings suggest that comprehensive accountability indeed strengthens the perceived program effectiveness. The study emphasizes the managerial argument that implementing comprehensive accountability, not only is the “right thing” to do, but also has the strategic advantage of strengthening perceived mission achievement.
... In general, potential donors to medical crowdfunding need to carefully check the quality of the project and judge its credibility before deciding to donate. When the quality information displayed by the platform institutions is limited, for example, the donors do not know how the funds are used, etc., it will cause the supporters of donation to have a sense of distrust (Prakash and Gugerty, 2010). Furthermore, project quality is related to the success of a crowdfunding project (Mollick, 2014). ...
Perceived trust is a key factor affecting the behavior to donate online. In order to further explore the factors and influencing mechanisms that affect the success of medical crowdfunding projects, this paper, combined with the Stimulus-Organism-Response (S-O-R) theory, introduces the mediating variable of social presence and perceived differences in trust, and constructs a model of online users’ donation behavior to medical crowdfunding projects. We collected 437 valid samples through a questionnaire survey, and processed the data with SPSS and Amos software to test and analyze the theoretical model. The research results showed that project description and user participation have a significant positive effect on social presence; project transparency and patient identity have a significant negative effect on perceived differences in trust; social presence has a positive effect on donation behavior, while the perceived difference in trust has a negative effect; social presence and perceived differences in trust play a mediating role respectively; there is no significant effect of patient status on social presence. This study further expands the application of social presence and perceived differences in trust in medical crowdfunding, and provides a theoretical basis for the success of medical crowdfunding projects.
... Voluntary regulatory programs emerged as part of a new era of regulation aimed at correcting the conventional command and control's shortcomings, such as high transaction cost and political backlash (Potoski and Prakash 2004). They are now booming in both the Global North and Global South (Breen et al. 2019;Prakash and Gugerty 2010). The goal is to incentivize nonprofits to adopt management practices and commit to accountability and transparency standards that exceed legal requirements. ...
Around the world, voluntary programs are an increasingly prevalent regulatory instrument in governing nonprofit organizations. But accounts of mechanisms driving nonprofits’ participation in those programs are underdeveloped. This article combines and expands insights from voluntary regulation and institutional work theories to examine the impact of government’s informal relational work on nonprofits’ regulatory participation. Drawing on interviews and survey data from a random sample of 203 nonprofits in Shenzhen, China, the authors study the country’s pioneering government-sponsored voluntary accreditation program and its varying receptions among nonprofits. The empirical analysis shows that politically embedded nonprofits, those with closer organizational connections with the local government, are more likely to participate in accreditation. Since government agencies rely on existing regulatory networks to conduct relational work at both organizational and personal levels to persuade or cajole nonprofits to participate, they tend to direct their recruitment efforts towards more politically embedded nonprofits. However, these targeted recruitment practices may generate reactions much more complicated than the dichotomy of acceptance versus resistance, which ultimately facilitates some nonprofits seeking accreditation while deterring others.
... Scholars studying misconduct in the nonprofit sector in the United States have heavily focused on financial fraud committed by individual perpetrators. This makes sense, given that about 5% of revenue across all organizations, including charities, is estimated to be lost annually due to fraud globally (Association of Certified Fraud Examiners [ACFE], 2020), and many widely publicized charity scandals involve some form of financial wrongdoing (Prakash & Gugerty, 2010). The past literature in this vein provides detailed information regarding the types of fraud and other financial wrongdoing committed, characteristics of organizations that victimize the public or were victimized by their employees, sociodemographics of perpetrators, and financial losses caused by misconduct (Archambeault et al., 2015;Greenlee et al., 2007;Holtfreter, 2008). ...
The purpose of our study is to broaden the investigation of nonprofit misconduct beyond financial fraud perpetrated by individual actors and to identify structural features that are more or less likely to be associated with actual misconduct. We utilize the Charity Navigator Advisory System and related press releases to identify 215 nonprofit organizations with confirmed or alleged misconduct. We also collect the IRS Form 990 information for 133 out of the 215 organizations with known misconduct and 150 organizations without known misconduct to compare their accountability structures. Our findings suggest that, while financial fraud committed by individual perpetrators against their organizations is the most frequently identified type of misconduct, a substantial number of other types of misbehaviors also commonly occur. Our comparison analysis indicates that organizations with known misconduct deviate significantly from scandal-free charities in several structural aspects.
... On the other hand, trust and regulation can work as substitutes. By reducing the risk of opportunistic behavior, trust can be less costly than formal regulation and, hence, weaken the demand for regulation (Mellewigt et al., 2007;Prakash & Gugerty, 2010). People in trusting societies value their reputations and do not want top-down control. ...
Building from the interest-group theory of regulation, we posit that trust alters the payoff from regulatory rent-seeking relative to profit-seeking. Trust reduces the costs of productive economic exchange by lowering transaction costs, thus raising the cost of rent-seeking behavior. In addition, trust increases political accountability, discouraging politicians from creating regulatory rents. We therefore hypothesize that trust reduces the extent of business regulation while simultaneously facilitating market efficiency. To test that hypothesis, we construct an overall business regulation index measuring procedures, time, and cost along eight dimensions of doing business in a country. The empirical results reveal that trust negatively relates to business regulation but positively relates to market efficiency. Interaction and split-sample results further indicate that trust and business regulation are substitutes. Collectively, the findings reported herein suggest that business regulation itself is not the root cause of market inefficiency, but rather lack of trust is the dominant factor.
... Online disclosure has the function of reducing the information asymmetries between a nonprofit and its actual and potential donors at a limited cost. Hence, nonprofits competing for resources are assumed to have an incentive to signal their virtue and their superiority over other nonprofits by providing web-based information about their finances and performance (Blouin et al., 2018;Gandía, 2011;Gugerty, 2009;Harris & Neely, 2018;Haski-Leventhal & Foot, 2016;Prakash & Gugerty, 2010;Rossi et al., 2020;. ...
Nonprofits that compete for charitable contributions often question which are the most effective factors that lead to high levels of donations. To date, the research has been dominated by linear models mainly based on the economic model of giving, and has reported mixed and sometimes conflictual findings about the net effect of certain individual organization-specific factors on donations. In this study, we introduce a configurational approach to explore how the factors considered by the economic model of giving may be combined with each other in multiple configurations with the goal of obtaining high levels of donations. Applying fuzzy set qualitative comparative analysis, we focus on a sample of British community foundations and identify four combinations that lead these organizations to collect large amounts of charitable contributions. The results show that, whereas young foundations should rely on high levels of program spending and large amounts of online disclosure combined with, alternatively, efficiency or aggressive fundraising, old foundations should contain administrative costs and strengthen fundraising efforts while, alternatively, spending the most part of their resources on programs or disseminating large amounts of information through their public websites.
... This evaluation allows them to determine GVOs' performance. However, outcomes and results are difficult to discern in this sector (Prakash & Gugerty, 2010;Willems et al., 2016). In addition, GVOs are rather in difficulty in developing in their evaluation (Lee & Clerkin, 2017;Liket et al., 2014;Murtaza, 2012;Rey García, 2008;Svensson et al., 2017). ...
French “associations” continue to grow in importance in society and the economy, while their financing is increasingly turning to private funds. New requirements in terms of governance are also being imposed on them. In order to support grassroots volunteer organizations in their evaluation, this research proposes to understand the role of the relationship with stakeholders in shaping the impact of an organization. This approach has been mostly theoretical until now and this study is one of the first of its kind to make an empirical contribution. Stakeholder theory and theoretical frameworks led to a questionnaire study and analysis using a structural equation model. The impact perceived by the stakeholders (in this case, the students) is explained both by the relationship quality with the organization and by the degree of their contribution to its success. This research proposes a reciprocal definition of relationship quality, and is about individual stakeholders little studied as members. This article remains exploratory given some of the difficulties with the measurement model and future researches should look into enhancing the measurement of the constructs.
... Trust is an essential component for INGO sustainabilityfor many nonprofits, trust often translates into grants and donations (Coombs, 2007). Geography often impedes donors' direct evaluation of their work and trust is one of the most influential criteria that private donors use when deciding which nonprofits to support (Bekkers, 2003;Prakash and Gugerty, 2010). A lack of trust could be further fueled by legal trouble with the INGO host governmenta dynamic that individuals may not wish to enter with their dollars. ...
The phenomenon of closing civic space has adversely impacted international non‐governmental organization (INGO) funding. We argue that individual private donors can be important in sustaining the operations of INGOs working in repressive contexts. Individual donors do not use the same performance‐based metrics as official aid donors. Rather, trust can be an important component of individual donor support for nonprofits working towards difficult goals. How does trust in charitable organizations influence individuals' preferences to donate, especially when these groups face crackdown? Using a simulated market for philanthropic donations based on data from a nationally representative sample of individuals in the United States who regularly donate to charity, we find that trust in INGOs matters substantially in shaping donor preferences. Donor profiles with high levels of social trust are likely to donate to INGOs with friendly relationships with host governments. This support holds steady if INGOs face criticism or crackdown. In contrast, donor profiles with lower levels of social trust prefer to donate to organizations that do not face criticism or crackdown abroad. The global crackdown on NGOs may thus possibly sour NGOs' least trusting individual donors. Our findings have practical implications for INGOs raising funds from individuals amid closing civic space. Research on international giving by individuals, especially in the era of closing civic space, is not meant to find answers that can act as substitutes for strategic policy responses, especially by official aid donors and foundations. However, many INGOs are under immediate threat, and individual‐level philanthropy can help support these organizations.
In China, both governments and civil institutions play important roles in non-profit regulation. However, with various regulatory instruments available, it remains unclear which has the strongest public support and most effectively promotes civic engagement. This study compared the impact of different non-profit regulatory instruments addressing information disclosure on two aspects of civic engagement intention: willingness to donate and willingness to volunteer. A survey experiment was conducted to analyse the perspectives of 939 Chinese participants on four types of regulation: no regulation, civil regulation, accommodative government regulation and deterrent government regulation. Results showed that regulation was preferred to no regulation and deterrent government regulation was preferred to accommodative government regulation, which was preferred to civil regulation. Additionally, public trust in non-profits significantly mediated the relationship between regulation and civic engagement intention. These findings suggest that government regulation, particularly the deterrent approach, garners strong public support and may be prioritized within the Chinese context.
Sosyal medyanın ortaya çıkışıyla birlikte hem bireylerin hem de örgütlerin iletişim biçimlerinde değişiklikler meydana gelmiştir. Bu yeni iletişimde başarılı olmak isteyen kar amaçsız örgütler de sosyal medyayı aktif bir şekilde kullanmaktadır. Sosyal medyanın bu denli yaygın kullanımı akademik anlamda da ilgi çekmiştir. Literatürde pek çok çalışma kar amaçsız örgütlerin faaliyetlerini sürdürebilir bir şekilde devam ettirebilmeleri için gerekli olan bağış ve sosyal medya arasındaki ilişkiyi araştırmıştır. Bunu yaparken de varsayımlarını farklı teoriler bağlamında geliştirdikleri görülmektedir. Bu konuda hem bütüncül bir bakış açısı sunmak hem de gelecek araştırmalara yeni kavrayışlar sağlamak amacıyla mevcut çalışmada üç farklı sosyal medya etkeni (ağ büyüklüğü, medya varlığı ve faaliyetleri ve takipçi katılımı) üç farklı teori (paydaş teorisi, sinyal teorisi ve meşruiyet teorisi) bağlamında tartışılmıştır. Ortaya çıkan tartışmaların teorik açıdan sosyal medya ve bağış toplama arasındaki ilişkiye odaklanacak çalışmalara yönlendirici fikirler sunması ve pratik açıdan ise kar amaçsız örgütlere sosyal medya kullanımında yol göstermesi beklenmektedir.
The success of a democratic country is the increasing public trust in the government. With increasing public trust, it is hoped that the community can participate in the government development process. One way that can be done to increase trust is good governance. Good governance itself consists of responsiveness, accountability, and transparency. However, in Indonesia, people's trust in the government has declined, contributing to the ineffectiveness of the government's performance. The number of corruption cases in Indonesia has also caused a decline in public trust. Therefore, this study aims to determine whether responsiveness, accountability, and transparency affect public trust. The novelty of this research is the use of data processing methods. The research method used was distributing questionnaires and then processing the data using SEM PLS. The research results show that responsiveness, accountability, and transparency affect public trust. The results of this study are anticipated to help government institutions promote good governance and boost community trust. Furthermore, this research is expected to enhance the community's understanding of the importance of information and communication technology in evaluating government performance.
This study examines the impact of governance on the efficiency of nonprofit organizations and the relationship among different governance mechanisms. Using a dataset of 3496 Chinese foundations from 2011 to 2015, we find that internal governance, external donor governance, and external governance environment are significantly and positively associated with foundations’ efficiency. Importantly, substitutional relationships exist among these governance mechanisms. Financial reporting quality is a major channel through which governance influences efficiency. Furthermore, the positive association between governance and efficiency is more pronounced for small foundations than for large ones and for noneducation‐focused foundations than for education‐focused ones. This study offers practical guidance for foundations to improve their efficiency by enhancing both internal and external governance and will be of interest to foundation leaders, donors, and policymakers.
In the wake of unethical practices by some nonprofit organizations (NPOs), donors have called for better monitoring, to which some NPOs have responded by adjusting their donor-based transparency practices. Yet despite momentum for such efforts, a comprehensive conceptualization and operationalization of NPOs’ transparency remains missing, partly because knowledge about donors’ information requirements is limited. Accordingly, the present research proposes conceptualizing NPOs’ transparency, as perceived by donors, as a three-dimensional construct, composed of information accessibility, completeness, and accuracy. With a scale development procedure and three distinct empirical studies, this article establishes a reliable, valid measure of NPOs’ perceived transparency. Combined, the conceptualization and operationalization offer a comprehensive overview of donors’ information needs that can enhance the study of organizational transparency.
There is widespread acknowledgment of the importance of nonprofit good governance with a need for guidance on different effective mechanisms to increase ethical practices for the whole sector to assist professionals and researchers. This study explores two research questions: (1) What are the main reasons that inspire nonprofit organizations (NPOs) to implement good governance mechanisms? (2) What are the good governance mechanisms conducted by NPOs? The purpose is to serve as a reference and an instrument of reflection for interested NPOs exploring good governance mechanisms to make their accountability work more effective. We used a systematic literature review methodology for identification, selection, and analysis of published research on nonprofit good governance. A set of 89 articles published until 2021 was analyzed, and a new classification that identified 3 lines and 13 sublines of research was provided. Our results show that a variety of internal mechanisms and international third‐party initiatives are underpinned by the need to adhere to standards of ethics and honesty.
In this paper we posed a question about the role of the state with regard to imposing regulations on the sharing economy sectors. Analysis of the institutional frames of the regulatory intervention of the state in the sharing economy still constitutes an underexploited niche. We drew on the literature in institutional economics and other related fields to provide a picture of a reasonable regulation of markets introduced by a state. The paper covers the spheres of information asymmetry, imperfect competition, negative externalities, and the supply of public goods. What may be generally concluded is that there are no sufficient arguments for treating sharing economy entities more favorably as compared to other organizations. As regards the imperfect competition and negative externalities, sharing economy entities may play a key role and should not be excused from respecting general legal rules. Otherwise, some market actors would use the sharing economy cover just to take advantage of the exemptions. The sharing economy may be also an attractive channel of activity from the perspective of policymakers for mixing direct governmental support with other (social) sources for public goods.
In societies where civic space is closing, integrity in the civic sector is critical for its sustainability. Where state regulatory frameworks are inadequate, or worse, manipulative, self‐regulation can help defend the sector's integrity and strengthen the ability of civic associations to serve the public and contribute to democracy. This paper describes the strategic role in self‐regulation of a particular type of third sector actor in Mexico, the coordinating body or civic network. A case study of the Mexican Center for Philanthropy (CEMEFI) and its Accreditation in Institutionalization and Transparency project illustrates the contribution of NGO networks in service to the sector, and their key role in diffusion of norms of transparency and accountability within the civic sector and beyond.
Advocacy organizations are viewed as actors motivated primarily by principled beliefs. This volume outlines a new agenda for the study of advocacy organizations, proposing a model of NGOs as collective actors that seek to fulfil normative concerns and instrumental incentives, face collective action problems, and compete as well as collaborate with other advocacy actors. The analogy of the firm is a useful way of studying advocacy actors because individuals, via advocacy NGOs, make choices which are analytically similar to those that shareholders make in the context of firms. The authors view advocacy NGOs as special types of firms that make strategic choices in policy markets which, along with creating public goods, support organizational survival, visibility, and growth. Advocacy NGOs' strategy can therefore be understood as a response to opportunities to supply distinct advocacy products to well-defined constituencies, as well as a response to normative or principled concerns.
This article proposes a research program with two goals: (a) to support nonprofit leaders to productively engage evaluation and (b) to advance a meso-level theory of nonprofit evaluation that recognizes the diverse ways nonprofits contribute to social change. Such a research program is timely, as evaluation becomes increasingly institutionalized in the sector in ways that constrain nonprofit leaders from engaging productively with evaluation to advance their social impact. This research program brings existing nonprofit scholarship into conversation with evaluation scholarship and puts forward a research agenda organized around the practical dilemmas facing nonprofit leaders as they answer four key evaluation questions: what to evaluate, for what purpose, using which criteria, and with what evidence and methods. By anchoring a research program around these four questions, we seek to reopen the possibilities for how scholars can support nonprofit leaders in engaging evaluation to enhance their social impact.
The disastrous effects of the coronavirus disease 2019 pandemic have demonstrated the need for comprehensive reform of the policy, regulatory, and financing regimes of long-term care in Canada, including strengthening the non-profit component of the care system. In this article, we assess the implications of the evolution of Ontario’s long-term-care policy on non-profit providers. We analyze the revenue trends and financial health of charitable long-term-care homes (LTCHs) from 2004 to 2017. Although the general pattern is one of revenue stability for non-profit LTCHs, their financial robustness has become more constrained over time as a result of greater reliance on government funding and declining philanthropy.
Leadership is always being challenged, and the current challenges are always the most demanding. This textbook for students and practitioners in organisations working within the parameters of the social economy identifies the requirements in this regard and introduces the current approaches to and concepts of leadership. It examines aspects of leadership in depth, such as supporting teamwork and dealing with interculturality and new media, and addresses in detail the particular demands placed on managers. This volume provides a sound theoretical basis on this subject, but also gives valuable tips for practice. With contributions by Armin Wöhrle, Maik Arnold, Paul Brandl, Yvonne Knospe, Frank Unger and Birgitta Zierer.
The literature on NGOs under authoritarian rule largely attributes NGOs' receipt of government grants to their political connections. This article presents an alternative explanation by asking the question: Does nonprofit organizational legitimacy influence the receipt of government grants under authoritarianism? Applying logit regression to 2,021 Chinese foundations, this article proposes that passing the nonprofit evaluation, which is one of the major certification programs in the country's nonprofit sector, is positively related to the probability of receiving government grants. Subsample analysis reveals that nonprofit evaluation is influential for the receipt of government grants primarily among foundations formally affiliated with government agencies. This article provides for the first time evidence that contemporary authoritarian regimes appreciate nonprofit organizational legitimacy, albeit still in a highly politicized manner. ARTICLE HISTORY
The nonprofit sector strives to be a virtuous and transparent space, one that is diverse, inclusive, and welcoming. Still, inappropriate and exclusionary behaviors can and do occur in nonprofits—one of which is sexual harassment (SXH). Currently, little research on SXH in the nonprofit sector exists, and even less is known about the steps taken by nonprofits to protect their employees and stakeholders from SXH. This study examines rates of SXH policy adoption among nonprofits and the relationship between SXH policy adoption and organizational characteristics. Drawing from a state‐wide survey, we find that there is wide variation among nonprofits in their adoption of a written SXH policy. Organizations that have full‐time employees, more revenue, and greater capacity are more likely to have a policy. Organizations that serve women are no more likely to have a policy; however, lesbian, gay, bisexual, and transgender‐serving organizations are more likely to have a policy. We discuss the implications of these results, including the conceptualization of SXH as part of the broader issues of discrimination, harassment, and bullying in nonprofits.
Israel is characterized by weak governability and low-quality early childhood education and care (ECEC; birth to three years) services. This policy is characterized by four dimensional deficits: deficit in provision of services, deficit in legislation, deficit in quality, and deficit in funding.
This paper probes the sources of the regulatory deficit and low public investment in ECEC services in Israel. I use historical institutionalism analysis along with bureaucratic politics theory to explore Israel's weak regulatory governance from the 1920s to the 1980s. The bureaucratic politics approach furnishes a good view of the role of bureaucrats and the bureaucratic power struggle in policy formation. The analysis indicates three tensions that have shaped ECEC policy: (1) support for working mothers versus disadvantaged children and families; (2) accessibility of services versus quality of services; and (3) form of provision (i.e., ECEC as a private service versus ECEC as a public service).
Historical analysis shows that the ambiguity and duality that characterize ECEC policy regarding these issues has led to indecisive and inconsistent policies, weak regulatory governance, and poor public services. The conflict among ministerial offices has also contributed to the gradual change in policy. The study underscores the contribution of historical analysis to understanding policy trends and for designing future reform.
Objectif : La présente recherche explore la relation entretenue entre la gouvernance des organisations à but non lucratif et leur performance globale, qui inclut également leur impact sur leurs parties prenantes. Elle affiche donc des objectifs analytiques autour des liens avec les parties prenantes : avec qui œuvrer et à qui rendre des comptes ? comment rendre des comptes et raffermir les liens avec elles ? quels comptes rendre et quels sont les critères d’évaluation ? Les effets de la gouvernance, les formes prises par la reddition des comptes et la construction sociale de la performance et de l’impact organisationnels sont donc particulièrement étudiés.Approche et méthode : L’ancrage principal est la vision contingente des organisations, à laquelle appartiennent les théories des parties prenantes et de la dépendance aux ressources. A partir d’une démarche hypothético-déductive insérée dans le paradigme épistémique réaliste critique (PERC), les hypothèses issues de la littérature sont testées à partir de méthodes d’analyses de données textuelles, de régressions multiples logistiques et linéaires ainsi que de modèles d’équations structurelles. Les analyses ont porté sur les données des plus grandes associations françaises, sur un questionnaire auprès des dirigeants associatifs pendant la crise de la Covid-19, sur une enquête auprès de parties prenantes individuelles ainsi que sur le cas des Jeunes Agriculteurs.Résultats : Les études menées ont permis de montrer que les mécanismes de gouvernance s’expliquent notamment grâce au secteur et aux actions de l’association. En revanche, les liens entre gouvernance et performance globale sont à étudier au cas par cas. Il en va de même pour les effets de la reddition des comptes sur la performance. La performance à court-terme des associations, à savoir leur viabilité, est renforcée par le maintien des dispositifs de gouvernance tandis que l’adoption d’une orientation sociétale a des effets contrastés sur la viabilité. Enfin, globalement, la gouvernance améliore l’impact et la qualité de relation avec les parties prenantes qui elle-même a un effet positif sur l’impact organisationnel. Cependant, ces résultats doivent être étudiés dans le détail des mécanismes de gouvernance, des parties prenantes et des dimensions de la performance.Implications théoriques : Les résultats obtenus permettent de répondre aux objectifs fixés. Ainsi, la vision contingente de la gouvernance des organisations à but non lucratif conduit à une forte adaptabilité (dans chaque organisation et à ses parties prenantes). Le reporting est un mécanisme crucial de reddition des comptes mais la relation avec les parties prenantes est aussi particulièrement pertinente. Enfin, l'ensemble des concepts abordés sont contingents, permettant d'expliquer une vision émotionnelle et subjective de l’impact ainsi que la multidimensionnalité de la performance. Les théories mobilisées sont donc particulièrement adaptées pour les associations et leur opérationnalisation a été revisitée.Implications praticiennes et sociétales : Les résultats invitent à une mesure raisonnable et flexible de l’impact des organisations à but non lucratif et soulignent le caractère crucial de la gouvernance pour améliorer la performance et l’impact, en dépit des méfiances. La priorisation des parties prenantes est en outre cruciale, pour éviter les problèmes associés à la reddition des comptes holistique. Les composantes de la qualité de relation peuvent alors devenir des critères de hiérarchisation et de priorisation des parties prenantes, car elles varient selon les parties prenantes et ont un effet sur la performance et l’impact.
This deliverable offers a systematic and comprehensive review of the literature on trust and regulation and their relations in three parts. Section 1 provides a brief overview of trust and distrust; their relationship; and antecedents (drivers) and positive and negative consequences. This second part of provides an overview of phases and processes of trust building, maintenance and repair as well as a review of how processes of distrust building or trust-reduction work. The third part suggests that the unfolding of trust relationships varies according to the type of involved actor, i.e. an individual, organisation, or system (such as regulatory regimes) and level of analysis. Section 2 moves to regulation. It reviews the main concepts of regulation and clarifies some of the most important questions around it. This should allow us, in later sections of this deliverable, to point on some of the possible directions that trust and regulation research may take. It starts with definitions and a distinction between narrow and broad approaches to regulation. It then clarifies the concept of regulatory regime; the regulatory agency, the regulatory state and regulatory capitalism. It concludes with an actor centered analysis of the regulation.
Section 3 deals with trust and distrust in government. It starts with a summary of the drivers of the dis/trust relations. The main sub-section deals with reviews of the literature on trust and distrust in (a) political institutions and actors; (b) public administration; (c) among courts; (d) citizens by government and (e.) between public organizations. Section 4 brings out the critical aspects of the review. It focuses on the relations between trust and regulation and offer a new conceptualization of their relations. One that will serve as the basis for section 1.3. The first part of the section moves the discussion of the relations forward in an attempt to looking at the relations beyond the current literature by distinguishing between four types of relations: independent, competitive, substitutive and supportive. The second part of the section focuses on the relations of trust between the main actors of the regime. The third discusses the relations between trust and regulation, when they touching on explanations for the processes. The fourth revolves around on assessment of outcomes of the relations. Section 5 deals with the operationalization and measurement of trust. It deals with the ways in which trust between actors in regulatory contexts has been measured in recent scholarship. It informed by, and seeks to expand upon, the current knowledge by more specifically examining measures used in the study of regulatory contexts. It starts with a description of the systematic methodology used. It then summarizes the purely descriptive findings of the review and an overview of the number of studies on trust in regulatory regimes published in recent years. It then presents separate discussions on how trust in different kinds of actors in regulatory regimes has been measured. Section 5 closes with a reflective and critical discussion of the literature. We analyse prominent limitations and gaps in existing empirical work.
La façon dont les organisations de proximité appliquent les réglementations a des implications importantes en matière de gouvernance. Dans le présent article, nous passons en revue la littérature sur l’application de la réglementation et la classons en trois grands modes de gouvernance afin d’examiner les conditions préalables au niveau de la capacité individuelle et organisationnelle des organisations de proximité à mettre en œuvre la relation gouvernement-société correspondante et à améliorer les résultats de la gouvernance. En analysant les difficultés d’application rencontrées par les agents de proximité dans le cadre de la récente réforme de la sécurité alimentaire à Pékin, nous identifions également les capacités essentielles des organisations de proximité à édicter des règles dans le cadre d’un mode de gouvernance juridico-hiérarchique. Nous espérons, avec cet article, inspirer d’autres recherches afin de découvrir les exigences spécifiques en matière de capacité de gouvernance pour d’autres organisations administratives dans le cadre de différents modes de gouvernance. Remarques à l’intention des praticiens Outre l’efficacité des politiques, les régulateurs gouvernementaux devraient aussi parfois prêter attention à leur impact sur la gouvernance. Malgré le pouvoir discrétionnaire des régulateurs de première ligne, les organisations de proximité peuvent améliorer les résultats de la gouvernance en concevant et en mettant en œuvre des programmes et des stratégies d’application de la réglementation conformes au mode de gouvernance dans lequel le gouvernement est engagé, car ce qu’elles font concrétise la relation spécifique entre le gouvernement et la société dans le processus de gouvernance. Les administrateurs en charge des organisations de proximité peuvent tirer parti de la culture des capacités essentielles à l’actualisation du mode de gouvernance respectif. L’absence de ces capacités est susceptible de nuire à l’efficacité de la gouvernance.
Much has been written during the last two decades about the theory of nonprofit organizations (NPOs). Researchers, policy makers, and practitioners in NPOs have repeatedly asked themselves variants of the following set of questions:
• What do NPOs do that for-profit firms (FPFs) and government agencies are not doing already?
• Do NPOs operate as efficiently as their for-profit counterparts?
• Do NPOs serve the same broad groups as government units do?
• Should NPOs receive special tax treatment?
Although accountability systems are established to ensure organizational adherence to financial and ethical standards for nonprofit organizations, the reality of whether such standards make a difference to donors has not been measured. This article discusses the current landscape of accountability systems and accountability ratings and describes a model for estimating the effect of ratings systems on donor behavior within the theoretical context of information asymmetry. Hypotheses are tested with nonprofit ratings for New York charities from the Better Business Bureau's Wise Giving Alliance to estimate the effect of accountability ratings on the amount of contributions an organization receives. Results indicate that the Wise Giving Alliance "pass" ratings have a statistically significant effect on the contributions received; however, "did not pass" ratings are nonsignificant. The study is important for academics as well as practitioners who are monitoring time and money spent on accountability issues.
Non-governmental organisations (NGOs) are acknowledged to be pivotal to poverty alleviation, especially in African countries where government capacity and revenues are often very limited. Despite their prominent role in developing countries, little is known about how these organsations function. In theory and policy analysis circles, NGOs are often presumed to have altruistic and pro-social motivations. For instance, advocates for the self-regulation of the non-profit sector frequently present the case for self-regulation primarily as a case against government intervention, arguing that government monitoring would threaten the sector's independence (Jordan and Van Tuijl, 2006). Government attempts to regulate the sector are regarded with suspicion (Antlöv, Ibrahim & van Tuijl, 2006; Kwesiga and Namisi, 2006) in the literature on the accountability of non-profit organisations, while the risks associated with self-regulation are rarely mentioned. The narratives and rhetoric suggest that NGOs are generally presumed to be well-intentioned do-gooders. There appears to be a tendency to depict non-profit organisations as innocent victims and the government as a perpetrator, interfering with the noble work of the non-profit organisation. To balance such debates it is vital to acknowledge that non-profit organisations may in certain situations be prompted to make decisions that are devious, short-sighted or self-interested. In developing countries employment is usually scarce and aid flows and grants generally represent a big share of a country's revenue pool, which make NGO entrepreneurship or employment attractive options. Under such circumstances it may be imprudent to assume that only individuals with pro-social motivations and charitable missions select themselves into this sector. Fafchamps and Owens (2006) suggest that employees and managers in NGOs are often motivated by a complex and contradictory set of principles, aims and ambitions and that "many local NGOs seem to be created not with an altruistic motive in mind but for the purpose of obtaining grant funding" (2006:3).
Losses due to fraudulent activities are particularly troublesome in the nonprofit sector because they directly reduce resources available to address tax-exempt purposes. The ensuing bad publicity also may reduce contributions and grants in subsequent periods. This article uses data provided by Certified Fraud Examiners to report on the types of fraud they identified in nonprofit organizations and the characteristics of both the victims and the perpetrators of the fraudulent activities. Based on the analysis of the data, the authors suggest ways that fraud losses can be prevented or mitigated. In particular, governing boards are urged to consider important controls in addition to the annual financial statement audit.
Over the last ten years or so, an important new approach to the study of organizations has emerged within economics. It is perhaps best characterized by three elements: a contractual perspective on organizational relationships, a theoretical focus on hierarchical control, and formal analysis via principal-agent models. This paper provides political scientists with an overview of the "new economics of organization" and explores its implications for the study of public bureaucracy. So far, positive political theory has not contributed much to our understanding of public bureaucracy. In part this is due to the unsympathetic treatment that rational modeling and most other modes of quantitative analysis have long received from students of public administration. The other side of the coin, however, is that positive theorists have not made much of an effort to develop theories of bureaucracy. Their concerns have centered around two basic mechanisms of social choice, voting and markets, and they have devoted little systematic attention to a third mechanism that is clearly important for understanding how societies and other aggregates make collective decisions. This third and relatively unexplored mechanism is hierarchy. Movement toward a positive theory of hierarchies would fill a serious gap in the social choice literature, while at the same time making a theoretical contribution that strikes to the essence of public bureaucracy, indeed of all organizations. In fact, significant steps toward a positive theory of hierarchies have very recently been taken-but by economists, not political scientists. In small numbers, of course, economists made contributions to the study of public bureaucracy some time ago with the pioneering works of Downs (1967), Tullock (1965), and Niskanen (1971). But this new wave of theoretical work is different. It is already a large, complex body of literature that is the focus of innovation and excitement among a growing number of economists, and it reflects an unusual degree of theoretical coherence and cumulative effort. Work in this tradition tends to receive orientation from a distinctive economic approach to the analysis of organizations, an approach perhaps best characterized by three elements: a contractual perspective on organizational relationships, a focus on hierarchical control, and formal analysis via principal-agent models. This approach has emerged from recent attempts to move beyond the neoclassical theory of the firm, which assumes away all organizational considerations, to a theory of economic organizations that can explain why firms, corporations, and other enterprises behave as they do. Propo
▪ Abstract With tools borrowed from the economic analysis of insurance, principal-agency theory has allowed political scientists new insights into the role of information asymmetry and incentives in political relationships. It has given us a way to think formally about power as the modification of incentives to induce actions in the interests of the principal. Principal-agency theory has evolved significantly as political scientists have sought to make it more applicable to peculiarly political institutions. In congressional oversight of the bureaucracy, increasing emphasis has been placed on negotiation of administrative procedures, rather than the imposition of outcome-based incentives, as originally conceived. Awareness of the problem of credible commitment has impelled more dramatic reformulations, in which agents perform their function only when their interests conflict with those of the principal, and they are guaranteed some degree of autonomy. The ‘political master’ finds himself in the position o...
Debates about globalization have centered on calls to improve accountability to limit abuses of power in world politics. How should we think about global accountability in the absence of global democracy? Who should hold whom to account and according to what standards? Thinking clearly about these questions requires recognizing a distinction, evident in theories of accountability at the nation-state level, between “participation” and “delegation” models of accountability. The distinction helps to explain why accountability is so problematic at the global level and to clarify alternative possibilities for pragmatic improvements in accountability mechanisms globally. We identify seven types of accountability mechanisms and consider their applicability to states, NGOs, multilateral organizations, multinational corporations, and transgovernmental networks. By disaggregating the problem in this way, we hope to identify opportunities for improving protections against abuses of power at the global level.
This study explores the development of communitarian regulation in the American chemical industry by focusing on the history and challenges facing Responsible Care, the leading example of regulation by an industry association on the environmental scene today.
Stakeholders who seek to reward or punish businesses for their environmental programs often cannot observe these organizations’ internal policies and operations. To address these informational problems, and signal their beyond-compliance environmental commitments, some businesses are participating in voluntary environmental programs (VEPs). This article examines whether business managers associate the brand value of VEPs – due to their differing program sponsors – with the perceived preferences of their critical stakeholders. Drawing on a novel data set of nearly 300 organizations, we assess business’ participation in 19 government- and industry-sponsored VEPs. We find that managers who recognize the importance of stakeholder influences on their business’ environmental practices are more likely to participate in a VEP but that pressures from different stakeholders are associated with variations in organizations’ participation in either government- or industry-sponsored VEPs.
Throughout the advanced countries of the world self-regulatory regimes are being introduced. This article suggests that, at least in some contexts, industry self-regulation can be an effective and efficient means of social control that has been largely ignored by economics (which has a focus on individual rather than group behavior) and prematurely discounted by mainstream regulatory theory. The article examines the strengths and to a lesser extent the weaknesses of industry self-regulation from five closely related yet distinct vantage points: mediating institutions; industrial morality; institutionalizing responsibility; institutions responding to external pressure; and the roles of the state and third parties.
Traditionally, enforcement of consumer protection laws meant to provide quality assurance of goods and services was considered a responsibility of the state in its various guises. Unfortunately, enforcement is an expensive, and hence particularly problematic proposition in transition economies that have many competing demands on their very scarce resources. An alternative mode of enforcement is through reputation. Yet for reputation to be able to fulfill this disciplining role, a high degree of information flow, or transparency, is imperative. Transparency, of course, is not something that transition economies typically excel in. In this article we discuss a third form of enforcement that relies much less, or not at all, on the state, and that relies on the market only indirectly: Certification agencies force their members to reveal their (good) type through costly signals that can be "engineered" to induce a separating equilibrium. We discuss the viability of this system of enforcement in an environment (namely, fundraising) where state and market have failed to deliver a satisfying degree of quality assurance.
Nonprofit organizations in the U.S. earn more than $100 billion annually, and number over a million different organizations. They face increasing competition for donor's dollars and many of the issues they confront are similar to those confronted by for-profit organizations. This book applies powerful concepts of strategic management developed originally in the for-profit sector to the management of nonprofits. It describes the preparation of a strategic plan consistent with the resources available; it analyses the operational tasks in executing the plan; and describes the ways in which nonprofits need to change in order to remain competitive. The book draws clear distinctions between the different challenges encountered by nonprofits operating in different industries. It will be useful for managers in such diverse organizations as the Santa Fe Opera, the Salvation Army, and the National Football League.
This book brings together classic writings on the economic nature and organization of firms, including works by Ronald Coase, Oliver Williamson, and Michael Jensen and William Meckling, as well as more recent contributions by Paul Milgrom, Bengt Holmstrom, John Roberts, Oliver Hart, Luigi Zingales, and others. Part I explores the general theme of the firm's nature and place in the market economy; Part II addresses the question of which transactions are integrated under a firm's roof and what limits the growth of firms; Part III examines employer-employee relations and the motivation of labor; and Part IV studies the firm's organization from the standpoint of financing and the relationship between owners and managers. The volume also includes a consolidated bibliography of sources cited by these authors and an introductory essay by the editors that surveys the new institutional economics of the firm and issues raised in the anthology.
Often described as a public policy “bible,” Weimer and Vining remains the essential primer it ever was. Now in its sixth edition, Policy Analysis provides a strong conceptual foundation of the rationales for and the limitations to public policy. It offers practical advice about how to do policy analysis, but goes a bit deeper to demonstrate the application of advanced analytical techniques through the use of case studies. Updates to this edition include: A chapter dedicated to distinguishing between policy analysis, policy research, stakeholder analysis, and research about the policy process. An extensively updated chapter on policy problems as market and governmental failure that explores the popularity of Uber and its consequences. The presentation of a property rights perspective in the chapter on government supply to help show the goal tensions that arise from mixed ownership. An entirely new chapter on performing analysis from the perspective of a public agency and a particular program within the agency’s portfolio: public agency strategic analysis (PASA). A substantially rewritten chapter on cost-benefit analysis, to better prepare students to become producers and consumers of the types of cost-benefit analyses they will encounter in regulatory analysis and social policy careers. A new introductory case with a debriefing that provides advice to help students immediately begin work on their own projects. Policy Analysis: Concepts and Practices remains a comprehensive, serious, and rich introduction to policy analysis for students in public policy, public administration, and business programs.
This paper analyzes the survival of organizations in which decision agents do not bear a major share of the wealth effects of their decisions. This is what the literature on large corporations calls separation of 'ownership' and 'control.' Such separation of decision and risk bearing functions is also common to organizations like large professional partnerships, financial mutuals and nonprofits. We contend that separation of decision and risk bearing functions survives in these organizations in part because of the benefits of specialization of management and risk bearing but also because of an effective common approach to controlling the implied agency problems. In particular, the contract structures of all these organizations separate the ratification and monitoring of decisions from the initiation and implementation of the decisions.
What makes for a good theory in economics? Tastes and opinions differ on this important issue, with some admiring the mathematical elegance and logical completeness of analysis, some admiring the metaphoric insight provided by deep description, and others admiring the development of new analytic tools rather than the application of those tools to nonprofit issues. In this Chapter, I choose to evaluate economic theories of the nonprofit sector by their ability to answer what I regard as the central questions in (a) describing the sector; (b) formulating governmental policy towards the sector; and (c) managing nonprofit organizations. More specifically, I discuss theories’ ability to enlighten our understanding of the scope of inquiry, the determinants of the size and scope of the nonprofit sector, and the behavioral responses of donors, volunteers, paid staff, and nonprofit organizations to changes in their external environment. I then turn, more briefly and selectively, to theories’ ability to inform tax policy towards donations, taxation of nonprofit entities, competition among and between organizations in the various sectors, and fundraising regulation. Finally, I briefly discuss theories’ ability to improve the pricing, fundraising, and evaluation functions of nonprofit management.
Andreas Ortmann and Mark Schlesinger, in their article “Trust, Repute, and the Role of Nonprofit Enterprise,” examine what they term “the trust hypothesis,” namely “the claim that asymmetric information in the markets for certain goods and services can explain the existence of nonprofit enterprise in those markets” (this volume). There is much that is sensible in what they say, and they have performed a valuable service in pulling together some of the more recent empirical literature on asymmetric information in markets heavily populated with nonprofit firms. I have some concerns, however, both with respect to the authors’ formulation of the trust hypothesis and with their approach to its verification.
Around the globe, people are forming private, nonprofit and voluntary organizations to pursue public purposes once considered the exclusive domain of the state. Economically, environmentally and socially, where the state has failed, nonprofit groups are taking advantage of revolutions in communications and bourgeois values to fill these gaps for themselves. This "associational revolution" may be permanently altering relations between states and citizens and prove as important to the latter twentieth century as the rise of the nation-state was to the nineteenth.
Three years after the terrorist attacks on New York City and Washington, D.C., confidence in charitable organizations continues to languish well below its pre-September 11 levels. Despite hopes that the confidence would rebound with the mere passage of time, the controversies surrounding disbursement of the September 11 relief funds and subsequent nationally-visible scandals surrounding the Nature Conservancy and several private foundations appear to have left a durable imprint that has yet to fade. The number of Americans who express little or no confidence in charitable organizations increased significantly between July 2001 and May 2002, and remains virtually unchanged to this day. (See Tables 1 and 2 attached to this fact sheet.) As I argue in Sustaining Nonprofit Performance: The Case for Capacity Building and the Evidence to Support It, which is being released by the Brookings Press at the same time as this fact sheet, charitable organizations did not get any of the post-September 11 "rally" in confidence that boosted government and other civic institutions, but received all of the decline as America returned to a semblance of normalcy in 2002. As a result, confidence in charitable organizations stands roughly 10-15 percent lower today than it was in the summer of 2001.
Brands have becoming increasingly important to many nonprofit organisations. Consequently, brand orientation has emerged as an attractive business philosophy in this sector. In this study, the relationship between nonprofit brand orientation (NBO) and organisational performance is examined. Findings suggest that there is a positive association between the dimensions of NBO and nonprofit organisational performance. Further, successful nonprofit organisations tend to be more brand-oriented than their less successful counterparts. Limitations of the study are noted and suggestions for ongoing research offered.
Preface Acknowledgments List of Figures List of Tables Part 1: Introduction to Public Policy Analysis 1. Preview: The Canadian Salmon Fishery 2. What is Policy Analysis? 3. Toward Professional Ethics Part 2: Conceptual Foundations for Problem Analysis 4. Efficiency and the Idealized Competitive Model 5. Rationales for Public Policy: Market Failures 6. Rationales for Public Policy: Other Limitations of the Competitive Framework 7. Rationales for Public Policy: Distributional and Other Goals 8. Limits to Public Intervention: Government Failures 9. Policy Problems as Market and Government Failure Part 3: Conceptual Foundations for Solution Analysis 10. Correcting Market and Government Failures: Generic Policy Instruments 11. Adoption 12. Landing on Your Feet: Organizing Your Policy Analysis 13. Implementation Part 4: Doing Policy Analysis 14. Government Supply: Drawing Organizational Boundaries 15. Gathering Information for Policy Analysis 16: Goals/Alternatives Matrices: Some Examples from CBO Studies 17: Benefit-Cost Analysis 18: When Statistics Count: Revising the Lead Standard for Gasoline Part 5: Conclusion 19: Doing Well and Doing Good
This paper relates quality and uncertainty. The existence of goods of many grades poses interesting and important problems for the theory of markets. On the one hand, the interaction of quality differences and uncertainty may explain important institutions of the labor market. On the other hand, this paper presents a struggling attempt to give structure to the statement: “Business in under-developed countries is difficult”; in particular, a structure is given for determining the economic costs of dishonesty. Additional applications of the theory include comments on the structure of money markets, on the notion of “insurability,” on the liquidity of durables, and on brand-name goods.
Responsible Care is a voluntary code of conduct developed, enforced, and monitored by the Chemical Manufacturers Association. Voluntary codes could be designed and enforced by regulators, nonprofit groups, industry associations, and individual firms. They could vary in their scope, focusing on firms around the globe, in a given region, within a country, or in a given industry. This article focuses on Responsible Care’s self-regulatory services that pertain to establishing, monitoring, and enforcing industry-wide environmental, health, and safety standards. Employing insights from the club theory, stakeholder theory, institutionalist theory, and the corporate social performance perspective, it examines the demand and supply sides of voluntary codes. Finally, it discusses theoretical implications and the key challenges faced by Responsible Care in the future.
Transparency concerns and the concomitant accountability challenges have motivated policy and legal scholars to explore information-based
regulatory approaches. We examine their usefulness in the context of the nonprofit sector which tends to show signs of governance
failure. Although nonprofits are required by law to disclose information on fund use, nonprofit donors face difficulties in
accessing and interpreting information about how nonprofits are deploying resources. Charity watchdogs make this information
available to donors in a convenient format. In theory, this should allow donors to reward nonprofits that devote resources
to service delivery and to punish those that are less careful about controlling overheads. To test the relationship between
charity ratings and donations, we examine 90 nonprofits in the state of Washington for the period 2004–2007. Drawing on ratings
data provided by Charity Navigator, we find that changes in charity ratings tend not to affect donor support to these nonprofits. We explore this statistical finding via interviews with 10 charities located
in Washington State. Supporting the statistical results, we find that charities believe that donors tend not to systematically
embed ratings in their donation decisions. Instead, they believe that donors assess nonprofits’ effectiveness and trustworthiness
via other means such as familiarity, word-of-mouth, or the visibility of the nonprofit in their community. In sum, the policy
challenge is to provide information which users desire such as organizational effectiveness as opposed to basic fund allocation
in the case of non-profits. What matters for policy efficacy is not how much information is provided but of what type.
Examines the role that institutions, defined as the humanly devised constraints that shape human interaction, play in economic performance and how those institutions change and how a model of dynamic institutions explains the differential performance of economies through time. Institutions are separate from organizations, which are assemblages of people directed to strategically operating within institutional constraints. Institutions affect the economy by influencing, together with technology, transaction and production costs. They do this by reducing uncertainty in human interaction, albeit not always efficiently. Entrepreneurs accomplish incremental changes in institutions by perceiving opportunities to do better through altering the institutional framework of political and economic organizations. Importantly, the ability to perceive these opportunities depends on both the completeness of information and the mental constructs used to process that information. Thus, institutions and entrepreneurs stand in a symbiotic relationship where each gives feedback to the other. Neoclassical economics suggests that inefficient institutions ought to be rapidly replaced. This symbiotic relationship helps explain why this theoretical consequence is often not observed: while this relationship allows growth, it also allows inefficient institutions to persist. The author identifies changes in relative prices and prevailing ideas as the source of institutional alterations. Transaction costs, however, may keep relative price changes from being fully exploited. Transaction costs are influenced by institutions and institutional development is accordingly path-dependent. (CAR)
This article reports on a theory-based experiment to determine whether there is an observable relationship between changes in charitable giving to an organization and changes in the proportion of revenue it spends on administration and fund-raising (“overhead ratio”). This article argues that overhead ratios are meaningless for comparing organizations, but changes in overhead ratios communicate useful, though incomplete, information to donors. Empirical studies have used organization-level data with mixed results. This research improves on past work by using donor-level information on federal employees in the Chicago area who donate through the Combined Federal Campaign with ready access to information on the overhead ratios of all participating charities. Donations are aggregated by charity and compared over time. Statistical tests give evidence of an inverse relationship between changes in overhead ratios and changes in giving that are robust with respect to model specification; however, collectively other factors are much more important.
Property in transition (Book I, chapter 1) …The typical business unit of the 19th century was owned by individuals or small groups; was managed by them or their appointees; and was, in the main, limited in size by the personal wealth of the individuals in control. These units have been supplanted in ever greater measure by great aggregations in which tens and even hundreds of thousands of workers and property worth hundreds of millions of dollars, belonging to tens or even hundreds of thousands of individuals, are combined through the corporate mechanism into a single producing organization under unified control and management.… Such an organization of economic activity rests upon two developments, each of which has made possible an extension of the area under unified control. The factory system, the basis of the industrial revolution, brought an increasingly large number of workers directly under a single management. Then, the modern corporation, equally revolutionary in its effect, placed the wealth of innumerable individuals under the same central control. By each of these changes the power of those in control was immensely enlarged and the status of those involved, worker or property owner, was radically changed. The independent worker who entered the factory became a wage laborer surrendering the direction of his labor to his industrial master. The property owner who invests in a modern corporation so far surrenders his wealth to those in control of the corporation that he has exchanged the position of independent owner for one in which he may become merely recipient of the wages of capital.
Globalization critics argue that international trade spurs a race to the bottom among national environmental standards. ISO 14001 is the most widely adopted voluntary environmental regulation which encourages firms to take environmental action beyond what domestic government regulations require. Drawing on a panel study of 108 countries over seven years, we investigate conditions under which trade linkages can encourage ISO 14001 adoption, thereby countering environmental races to the bottom. We find that trade linkages encourage ISO 14001 adoption if countries' major export markets have adopted this voluntary regulation.
The major arguments of this paper are that there is a need for an integrating framework for the study of regulation, including the design of regulatory institutions, and that the theory of agency may provide such a framework. The paper provides a brief overview of this approach. The theory of agency is a general theory of social relationships of “acting for” that is now under development in several disciplines, particularly economics and accounting. Regulation is seen as a generic relation observed widely in social behavior, and as a particular type of agency relationship. The problems of agency relations–e.g., the problems of principals in controlling agents and of agents in acting according to the principals' desires–have their counterparts in regulation.
Non-governmental organizations (NGOs) play an increasingly important role in public service provision and policy making in sub-Saharan Africa, stimulating demand for new forms of regulatory oversight. In response, a number of initiatives in NGO self-regulation have emerged. Using cross-national data on 20 African countries, the article shows that self-regulation in Africa falls into three types: national-level guilds, NGO-led clubs and voluntary codes of conduct. Each displays significant weaknesses from a regulatory policy perspective. National guilds have a broad scope, but require high administrative oversight capacity on the part of NGOs. Voluntary clubs have stronger standards but typically have much weaker coverage. Voluntary codes are the most common form of self-regulation, but have the weakest regulatory strength. This article argues that the weakness of current attempts to improve the accountability and regulatory environment of NGOs stems in part from a mismatch between the goals of regulation and the institutional incentives embedded in the structure of most self-regulatory regimes. The article uses the logic of collective action to illustrate the nature of this mismatch and the tradeoffs between the potential breadth and strength of various forms of NGO self-regulation using three detailed case studies. Copyright © 2008 John Wiley & Sons, Ltd.
Largely as a response to critiques of top-down development and of a growing awareness of the low effectiveness of aid absorption in poor countries, the international donor community has recently adopted with enthusiasm and determination a new approach to fight poverty, called the community-based development approach (CBD). Such an abrupt shift in aid strategies is questionable, not because the approach is wrong (the opposite is actually the case), but because massive injections of aid funds in CBD projects, the entry into the field of numerous agencies with little or no experience in participatory development, as well as the pressing need for quick and visible results, threaten to undermine its effectiveness in reducing poverty. The cause for worry comes from the 'elite capture' problem that risks deflecting a large portion of the resources devoted to CBD into the hands of powerful groups dominating target communities. On the basis of a game-theoretical model, the main aim of the paper is to discuss the use of sequential and conditional disbursement procedures as a way of surmounting such a problem, and to examine how the share of CBD aid reaching the poor is influenced by various elements of the aid environment, including the pressure of competition among donor agencies and the availability of aid funds. Multilateral reputation mechanisms and intra-community competition for leadership are also assessed as possible alternatives to sequential disbursement procedures. 1 Our gratitude goes to all those who made useful remarks and suggestions in the course of seminar presentations of this paper, in particular, to François Bourguignon, Louis Hotte, Marcel Fafchamps, and Jan Gunning.
Examines the role that institutions, defined as the humanly devised constraints that shape human interaction, play in economic performance and how those institutions change and how a model of dynamic institutions explains the differential performance of economies through time. Institutions are separate from organizations, which are assemblages of people directed to strategically operating within institutional constraints. Institutions affect the economy by influencing, together with technology, transaction and production costs. They do this by reducing uncertainty in human interaction, albeit not always efficiently. Entrepreneurs accomplish incremental changes in institutions by perceiving opportunities to do better through altering the institutional framework of political and economic organizations. Importantly, the ability to perceive these opportunities depends on both the completeness of information and the mental constructs used to process that information. Thus, institutions and entrepreneurs stand in a symbiotic relationship where each gives feedback to the other. Neoclassical economics suggests that inefficient institutions ought to be rapidly replaced. This symbiotic relationship helps explain why this theoretical consequence is often not observed: while this relationship allows growth, it also allows inefficient institutions to persist. The author identifies changes in relative prices and prevailing ideas as the source of institutional alterations. Transaction costs, however, may keep relative price changes from being fully exploited. Transaction costs are influenced by institutions and institutional development is accordingly path-dependent. (CAR)
Voluntary environmental programs are institutions that seek to induce firms to produce positive environmental externalities beyond what government regulations require. Drawing on club theory, this paper outlines a theoretical perspective to study the relationship between program design and program effectiveness. Effective programs have rule structures that mitigate two central collective action problems inherent in producing positive environmental externalities: attracting firms to participate in the program and ensuring that participating firms adhere to program obligations. Because program efficacy can be undermined by collective action problems associated with free riding and shirking, effective voluntary clubs should be designed to mitigate these challenges.
Can businesses voluntarily adopt progressive environmental policies? Most environmental regulations are based on the assumption that the pursuit of profit leads firms to pollute the environment, and therefore governments must impose mandatory regulations. However, new instruments such as voluntary programs are increasingly important. Drawing on the economic theory of club goods, this book offers a theoretical account of voluntary environmental programs by identifying the institutional features that influence conditions under which programs can be effective. By linking program efficacy to club design, it focuses attention on collective action challenges faced by green clubs. Several analytic techniques are used to investigate the adoption and efficacy of ISO 14001, the most widely recognized voluntary environmental program in the world. These analyses show that, while the value of ISO 14001's brand reputation varies across policy and economic contexts, on average ISO 14001 members pollute less and comply better with governmental regulations.