Article

Charity Watchdogs and the Limits of Information-Based Regulation

March 2011
International Journal of Voluntary and Nonprofit Organizations 22(1):112-141

Authors:

University of Washington Seattle

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.

Understanding National Nonprofit Data Environments

Article

Full-text available

Apr 2022

We develop the concept of the nonprofit data environment as all data collected and reported in a country resulting from law implemented into practice. We map data environments across 20 countries and propose explanations for differences between the information nongovernmental organizations report (collected) and what is made publicly available (reported). Domestic factors including regime type, civil society autonomy, and regulatory quality increase the amount of information collected and released publicly. Exposure to international political forces, including aid flows and globalization, increases the gap, which runs counter to expectations of greater openness with global engagement. Our findings point to the need for a better understanding of patterns in non-profit organizations (NPOs) data environments; while all governments collect information, countries with similar legal codes have widely varying data environments. This matters for NPOs as their ability to learn and improve depends on access to quality data and coincides with a feared global political backlash.

Using Certifications to Signal Trustworthiness and Reduce the Perceived Risk of Donors – An Exploratory Investigation into the Impact of Charity Labels

Article

Full-text available

Jul 2021

Several accountability clubs and watchdogs issue charity labels for stimulating charitable giving, but research on the impact of such seals of approval built on certification systems is still narrow and contradictory. Based on signaling theory and theory of perceived risk, we develop a framework matching means of signaling trustworthiness by charities and of risk reducing by donors. Additionally, we present results of a study exploring the influence of the Austrian charity label “OSGS” on the donation behavior of 192 survey participants and investigate whether donors are more willing to support charities participating in this self-regulatory program. Our study provides insights into the benefits and constraints of voluntary accountability initiatives and enhances understanding of individuals’ motivations for giving. Findings indicate that expectations toward the OSGS are high and partly exaggerated. Nevertheless, we found that generally the OSGS is not crucial for charity choice but mainly beneficial for nonprofits not widely known.

Donor Reaction to Non-Financial Information Covering Social Projects in Nonprofits: A Spanish Case

Article

Full-text available

Dec 2020

The notion of accountability in nonprofits suggests that these organisations should disclose financial and non-financial practices following a holistic model. In practice, the interest of both managers and researchers has focused primarily on donors and financial disclosures, for funding and methodological reasons respectively. From the perspective of impact investment, all of them, government, beneficiaries, private donors, managers and volunteers are expected to make their decisions based on non-financial information as investors expecting social returns. However, to what extent does project information that demonstrates that the non-profit organisation has achieved its social mission actually matter? The main objective of this paper is to analyse whether the donations received by non-governmental organisations NGOs are related to the information disclosed on the projects undertaken. We perform our analysis separately for individual, private and public donors. Our results show that public donors are more interested in financial disclosures, private donors find information about outcomes and impacts to be most useful and individual donors do not tend to use non-financial information when it comes to making decisions about whether to donate or not.

Community Grantmaking Committees: Pravalence, Conceptualization, And Funding Decisions

Article

Jan 2020

Megan Farwell

Over the past 50 years, there has been increasing pressure to return human service funding responsibilities to state and local communities. Simultaneously, both philanthropic and government funders have sought to adopt more participatory, community-focused approaches to human service decision-making. However, little is known about (1) the extent to which locally based human service funders engage community in funding decisions; (2) how these community grantmaking committees (CGCs) are conceptualized and operate; and (3) whether they can deliver on the promise of a “front-row take” on community problems and the organizations best suited to address them. This three-paper mixed-methods dissertation aims to address these gaps in both academic and practitioner literature. Using both funder website research (n=2,029) and a survey (n=462), Paper 1 investigates the nationwide use of CGCs, finding that such committee use is prevalent nationwide, although committee members are largely white, professional, older, and lacking human service expertise. Paper 2 uses qualitative methods to examine the experiences of community grantmakers (n=20) and grantmaking staff (n=5) among six Washington State human service funders. Findings suggest challenges with achieving the goals of more participatory grantmaking, stemming mainly from committee member motivations to serve as grantmakers and sensitivity to staff involvement. Finally, Paper 3 analyzes the grant applications (n=291) and funding awards of a single municipal-level funder using a CGC. Contrary to hypotheses grounded in the purported merits of more participatory grantmaking systems, community needs and program capacity were inconsistent predictors of grant receipt. Taken together, these papers provide insight into the use, composition, practices, and funding outcomes of CGCs. Beyond just contributing to the limited scholarly literature on participatory grantmaking within human services, this dissertation also has practical implications for funders currently using or exploring use more community-based granting processes. These include recommendations for making funding approaches more transparent and accessible to community members, considerations for organizational policies that influence CGC member engagement, and adjustments to the funding deliberations process.

The Power of Elites: A Survey Experiment of the Impact of Strategic Messaging on Donations to Nonprofits

Article

Dec 2022

Nonprofits engage in various service and advocacy efforts to support their missions, and it is critical to effectively communicate the importance of these activities and their missions to donors. In these communications, it remains unclear the extent to which messaging from nonprofit elites such as coalitions and other nonprofit infrastructure organizations (NIOs) shapes donor support for service and advocacy activities, and which messages exhibit the strongest influence on donors. This survey experiment tests the effects of three strategic messages from a fictional NIO on respondents’ allocation of donation budgets between traditionally service-oriented nonprofits engaging in varying levels of service and advocacy activities. Results show messages promoting advocacy and social change yield substantial donation increases to nonprofits engaging in low and high levels of advocacy work. Messages pushing direct service failed to produce effects on donor intentions; however, findings suggest direct service may enjoy an inherent advantage in donor preference.

Assessing the Impact of Nonprofit Organizations on Multi-Actor Global Governance Initiatives: The Case of the UN Global Compact

Article

Full-text available

Jun 2021

Alice Hengevoss

This study empirically assesses the impact of nonprofit organizations (NPOs) on multi-actor global governance initiatives. Multi-actor global governance initiatives have emerged to strengthen joint action among different societal actors to tackle transnational social and environmental issues. While such initiatives have received a great deal of academic attention, previous research has primarily focused on businesses’ perspectives. In light of the important role of NPOs within such initiatives, critically addressing NPOs’ role by assessing their impact on the effectiveness of such initiatives is crucial. This article builds on the United Nations Global Compact (UNGC)—the largest multi-actor global governance initiative in the world—and offers a panel analysis on a unique dataset including 820 NPOs from 68 different countries. The findings suggest that NPOs have indeed strengthened the UNGC over time, yet their engagement explains only a small fraction of differences in UNGC activity across countries. This study contributes to the emerging research on nonprofits’ social responsibility by fostering the actorhood thesis, which places higher responsibility for the impact and requirements for accountability on NPOs. Furthermore, the study supports discussions about the increasing political role of NPOs by providing the first empirical evidence for their political leadership and impact in multi-actor global governance initiatives.

NONPROFIT BUSINESS MODELS: A BOURDIEUSIAN PERSPECTIVE

Thesis

Jan 2021

Gaëlle Cotterlaz-Rannard

Toward a triadic understanding of charitable giving: How donors, beneficiaries, fundraisers, and social contexts influence donation decisions

Thesis

Full-text available

Apr 2019

Cassandra Chapman

This thesis applies social psychological theories about intergroup relations (e.g., Social Identity Theory, Tajfel, 1981; the Intergroup Helping Relations as Status Relations model, Nadler, 2002) to investigate the process and outcomes of charitable giving. Moving beyond the traditional focus on studying donors, this thesis uses a mixed-methods approach (surveys, experiments, thematic analysis, and literature review) to show that charitable giving is triadic, relational, and contextualized. That is, decisions about donations are informed by a triad of actors (donors, beneficiaries, and fundraisers), the relationships between them, and the wider social context. Chapter 1 provides a general overview of previous scholarly work on charitable giving and key psychological theories identified as relevant to my approach. Findings from Chapters 2 and 3 confirm that beneficiaries affect donor choices and that the relationships (e.g., shared identities) between particular donors and particular beneficiaries are especially important. Chapter 2 comprises two surveys of confirmed (N = 675) and self-reported (N = 376) donors, which show that donors are not universally generous. Instead, consistent with the social identity approach (Tajfel, 1981; Turner, Hogg, Oakes, Reicher & Wetherell, 1987), donors prefer to support charities that align with their social groups in meaningful ways. Chapter 3 goes on to present thematic analyses of responses to the question of why donors support their favorite charity (N = 1,849 from 117 countries). Results show a self/other dichotomy in donor motivation: donors are more likely to reference the self when explaining giving to religious and research charities, but are more likely to reference the other (i.e., beneficiary) when explaining giving to social service, animal, or international charities. In combination, Chapters 4 and 5 demonstrate that social contexts affect charitable responses, in part by changing the perceived relations between donors and beneficiaries. Chapter 4 presents one survey (N = 189) and one experiment (N = 290) that show how government policy on foreign aid affects private giving by changing perceptions of national giving norms. Chapter 5 presents two experiments (combined N = 440) that demonstrate how political advocacy can affect charitable giving by changing donor emotions, perceptions of efficacy, and identification with beneficiaries. Chapter 6 highlights the importance of also considering fundraisers when studying charitable giving. Mediation analyses from two samples of peer-to-peer fundraisers (combined N = 1,647) show that when fundraisers identify more with their nominated charity they take more actions to raise money and that, in turn, results in more funds raised. In particular, results show that actions which make the fundraiser more salient (e.g., adding photos, sharing personal motivations) are most effective. Chapter 7 draws together evidence from my program of research and more than 300 articles from the interdisciplinary literature to generate a new model of charitable giving: the charitable triad. This model theorizes that charitable giving is informed by the dyadic and triadic relationships between donors, beneficiaries, and fundraisers as well as salient aspects of the wider social context. Finally, Chapter 8 draws the entire body of work together, discusses it in relation to previous research, and presents future directions for study. The program of research presented in this thesis demonstrates the triadic nature of giving, setting a new agenda for both future research on charitable giving and fundraising practice.

Three Models of US State-Level Charity Regulation

Article

Full-text available

Aug 2023

George E. Mitchell

The existence of federal oversight of charitable organizations in the United States implies a degree of uniformity to US charity regulation. However, charity regulation is far from uniform across the country. States differ significantly in their adoption or non-adoption of various state-level regulatory requirements, creating not one but many different regulatory environments for charities. The complexity and diversity of these regulations has made it difficult for sector stakeholders, such as researchers, regulators, practitioners, information intermediaries, and donors, to understand the nature and significance of state-level charity regulation from a comparative perspective. To address this problem, this article employs latent class analysis to identify three distinct models of state-level charity regulation: broad regulation, limited regulation, and asset oversight. Subsequent analysis identifies relationships between a state’s economic, social, and political characteristics and its model of charity regulation, suggesting new avenues of research for understanding regulatory model emergence. Many additional practical applications of the typology are also discussed.

NGO accountability to donors: better said than done?

Article

Full-text available

Jan 2023

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.

"Innovative Forms of Adult Education - Bringing people together for rural development in East Germany" page 200-210 in Proceedings-of-the-Conference-Lisbon-2014

Chapter

Full-text available

Jun 2014

Mandy Schulze

After the social and political transformation, followed by a process of deindustrialisation and a very high mobility of young people, the working shortage and demographic change is having an impact on the development of communities in East Germany. Young person leaving their home regions for educational reasons or job opportunities. Like all brain drain regions, East Germany is loosing their high potentials to the big cities. Almost paradoxally in certain branches of industry and especially in services in this regions is a lack of qualified employees. Young people are seen as the future for regional development not only as the parents of the next generation but formost as innovative agents of changes. The following article is focused on the question which kind of impact open adult education could have on innovative rural development to improve the attractiveness of such areas. This contribution presents the challenges of rural adult education, describes the demographic change in East Germany and provides research results from the perspective of the “missing” people in order to regard practical approaches for local development. In a wider perspective regional development emphasises more than the possibility to work. Keywords: adult education, rural development, demographic change, East Germany

Fundraising Design in a Competitive Market

Preprint

Full-text available

May 2022

Fundraising involves the simultaneous consideration of three actors-the donor, the charitable organization raising the funds, and the beneficiary. Successful fundraising appeals match donor motivations to preferred organizational and beneficiary attributes while acknowledging the influence of alternative, competitive appeals. In this paper, we propose an integrated method of analysis that combines multiple conjoint analyses for understanding preferences for charities and beneficiaries, with donor text and scaled responses describing their motivations. Analyses revealed five donor archetypes (i.e., exemplars): 'Cancer Carers' (24%), 'Effective Altruists' (19%), 'Animal and Nature Lovers' (16%), 'Emergency Responders' (23%), and 'Feel-good Do-gooders' (18%). These archetypes cannot be understood with exclusive reference to donor characteristics and motivations; rather archetypes combine donor characteristics with features of preferred beneficiaries and fundraisers. We show how our model can be used to conduct integrated, conditional and competitive analyses useful for fundraising design.

Relational Work and Its Pitfalls: Nonprofits’ Participation in Government-Sponsored Voluntary Accreditation

Article

Full-text available

Feb 2022

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.

Accountability and transparency: cornerstones of civil society governance

Chapter

Dec 2021

Jurgen Willems

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.

Who Cares about Crackdowns? Exploring the Role of Trust in Individual Philanthropy

Article

Jul 2021

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.

Who Gets the Money? Strategic Orientations and Resource Attraction by Not-for-Profit Organizations

Article

May 2021

Not-for-profit organizations (NPOs) depend heavily on external resources to sustain their operations and program delivery. Their financial sustainability depends on their ability to attract donors’ resources, which is a challenging task in the resource-scarce external environment. Our study investigates the impact of two strategic orientations – market orientation and internal market orientation – on the success of NPOs at attracting resources. Based on survey data gathered from 360 NPOs having field operations in India in the space of environment, livelihoods, and natural resource management, and using the Partial Least Square based Structural Equation Modeling (PLS-SEM) method, we find that market orientation and staff retention predict resource attraction by NPOs. Internal market orientation has an indirect impact on resource attraction through staff retention. The study also finds that bigger NPOs attract more resources than smaller ones.

Does Mandatory Disclosure Matter? The Case of Nonprofit Fundraising

Article

Apr 2021

Do donors seek out potentially adverse information about organizations making fundraising appeals? Do they react when it is readily available? Do they draw negative inferences when critical information is not available? To answer these questions, we consider previously unexamined large-scale natural experiments involving U.S. charitable organizations—tax-exempt organizations that file Internal Revenue Service (IRS) Form 990. Using standard difference-in-differences designs, we find that donors penalize organizations with high fundraising costs when there is mandatory disclosure or involuntary disclosure by a third-party reporter. Organizations with lower fundraising costs fundraise more successfully in the presence of these disclosures. The contrast with donors’ behavior when such information is not available suggests that donors do not draw correct inferences when potentially consequential information is not disclosed. Disclose-on-request requirements, in contrast, apparently do not have any significant impact on donors’ or organizations’ behavior. We then sketch implications for the regulation of donations to charities and their modern cousins, such as crowdfunding and social enterprise organizations.

Putting the 'community' in community-based human service funding: Recruitment, motivation, and role negotiation of granting committees i

Article

Apr 2021
J Health Hum Serv Admin

We explore how funding decisions are made when giving grants to human services organizations that include mental and physical health. Community engagement in the decision-making processes is expected to yield many benefits, including a deeper understanding of community problems, a better sense of grantee needs and challenges, and greater effectiveness. This qualitative study examines the experiences of 20 community grantmakers and 5 grantmaking staff in six Washington State human service funders. Findings suggest challenges with achieving the goals of more participatory grantmaking, stemming mainly from recruitment processes, grantmaker motivations, and sensitivity to staff roles.

Putting the 'community' in community-based human service funding: Recruitment, motivation, and role negotiation of granting committees

Article

Apr 2021
J Health Hum Serv Admin

To What Extent Is Trust a Prerequisite for Charitable Giving? A Systematic Review and Meta-Analysis

Article

Apr 2021

Trust is assumed to be important for charitable giving. However, disparate associations have been found, and recent theoretical approaches emphasize motives for giving that do not rely on trust. To resolve this tension, we conducted a systematic review of evidence generated between 1988 and 2020. A meta-analysis of 69 effect sizes from 42 studies sampling 81,604 people in 31 countries confirmed a positive association between trust and giving across diverse measures, r = .22. Meta-regressions showed that organizational ( r = .35) and sectoral trust ( r = .27) were more strongly associated with giving than were generalized ( r = .11) or institutional trust ( r = .14). The relationship was also stronger in non-western (vs Western) countries and in nonrepresentative (vs nationally representative) samples. All evidence was correlational, and few studies measured actual behavior. We discuss implications for theories of trust and for fundraising practice, and highlight critical gaps in evidence.

Terrorists or Persecuted? The Portrayal of Islamic Nonprofits in US Newspapers Post 9/11

Article

Feb 2021

Rafeel Wasif

Media plays a major role in molding US public opinions about Muslims. This paper assesses the effect of 9/11 events on the US media's framing of the Muslim nonprofit sector. Overall it finds that the press was more likely to represent the Muslim nonprofit negatively post 9/11. However, post 9/11, the media framing of Muslim nonprofits was mixed. While the media was more likely to associate Muslim nonprofits and terrorism, they were also more likely to represent Muslim nonprofits as organizations that faced persecution because of Islamophobia, government scrutiny, or hate attacks against them. These media frames may have contributed to public perceptions that Muslim organizations support terrorism while also raising the alarm amongst various stakeholders that the government and the general public are persecuting the Muslim nonprofit sector.

Many stones can form an arch, singly none: (Re‐)establishing trust in charities

Article

Full-text available

Jan 2021

Trust in charities is critical in terms of the health of the sector, and also in relation to the establishment and maintenance of social cohesiveness. Moreover, lack of trust can not only damage the charity sector (having negative impacts on public perceptions and donor giving) but can also undermine attempts at building social capital. Yet, how trust is defined, the various forms that it takes and how it is established (or re‐established, if lost) is unclear. This paper explores the various conceptions of what trust is, applies them to charities and examines trust in relation to the sustainability of the sector. A key finding is that trust has many dimensions, and charities (and the sector as a whole) need to work on a range of fronts on an ongoing basis to protect and build perceptions of trustworthiness (‘many stones can form an arch’). As a consequence, the paper presents an outline research agenda (in the form of four key questions) that encourages future researchers to enhance understanding of the important interplay between trust and charities more fully. This focuses on the relationship between charities and beneficiaries, how trust‐building activities vary with charity size/area of activity, the potential role of communicating service delivery and what ‘good regulation’ might look like.

Influence of online transparency on efficiency. Analysis of spanish NGDOs

Article

Full-text available

Jul 2020

This study examines (a) whether nongovernmental development organizations (NGDOs) disseminate relevant information for their stakeholders through their web pages, information that after being reviewed and evaluated by external organizations such as the Spanish Coordinator of Development NGO or Lealtad Foundation, allowed these NGDOs to obtain a seal of transparency and (b) whether their level of transparency influences efficiency. To determine online transparency, web pages of seal-approved NGDOs were reviewed to assess the availability of relevant information. This paper uses data envelopment analysis to assess the efficiency using an input orientation. To determine the influence of online transparency on efficiency, an ordinary least squares regression was used. Results show that while increased transparency has a significant effect on efficiency, the level of information disclosure of NGDOs through their web pages has considerable room for improvement. Improved transparency leads to best practices and increased competition in obtaining financing and support from society. To improve transparency in the nonprofit sector, external organizations have created a series of seals to certify that an organization complies with the basic principles of transparency. In addition, new technologies make it easier for organizations to disseminate information quickly and economically. This article contributes to the literature regarding web use of NGDOs to disclose relevant information and analyzing the influence of online transparency on organizational efficiency.

Does Mandatory Disclosure Matter? The Case of Nonprofit Fundraising

Article

Jan 2020

“Corporate governance” and performance in nonprofit organizations

Article

Jun 2020
STRATEG ORGAN

Corporate governance has received substantial scholarly attention for decades, although the focus of this research has by and large been on publicly traded for-profit organizations. However, agency problems are increasingly recognized in nonprofits. As such, we examine the application of corporate governance logic in the context of nonprofits. Our study relies on nearly a decade of data spanning 6853 US-based charities and comprising nearly US$346 billion in total revenue. Our results show that common corporate governance practices—such as independent boards, chief executive officer oversight, and transparency—enhance the degree to which donor contributions are allocated toward a charity’s mission. Overall, we assess the broader applicability and benefits of corporate governance and build on literature highlighting links between for-profit and nonprofit organizations. In doing so, we demonstrate the usefulness of governance in this economically and socially consequential context.

How Do NPOs Get Funding? A Business Model Perspective Based on the Conversion of Symbolic Capital

Article

Full-text available

May 2020

Despite intensive research dedicated to both social alliances and business models, a research gap persists with regard to why and how nonprofit organizations (NPOs) choose (or not) to partner with for-profit organizations (FPOs) to obtain funding. By adopting an NPO-centered analysis, this article presents a new framework, based on Bourdieu’s forms of capital. With an explicit consideration of symbolic capital—and the risks of damaging it if the NPO turns to FPOs for funding—the authors explore specific issues related to NPO business models. The empirical test of the framework relies on an original database of 150 nongovernmental organizations with international scope. It reveals four distinct business models (public, civic, opportunistic, and diversified) and demonstrates that a high stock of symbolic capital gives organizations the power to choose and eventually diversify their funding sources, including partnering with select FPOs.

Trust and the ICRC - A literature review

Technical Report

Apr 2019

Scott Edwards

Trust is extremely important for the ICRC. It can assist in the facilitation of access and enables the ICRC to act more effectively by creating strong relationships with its employees, movement partners, national agencies, donors, and those effected by crisis. Understood as an interplay between positive expectations allowing for the acceptance of vulnerability in a context in which there is risk and interdependence, the literature shows there are many ways of thinking about the ways in which trust works.

Perceptions of governance in the animal welfare sector

Article

Full-text available

Dec 2019

Putting Humpty Together Again: How Reputation Regulation Fails the Charitable Sector

Article

Full-text available

Nov 2019

Susan D. Phillips

Investigations of how Oxfam Great Britain (GB) managed its safeguarding systems and handled revelations of sexual exploitation by its staff highlighted a variety of internal governance and culture issues, and a lack of transparency as it sought to protect its reputation. The current models of reputation management do not fully explain its actions, however. This article argues that five systemic factors in the environment in which nonprofits operate create undue pressures for protection of reputations and contribute to poor assessment of risks, inadequate accountability systems and limited transparency. These factors include: a stress on success and related competition for market share and pressures for growth; expectations of low overheads; challenges of governance and risk management; lack of public awareness; and regulatory gaps. Drawing on media coverage and the commissions of inquiry, the analysis shows how all of these contextual factors were at play in the Oxfam case, and suggests potential reforms.

Recovering from Scandals: Twitter Coverage of Oxfam and Save the Children Scandals

Article

Aug 2019

We examine Twitter data to assess the impact of media exposes on the reputations of two international nonprofits, Oxfam and Save the Children (STC). Using a random sample of 6794 Tweets, we study the daily gap between positive and negative sentiments expressed towards these organizations. The “unweighted gap” and the “weighted gap” (weighted by the number of followers) of the Twitter handle follow broadly the same trajectory with high fluctuation in response to new negative or positive media stories. Twitter handles with large audiences amplify variability in weighted gap. While Oxfam’s reputation did not fully recover to pre-Haiti levels even 6 months after the scandal, STC’s reputation returned to pre-scandal levels in 8 days, although it fluctuated in response to new revelations. Overall, reputation recovery for both organizations was aided when they received celebrity endorsements and focused public attention on their positive activities, especially by linking to visible global events.

Institutional and Ideational Challenges of Organizations in Public Discourses: An Ordonomic Approach

Thesis

Full-text available

Apr 2019

Jan Winkin

This quasi-cumulative dissertation analyzes the institutional and ideational challenges of organizations in public discourses. Academic scholars with different theoretical backgrounds assign NGOs a leading role to promote and fertilize public discourses in democratic societies. However, empirical research documents numerous cases, in which NGOs fostered discourse failure by launching controversial campaigns, the use of distorting framing strategies or even misinforming the general public. Following the ordonomic approach, this dissertation provides new counter-intuitive explanations for discourse failure and outlines feasible ideational and institutional reform proposals. The first article identifies the problem of discourse failure in the case of the public controversy (2015-2017) in Germany about two international trade agreements. The second article investigates existing solution approaches to discourse failure. In particular, it presents a longitudinal case study (2006-2018) about Accountable Now, which is the leading global initiative of international NGOs to promote the effectiveness and collective reputation of the NGO sector. The third article theorizes that discourse failure is the result of two different types of social dilemmas that require specific reforms. The following discussion links the empirical findings and theoretical contributions of the three previous articles to an ordonomic analysis of discourse failure in the NGO sector. This dissertation yields valuable theoretical implications for deliberative and rational-choice theory, the research on NGO accountability, and NGO self-regulation in practice.

Nonprofit good governance mechanisms: A systematic literature review

Article

Nov 2023

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.

Networking, resource mobilisation and NGO role- performance: Considering more than simply the main effects

Article

Full-text available

Jan 2023

This study aims to establish the relationship between networking, resource mobilization, and role performance of Non-governmental Organizations (NGOs). This study is cross-sectional and correlational. The results, using a questionnaire, are obtained from a sample of 122 NGOs in Uganda. The study finds that both resource mobilisation and networking are significant predictors of NGO role-performance; with resource mobilisation the most significant predictor of NGO role performance. Human resource mobilisation as a construct of resource mobilisation correlates better with NGO role-performance relative to financial resource mobilisation. Similarly, the political networking construct correlates better, relative to business networking, with NGO role-performance and subsists in the presence of financial resources but not in the presence of human resources. Notably, we find a significant partial mediation of resource mobilization in the relationship between networking and NGO Role-performance. Networks can help organisations to mobilize resources. Thus, if NGOs are to improve the performance of their roles, networking, especially political networking, and resource mobilisation (essentially human resources) should be enhanced. To ensure generalisation, further research may wish to focus on other sectors (like government institutions) to establish the relationship between networking, resource mobilisation, and those institutions' role-performance. Our design allows for the consideration of more than simply the main effects of networking and resource mobilisation by exploring the mediating role of resource mobilisation in the link between networking and NGO role-performance thus offering a more accurate and detailed description of the relationships between networking, resource mobilisation and NGO role-performance in a developing country context.

Fundraising and Nonprofit Marketing: A Research Overview

Book

Jun 2023

Roger Bennett

Selos de Aprovação e o Comportamento das Receitas em Organizações Não Governamentais Brasileiras

Article

Full-text available

Jun 2023

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.

Selos de aprovação e o comportamento das receitas em Organizações Não Governamentais Brasileiras

Article

Full-text available

May 2023

What drives organizational missions in the nonprofit sector? An institutional logic dependence perspective

Article

Apr 2023

This study examines how institutional multiplicity shapes nonprofit organizations’ mission-oriented actions by using the institutional logics perspective. We test how different institutional logics (professional, market, state, and community logics) independently and collectively affect mission-oriented actions of nonprofit organizations, focusing on the two focal subsectors: human service organizations and art and culture organizations. Using a panel dataset of 501(c)(3) nonprofit organizations between 2000 and 2010, we find that multiple institutional logics jointly as well as independently affect nonprofits’ mission-oriented actions and this relationship varies between the two subsectors. The findings offer empirical evidence of how multiple logics co-exist and how the dynamics among multiple logics may shape nonprofits’ actions across different subsectors.

A processing fluency perspective on overhead aversion: How much is too much?

Article

Jan 2023

Overhead aversion has afflicted the nonprofit sector in recent decades. Yet, questions remain regarding how high is too high from a donor perspective and at what level overhead expenses just “feel right.” Using processing fluency as a theoretical foundation, the central purpose of this research was to investigate whether a nonprofit overhead ratio fluency level exists that significantly reduces both donation likelihood and nonprofit perceptions. Results from two studies show that a 25% overhead ratio appears to be the proximate ceiling regarding what fluently fits within a potential donor's schema for acceptance. Overhead ratios exceeding this threshold tended to decrease donation likelihood and nonprofit perceptions in a relatively stable manner. Moreover, the 25% threshold seems most relevant to human and animal causes and not as relevant to arts and cultural nonprofits such as museums. The results suggest that donors have a preconceived overhead ratio limit. Nonprofits that exceed that threshold are in danger of deterring donors. If nonprofit overhead ratios exceed the donor fluency threshold, nonprofit managers should consider distinct promotional strategies that entice donors and diminish overhead aversion effects.

Online social network fundraising: Threats and potentialities

Article

Dec 2022

There has been a growth in online fundraising from crowdfunding apps, like GoFundMe, that propagate fundraising appeals on social networking sites. In the online space, these crowdfunding apps pose a potential threat to the traditional intermediation role of charities. The disintermediation threat is that donors choose crowdfunding intermediaries instead of charities to channel their giving. In this article, we discuss what makes crowdsourced fundraising effective and how charities can adapt to this new dynamic for more effective online fundraising emphasizing two key success factors: brand strength/reputation and managing the donor experience. In addition, we explain the advantages and disadvantages of social media fundraising and giving and propose ways charities can leverage their good reputations and public trust to stimulate reintermediation. Finally, we propose a landscape for future research based on model that emphases the fundraising campaign's ability to stimulate viral sharing within and between online social networks.

O efeito da adoção do accountability no contexto das organizações sem fins lucrativos: um experimento no Brasil

Article

Full-text available

Oct 2022

As organizações sem fins lucrativos possuem um papel central na prestação de serviços à população. Como essas organizações dependem de recursos externos, especialmente doações, a transparência das ruas ações é central. Nesse sentido accountability é visto como uma das principais externalizações da transparência aos interessados dessas organizações. Este estudo tem como objetivo analisar a influência do accountability na percepção de confiança pública, reputação, qualidade percebida e intenção de doação, das instituições sem fins lucrativos. Para tal, foi aplicado um experimento baseado em vinheta com potenciais doadores de organizações sem fins lucrativos. Com base em Becker (2018), a variável accountability foi manipulada em 4 níveis distintos: “Com certificação externa”, “Responsabilização interna”, “Responsabilidade mínima legal” e “Sem padrão de certificação”. Com as seguintes variáveis dependentes: confiança, reputação, qualidade e intenção de doação. Para todos os níveis de accountability, foram feitas as análises das variáveis dependentes por meio da ANOVA. Os resultados indicam que o accountability influencia na confiança pública, na reputação, na qualidade percebida e também na intenção de doação.

Fundraising Design in a Competitive Market

Article

Jan 2022

Exploring the accountability relationship between non-profit organisations and the state auditor

Article

Oct 2021

Joanne G. Carman

This article explores the accountability relationship between the state auditor’s office and non-profit organisations by examining the audit reports prepared by the North Carolina State Auditor’s Office for non-profit organisations from 2009 to 2018. The data collected for this study show that the extent to which the state auditor conducts audits of non-profit organisations is fairly limited. Yet, when it does audit them, it is doing so to police their behaviours, monitor their expenditures and ensure that they are being good stewards with the resources they have been given. The findings from this study have important implications, in that they suggest that other accountability mechanisms continue to be important, including: training and education for board members about their legal and fiduciary responsibilities; the importance of adhering to best practices and standards; and the important role that third-party watchdog organisations and accreditors can play in ensuring non-profit accountability.

NGOs and the Cosmopolitan Agency Gap

Chapter

May 2021

Vincent Fang

This chapter advances the argument that development NGOs are ideal candidates to fill the cosmopolitan agency gap. Many international NGOs envision a world without poverty and have decades of experience and extensive expertise in poverty reduction and development. Moreover, they have built a good reputation in the global North and are skilled at engaging the general public. I examine the history of five NGOs to represent the sector and three global events that NGOs have organised to evidence their competence. However, I also caution against over-simplification and undue optimism: NGOs have tried to advocate radical change for decades to little avail. I agree with many NGO practitioners that change to this sector is necessary, before real change can happen to global poverty.

Does the introduction of ratings reduce giving? Evidence from charities

Article

Mar 2021

Laura Grant

The largest charity‐ratings organization evaluates thousands of charities with combined annual donations of $100 billion. Because charities' initial rating occurs at different times, in random order, I can estimate how the introduction of the ratings affects giving. Donations decrease by 5%–9%, on average. The pattern is intuitive: Donations to highest‐rated (4‐star) charities are stable. Yet for each consecutive star lower, donations decrease, with 1‐star charities losing 12%–14%. I also impute each charity's ratings for years before being rated determine the effect of prior information. Annual losses for the rated charities are approximately $2 billion. Several reasons for the losses are discussed including salience of information, donor expectations, and charity visibility.

NGO Accountability: A Conceptual Review across the Engaged Disciplines

Article

Mar 2021

Marcel Kaba

Non-governmental organizations (NGOs) are pivotal actors in international affairs. They manage billions of dollars in funding, work all around the world, and shape global policies and standards. It thus comes as no surprise that the subject of accountability has drawn the interest of an increasing number of scholars across disciplines. Though there seems to be agreement about its desirability, accountability is also described as chameleon-like and ambiguous. And despite calls for more cross-disciplinary learning and conceptual clarity, there does not exist a comprehensive review of accountability conceptualizations across and within disciplines, or how the different meanings relate to each other. Based on the conceptual review of 217 research articles published within the last twenty years, this study identifies and analyzes conceptualizations of accountability in the major journals of five engaged disciplines: accounting, development studies, international relations and political science, organization studies and management, and public administration. Integrating this broad scholarship reveals that: (1) there exist 113 different conceptualizations of accountability, 90 of which are rarely used and appear in less than 5 percent of all analyzed articles, (2) scholars have used forty-three different conceptualizations in 2019 compared to seventeen conceptualizations in 2009, (3) many conceptualizations refer to same phenomena by different name (duplication), and different phenomena by the same name (conflict), and that (4) conceptual ambiguity contributes to ambiguity among the forty different terms used to measure and operationalize accountability. These findings illustrate a lack of cross-disciplinary learning and accumulation of knowledge, and suggest that new conceptualizations be introduced only if one or more of the 113 existing ones don't already capture an idea sufficiently. The purpose of this article is to serve as a concept map for scholars when debating and charting new directions for the study of accountability.

Dynamics of International Giving: How Heuristics Shape Individual Donor Preferences

Article

Nov 2020

State restrictions on nongovernmental organizations (NGOs) have become increasingly pervasive across the globe. Although this crackdown has been shown to have a negative impact on public funding flows, we know little about how it affects private philanthropy. How does information about crackdown abroad, as well as organizational attributes of nonprofits, affect individual donors’ willingness to donate internationally? Using a survey experiment, we find that learning about repressive NGO environments increases generosity in that already-likely donors are willing to donate substantially more to legally besieged nonprofits. This generosity persists when mediated by two organizational-level heuristics: NGO issue areas and main funding sources. We discuss the implications of our results on how nonprofits can use different framing appeals to increase fundraising at a time when traditional public donor funding to such organizations is decreasing.

Reputationsmanagement von öffentlichen und zivilgesellschaftlichen Organisationen -- und die damit verbundenen Konzepte Leistung, Transparenz und Rechenschaftspflicht

Preprint

Full-text available

Sep 2020

In den letzten Jahrzehnten hat das Streben nach Effizienz und Effektivität des Managements viele öffentliche und zivilgesellschaftliche Organisationen verändert. Viele öffentliche Organisationen – wie z.B. die deutschen öffentlichen Universitäten im oben beschriebenen Fall – haben sich im Zuge der New Public Management Reformen als eigenständige Einheiten neu organisiert. Eine solche Umstrukturierung hat die Chance erhöht, dass kontextspezifische Management- und Führungspraktiken eingeführt werden. So können die öffentlichen Universitäten nun beispielsweise freier über die Verwendung der Mittel entscheiden. Die Umstrukturierung hat jedoch auch die Notwendigkeit erhöht, dass die Organisationen ihre Leistungen managen und darüber berichten, um somit langfristig ihre Reputation gegenüber externen Stakeholdern aufzubauen. Dies können sie erreichen, indem sie das richtige Maß an Transparenz wahren und ihren Stakeholdern gegenüber Rechenschaft ablegen. Öffentliche Universitäten bemühen sich nun mehr um ihr Image, z.B. indem sie Hochglanzbroschüren drucken und ihre Jubiläen feiern. Gleichzeitig wird von ihnen mehr Transparenz bezüglich ihrer Prozesse und Wirkungsbereiche erwartet. Wenn zivilgesellschaftliche Organisationen für den Staat die Erbringung öffentlicher Leistungen übernehmen, dann geschieht dies zunehmend auf Basis von Leistungsverträgen mit komplexen Leistungs- und Zielvereinbarungen. Infolgedessen ist bei zivilgesellschaftlichen Organisationen die Notwendigkeit gestiegen, ihre Leistung, ihre Reputation, ihre Transparenz und ihre Rechenschaftspflicht gegenüber staatlichen Akteuren zu verwalten und zu steuern. Auch die Erwartungen privater Geldgeber/innen sind gestiegen, weil Skandale im Zusammenhang mit dem Missbrauch von Spendengeldern Spender/innen sensibilisiert haben (in Österreich z.B. der berüchtigteWorld Vision Skandal von 1998, der schließlich zur Einführung des österreichischen Spendengütesiegels führte). Aktuelle Trends in Richtung Venture Philanthropy und Impact Investment haben die Anforderungen privater Geldgeber/innen in Hinblick auf die Rechenschaftslegung von NPOs weiter erhöht.

Incentivizing Regulatory Participation: Effectiveness of a Fundraising Levy

Article

Mar 2020

In the absence of a statutory instrument to enforce payment of a regulatory fee, regulators must rely on a combination of “carrots” and “sticks” to encourage financial contributions by the organizations they oversee. In contrast to studies of public funding of nonprofits, this article empirically evaluates the effectiveness of a government policy to rely on nonprofit funding of statutory regulation. The authors exploit a sharp discontinuity in the eligibility threshold for charities contributing to the new Fundraising Regulator in England and Wales to estimate a causal effect of the levy on participation. The article shows that the regulator's threat to “name and shame” was effective at incentivizing regulatory participation and generating income, but it raises some concerns about the long‐term viability of this approach. The results are significant at a time when many jurisdictions are considering how best to fund the regulation of nonprofits.

Is Civil Society Self-Regulation Effective? The case of Roman Third-Sector and “Mafia Capitale” Scandal

Article

Dec 2019

Domenico Carolei

How the number of options affects prosocial choice

Article

Nov 2019
INT J RES MARK

Are potential contributors more likely to support a prosocial cause when presented with few contribution options or with many options? Across four studies—an analysis of archival contribution data from the crowdfunding site Kickstarter, a field experiment conducted in cooperation with a grocery store and a snack bar company, and two controlled laboratory experiments—we consistently find that when a fundraiser offers more options to potential contributors, the likelihood of contribution initially decreases and then increases. The result is a U-shaped relationship between the number of contribution options and contribution likelihood. We do not find such an effect for non-prosocial choices. With a fifth study, we offer a preliminary and tentative theoretical explanation for the U-shaped relationship, suggesting that the type of information processing by the decision maker (intuitive rather than deliberate) underlies this effect.

The Effects of Nonprofit Accountability Ratings on Donor Behavior

Article

Full-text available

Feb 2008

Margaret F. Sloan

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.

When is Administrative Efficiency Associated With Charitable Donations?

Article

Full-text available

Mar 2007

Whether accounting measures of administrative efficiency affect donations is an important issue for nonprofit managers. Prior research is inconclusive. Some studies find a significant negative relation, whereas others find no significant relation. The authors investigate a variety of reasons for the prior divergent results. The evidence is consistent with donors reducing contributions to organizations reporting higher administrative expense ratios when the ratios are presumably most relevant and reliable. The authors suggest that certain prior studies failed to find significant associations largely because their samples contained many organizations for which the administrative ratios were unreliable or not helpful for donor needs. Model specification issues also affect prior studies but are less critical than sample composition. When the authors replicate prior studies on samples containing established, donation-dependent organizations with nontrivial amounts of fund-raising and administrative expenses, they generally detect a significant negative association.

An Investigation of Fraud in Nonprofit Organizations: Occurrences and Deterrents

Article

Full-text available

Sep 2007

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.

Agency Theory in the Not-for-Profit Sector: Its Role at Independent Colleges

Article

Full-text available

Jun 2000

David E Olson

Agency theory has long been studied in the corporate setting and used to explain performance in management and in boards of directors. However, little has been done to extend this research into the area of not-for-profits. Using data collected from member institutions of the Council of Independent Colleges, relationships between boards of trustees and presidential demography and institutional performance were examined. Data were analyzed using panel regression with a separate panel for each year’s data and for each of the responding schools. Using revenue and gift income as dependent variables, it was found that increases in the size, average tenure, and level of business executive background on a board led to subsequent increases in performance for the institution. Diversity of the board had mixed results, whereas presidential tenure improved performance. These findings partially support the hypotheses and extend the explanatory reach of agency theory into the not-for-profit sector.

Rankings and Reactivity: How Public Measures Recreate Social Worlds

Article

Full-text available

Jul 2007

Recently, there has been a proliferation of measures responding to demands for accountability and transparency. Using the example of media rankings of law schools, this article argues that the methodological concept of reactivity-the idea that people change their behavior in reaction to being evaluated, observed, or measured-offers a useful lens for disclosing how these measures effect change. A framework is proposed for investigating the consequences, both intended and unintended, of public measures. The article first identifies two mechanisms, self-fulfilling prophecy and commensuration, that induce reactivity and then distinguishes patterns of effects produced by reactivity. This approach demonstrates how these increasingly fateful public measures change expectations and permeate institutions, suggesting why it is important for scholars to investigate the impact of these measures more systematically.

REINVENTING ENVIRONMENTAL REGULATION FROM THE GRASSROOTS UP

Article

Full-text available

Archon Fung

Commensuration as Social Process

Article

Full-text available

Nov 2003

Although it is evident in routine decision-making and a crucial vehicle of rationalization, commensuration as a general social process has been given little consideration by sociologists. This article defines commensuration as the comparison of different entities according to a common metric, notes commensuration's long history as an instrument of social thought, analyzes commensuration as a mode of power, and discusses the cognitive and political stakes inherent in calling something incommensurable. We provide a framework for future empirical study of commensuration and demonstrate how this analytic focus can inform established fields of sociological inquiry.

The Behavioral Assumptions of Policy Tools

Article

Full-text available

May 1990
J POLIT

This paper provides a framework to analyze the implicit or explicit behavioral theories found in laws, regulations, and programs. The analysis focuses on policy tools or instruments and the underlying behavioral assumptions that guide their choice. We begin with the premise that public policy almost always attempts to get people to do things they otherwise would not have done, or it enables them to do things they might not have done otherwise. Policy tools are used to overcome impediments to policy-relevant actions. The five broad categories of tools we identify--authority, incentives, capacity-building, symbolic and hortatory, and learning--make different assumptions about how policy relevant behavior can be fostered. We contend that policy tools are essentially political phenomena, and that policy participation in the form of compliance, utilization, and other forms of "coproduction" is an important form of political behavior deserving of greater attention by political science.

Accountability Myopia: Losing Sight of Organizational Learning

Article

Full-text available

Mar 2005

Alnoor Ebrahim

This article challenges a normative assumption about accountability in organizations: that more accountability is necessarily better. More specifically, it examines two forms of "myopia" that characterize conceptions of accountability among service-oriented non-profit organizations: (a) accountability as a set of unconnected binary relationships rather than as a system of relations and (b) accountability as short-term and rule-following behavior rather than as a means to longer-term social change. The article explores the effects of these myopias on a central mechanism of accountability in organizations—evaluation—and proposes a broader view of accountability that includes organizational learning. Future directions for research and practice are elaborated.

Substantive and Reflexive Elements in Modem Law

Article

Full-text available

Apr 2006

Gunther Teubner

The most comprehensive efforts to develop a new evolutionary approach to law are found in the work of Nonet and Selznick in the United States and Habermas and Luhmann in Germany. While these theorists are concerned with a common problem-the crisis of formal rationality of law-they differ drastically in their accounts of the problem and their vision of the future. This paper tries to resolve these differences by first decomposing and then restructuring the diverse neo-evolutionary models. Using a more comprehensive model of socio-legal covariation, the author identifies an emerging kind of legal structure which he calls reflexive law. Reflexive law is characterized by a new kind of legal self-restraint. Instead of taking over regulatory responsibility for the outcome of social processes, reflexive law restricts itself to the installation, correction, and redefinition of democratic self-regulatory mechanisms. The author identifies areas of private law in which reflexive solutions are arguably emerging, and he spells out the consequences which a concern for reflexivity has for a renewed sociological jurisprudence.

A Loss of Credibility: Patterns of Wrongdoing Among Nongovernmental Organizations

Article

Full-text available

Dec 2004

This paper analyzes, from a cross-national perspective, publicized incidents of wrongdoing by nongovernmental organizations (NGOs). A content analysis of media reports of scandals over the past four years involving NGOs was conducted to identify issues and trends in governance and management problems. The analysis is confined to NGOs that are involved in the financing and/or delivery of health and human services in order to facilitate comparisons. International and U.S. cases of wrongdoing, covering the gamut of embezzlement to mismanagement, are identified and the common elements and unique features of these cases are examined. The underlying problems that allowed these cases to occur and their implications in regard to NGO credibility and public trust are identified and options for enhancing accountability explored.

Trust, Repute and the Role of Non-Profit Enterprise

Article

Full-text available

Jun 1997

This article examines the trust hypothesis: the claim that asymmetric information can explain the existence of non-profit enterprise in certain markets. We argue that this hypothesis, in order to be viable, has to meet three challenges: ‘reputational ubiquity’, ‘incentive compatibility’ and ‘adulteration’. Drawing on modern agency theory, we conclude that the trust hypothesis stands on shaky ground. It can be sustained only under particular conditions that have been neither carefully described in theory nor subject to empirical assessment. The available evidence, patchy and inadequate as it is, seems to suggests that there are some ownership-related differences in aspects of organisational performance connected with asymmetric information. However, there is little evidence that this relates to trustper se or provides a rationale for the existence of non-profit ownership in these industries. We conclude with a plea for substantial research on consumer expectations and provider motivations.

ACCOUNTABILITY MYOPIA: LOSING SIGHT OF ORGANIZATIONAL LEARNING.

Article

Aug 2003

Alnoor Ebrahim

This article discusses the application of the term 'accountability' in nonprofit organizations. The term is frequently described as the means by which individuals and organizations report to a recognized authority and are held responsible for their actions or as the process of holding actors responsible for actions. This perspective focuses on accountability as being external to an organizational actor, in that an external principal holds an agent to account. This internal dimension of accountability is motivated by a felt responsibility as expressed through individual action and organizational mission. Accountability relationships are complicated by the fact that organizations often deal with competing accountability demands from patrons and donors, clients and beneficiaries, and internally to themselves in the sense of responsibility to mission and staff. Given that many nonprofit organizations are simultaneously accountable to numerous actors, these relations may be said to form a system of accountability. It is easy to overstate the potential benefits of outcome measurement, especially in terms of organizational learning. Proponents contend that it provides superior information as part of a system in which information is fed back into planning systems and goals.

Green Clubs and Voluntary Governance: ISO 14001 and Firms' Regulatory Compliance

Article

Apr 2005
AM J POLIT SCI

Voluntary programs have become widespread tools for governments and nongovernmental actors looking to improve industry's environmental and regulatory performance. Voluntary programs can be conceptualized as club goods that provide nonrival but potentially excludable benefits to members. For firms, the value of joining a green club over taking the same actions unilaterally is to appropriate the club's positive brand reputation. Our analysis of about 3,700 U.S. facilities indicates that joining ISO 14001, an important nongovernmental voluntary program, improves facilities' compliance with government regulations. We conjecture that ISO 14001 is effective because its broad positive standing with external audiences provides a reputational benefit that helps induce facilities to take costly progressive environmental action they would not take unilaterally.

Separation of Ownership and Control

Article

Jan 1983

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.

Voluntary Regulation of NGOs and Nonprofits: An Accountability Club Framework

Book

Nov 2010

How can nonprofit organizations and NGOs demonstrate accountability to stakeholders and show that they are using funds appropriately and delivering on their promises? Many nonprofit stakeholders, including funders and regulators, have few opportunities to observe nonprofit internal management and policies. Such information deficits make it difficult for 'principals' to differentiate credible nonprofits from less credible ones. This volume examines a key instrument employed by nonprofits to respond to these challenges: voluntary accountability clubs. These clubs are voluntary, rule-based governance systems created and sponsored by nongovernmental actors. By participating in accountability clubs, nonprofits agree to abide by certain rules regarding internal governance in order to send a signal of quality to key principals. Nonprofit voluntary programs are relatively new but are spreading rapidly across the globe. This book investigates how the emergence, design, and success of such initiatives vary across a range of sectors and institutional contexts in the United States, the Netherlands, Africa, and Central Europe.

Full Disclosure: The Perils and Promise of Transparency

Article

Jan 2007

Which SUVs are most likely to rollover? What cities have the unhealthiest drinking water? Which factories are the most dangerous polluters? What cereals are the most nutritious? In recent decades, governments have sought to provide answers to such critical questions through public disclosure to force manufacturers, water authorities, and others to improve their products and practices. Corporate financial disclosure, nutritional labels, and school report cards are examples of such targeted transparency policies. At best, they create a light-handed approach to governance that improves markets, enriches public discourse, and empowers citizens. But such policies are frequently ineffective or counterproductive. Based on an analysis of eighteen U.S. and international policies, Full Disclosure shows that information is often incomplete, incomprehensible, or irrelevant to consumers, investors, workers, and community residents. To be successful, transparency policies must be accurate, keep ahead of disclosers' efforts to find loopholes, and, above all, focus on the needs of ordinary citizens. © Archon Fung, Mary Graham, and David Weil 2007 and Cambridge University Press, 2009.

The Role of Trust in Nonprofit Enterprise

Article

Jan 2003

Henry Hansmann

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.

Designing Social Inquiry

Book

Jan 1994

The Role of Non-Profit Enterprise

Article

Apr 1980
YALE LAW J

Henry B. Hansmann

Organizational Report Cards

Article

Dec 2000

The nonprofit sector and accountability

Article

Apr 2001

Sara E. Melendéz

The Role Of Institutional and Market Forces In Divergent Organizational Change

Article

Dec 2000

This paper focuses on a radical change, in which organizations abandon an institutionalized template for arranging their core activities, that is likely to occur in organizational fields that have strong, local market forces and strong but heterogeneous institutional forces. We examine the role of market forces and heterogeneous institutional elements in promoting divergent change in core activities among all U.S. rural hospitals from 1984 to 1991. Results support the view that divergent change depends on both market forces (proximity to competitors, disadvantages in service mix) and institutional forces (state regulation, ownership and governance norms, and mimicry of models of divergent change).

Public Confidence in Charitable Nonprofits

Article

Feb 2008

Michael O'Neill

There has been much talk in recent years of a "crisis of confidence in charities" in the United States. This article presents a conceptual framework for analyzing the issue and reviews attitudinal and behavioral data relevant to public confidence in the nonprofit sector generally and major nonprofit subsectors. The article concludes that the "crisis of confidence" hypothesis is not supported by the evidence.

Do Charitable Donors Know Enough--and Care Enough--About Government Subsidies to Affect Private Giving to Nonprofit Organizations?

Article

Mar 2005

Christopher S. Horne

A large body of research has examined the effect of government subsidies to nonprofit organizations on philanthropy, with the preponderance of evidence suggesting that government funding partially displaces or “crowdsout”private giving. Such studies assume that charitable donors are aware of the amount of government funding received by their beneficiary charitable organizations and that they act on this information when determining how much money to donate. This study assesses the validity of these heretofore untested assumptions. After comparing the “best guesses” of survey respondents (N = 675) to the actual amount of government funding received by the charitable organizations to which they have donated money, the assumption of donors’ knowledge about government funding is found to be met only very weakly. Furthermore, few respondents anticipate changing giving behavior due to government subsidies. These findings suggest the need to explore explanations of crowding out beyond those assumed under current theory.

Rationality and Politics: What Really Goes on When Funders Evaluate the Performance of Fundees?

Article

Sep 1996

This article provides an in-depth case study of the process by which a funder evaluates the performance of a client nonprofit agency in the social services sector. The connection between the evaluation and the subsequent funding decision is also explored. A framework for uncovering the basic dimensions of the evaluation process is presented and applied to the evaluator-evaluatee relationship studied. Various points at which perceptions of the relationship got distorted are identified. The evaluation process was found to be a subtle and complex interaction of formally rational methods and nonformal subjective judgments. The implications of these findings for practical improvements to the evaluation process are discussed.

The Market for “Lemons”: Quality Uncertainty and the Market Mechanism

Article

Nov 1969

George Akerlof

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.

The Modern Corporation and Private Property ~McMillan

Article

Jan 1932

Adolf A. Berle

The Modern Corporation And Private Property

Article

Nov 1969

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.

Racing to the Bottom? Trade, Environmental Governance, and ISO 14001

Article

Apr 2006

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.

Using Organizational Report Cards

Article

Jan 2004

William T. Gormley

The Effects of New York's Bypass Surgery Provider Profiling on Access to Care and Patient Outcomes in the Elderly

Article

Oct 1998

Objective: The aim of this study was to examine the effects of provider profiling on bypass surgery access and outcomes in elderly patients in New York. Background: Since 1989, New York (NY) has compiled provider-specific bypass surgery mortality reports. While some have proposed that "provider profiling" has led to lower surgical mortality rates, critics have suggested that such programs lower in-state procedural access (increasing out-of-state transfers) without improving patient outcomes. Methods: Using national Medicare data, we examined trends in the percentages of NY residents aged 65 years or older receiving out-of-state bypass surgery between 1987 and 1992 (before and after program initiation). We also examined in-state procedure use among elderly myocardial infarction patients during this period. Finally, we compared trends in surgical outcomes in NY Medicare patients with those for the rest of the nation. Results: Between 1987 and 1992, the percentage of NY residents receiving bypass out-of-state actually declined (from 12.5% to 11.3%, p < 0.01 for trend). An elderly patient's likelihood for bypass following myocardial infarction in NY increased significantly since the program's initiation. Between 1987 and 1992, unadjusted 30-day mortality rates following bypass declined by 33% in NY Medicare patients compared with a 19% decline nationwide (p < 0.001). As a result of this improvement, NY had the lowest risk-adjusted bypass mortality rate of any state in 1992. Conclusions: We found no evidence that NY's provider profiling limited procedure access in NY's elderly or increased out-of-state transfers. Despite an increasing preoperative risk profile, procedural outcomes in NY improved significantly faster than the national average.

Regulation and the Theory of Agency

Article

Jun 2005
Rev Pol Res

Barry M. Mitnick

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.

Effects of Watchdog Organizations on the Social Capital Market

Article

Dec 2003

Jordan E. Silvergleid

This chapter examines the effects that watchdog agency evaluations of nonprofit organizations have on private donations.

Beyond the Magic Bullet: NGO Performance and Accountability in Post-Cold War World

Article

Nov 1995
J Int Dev

The Problem of Social Cost*

Article

Jul 2006
AM J ECON SOCIOL

Larry C. Ledebur

WP-00-26 Reengineering Nonprofit Financial Accountability: Toward a More Reliable Foundation for Regulation

Article

Aug 2000

Today, the annual IRS Form 990 tax filing is the principal annual disclosure mechanism of nonprofit organizations. Over time, considerable thought has been put into finding ways to improve access and use of the 990 Form, with only scant attention focused on whether the 990 is the right data source on which to build a system of nonprofit accountability. This paper takes a broader perspective, assessing not only the quality of the financial data and its availability, but also the entire financial reporting model. The paper begins with a framework for thinking about organizational accountability. It then examines the current structure of nonprofit financial reporting and contrasts it with alternative systems developed for publicly traded firms and credit unions. The paper concludes with recommendations for improving nonprofit accountability by reengineering the reporting and oversight systems in the sector.

The Promise and Limits of Collective Action for Nonprofit Self-Regulation: Evidence From Asia

Article

Feb 2008

Mark Sidel

Self-regulation is an increasing mandate in American nonprofit life, but the new focus on self-regulation is not limited to the United States. Nonprofit self-regulation is expanding rapidly in Asia as an expression of collective action to defend against encroaching and increasing state pressures; to strengthen the quality of sectoral governance, services, financial management, and fundraising; to improve public, corporate, media, and other perceptions of nonprofits and charities; to organize an unruly sphere and marginalize lower quality actors or other outliers; to access governmental or donor funding; to act as a market mechanism to exclude competitive or unproductive actors for the benefit of remaining players or to marginalize organizations causing reputational damage to the sector; as a learning opportunity for nonprofits and their networks; and as a means to clarify and strengthen shared identity. This article analyzes the rapid development and forms of nonprofit self-regulation in Cambodia, India, Pakistan, and the Philippines and the motivations behind this rapid growth.

The Interplay Between Law School Rankings, Reputations, and Resource Allocation: Ways Rankings Mislead

Article

Apr 2005

Jeffrey Evans Stake

The law school rankings published by US News and World Report have changed and continue to change the law school world, affecting both the demand and supply sides of legal education. Are the rankings valid? Are they changing schools for the better? The US News rankings mislead both applicants and law schools. As measures of educational quality, the US News rankings are seriously flawed. They overweight criteria that matter little, such as bar pass rate. They exclude criteria that matter greatly, such as job satisfaction. At least two of the seemingly valid criteria incorporated into the US News rankings are illusory; the reputation surveys done by US News do not tap into independent professional opinion but instead measure opinions that are echos of US News and, thus, add little reliability to the results that would be reached on other criteria. A more serious problem is the effect of US News rankings on the operation of law schools and students who desire admission. The rankings have created incentives for students who want to be lawyers to go to schools that have grade inflation and take easy courses at those schools. The US News rankings have created incentives for schools to teach to the bar exam, spend money on glossy publications, raise tuition, increase the number of transfer students, and admit students according to their bubble ability (their aptitude for taking multiple-choice standardized exams) rather than their prospects for contributing to the learning environment at the law school or their prospects for becoming effective and responsible lawyers.

The Problem of Social Cost

Chapter

Dec 2007

Ronald Harry Coase

The Problem to be ExaminedThe Reciprocal Nature of the ProblemThe Pricing System with Liability for DamageThe Pricing System with No Liability for DamageThe Problem Illustrated AnewThe Cost of Market Transactions Taken into AccountThe Legal Delimitation of Rights and the Economic Problem

Regulatory Competition and Environmental Enforcement: Is There A Race to the Bottom?

Article

Oct 2007
AM J POLIT SCI

David M. Konisky

This article examines several of the key hypotheses suggested by the race to the bottom theory in environmental regulation. The research studies annual state-level enforcement of federal air, water, and hazardous waste pollution control regulation, covering the period from 1985 to 2000. Specifically, the study estimates a series of strategic interaction models to examine whether a state's environmental regulatory behavior is influenced by the regulatory behavior of the states with which it competes for economic investment. While there is clear evidence of strategic interaction in state environmental regulatory behavior, states do not respond in the asymmetric manner suggested by the race to the bottom theory.

Trust but Verify? Voluntary Regulation Programs in the Nonprofit Sector

Article

Mar 2010
REGUL GOV

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.

The Effectiveness of Regulatory Disclosure Policies

Article

Dec 2006
J POLICY ANAL MANAG

Regulatory transparency-mandatory disclosure of information by private or public institutions with a regulatory intent-has become an important frontier of government innovation. This paper assesses the effectiveness of such transparency systems by examining the design and impact of financial disclosure, nutritional labeling, workplace hazard communication, and five other diverse systems in the United States. We argue that transparency policies are effective only when the information they produce becomes “embedded” in the everyday decision-making routines of information users and information disclosers. This double-sided embeddedness is the most important condition for transparency systems' effectiveness. Based on detailed case analyses, we evaluate the user and discloser embeddedness of the eight major transparency policies. We then draw on a comprehensive inventory of prior studies of regulatory effectiveness to assess whether predictions about effectiveness based on characteristics of embeddedness are consistent with those evaluations. © 2006 by the Association for Public Policy Analysis and Management

Reengineering Nonprofit Financial Accountability: Toward a More Reliable Foundation for Regulation

Article

Jan 2003
PUBLIC ADMIN REV

The annual Internal Revenue Service Form 990 tax filing is the principal disclosure mechanism for nonprofit organizations. Although considerable efforts have been made to improve the accuracy and accessibility of Form 990, questions remain as to whether this data source is the most desirable foundation for a system of nonprofit accountability. Taking a broad perspective on financial accountability, this article assesses not only the quality and availability of the financial data, but also the entire financial–reporting model. The article develops a framework for thinking critically about nonprofit financial accountability. After examining the current structure of nonprofit financial reporting and contrasting it with alternative systems developed for other industries, the article concludes with recommendations for reengineering nonprofit financial accountability.

Full Disclosure

Book

Governments in recent decades have employed public disclosure strategies to reduce risks, improve public and private goods and services, and reduce injustice. In the United States, these targeted transparency policies include financial securities disclosures, nutritional labels, school report cards, automobile rollover rankings, and sexual offender registries. They constitute a light-handed approach to governance that empowers citizens. However, as Full Disclosure shows these policies are frequently ineffective or counterproductive. Based on a comparative analysis of eighteen major policies, the authors suggest that transparency policies often produce information that is incomplete, incomprehensible, or irrelevant to the consumers, investors, workers, and community residents who could benefit from them. Sometimes transparency fails because those who are threatened by it form political coalitions to limit or distort information. To be successful, transparency policies must place the needs of ordinary citizens at centre stage and produce information that informs their everyday choices.

Covenant with Weak Swords: ISO 14001 and Firms''Environmental Performance

Article

Sep 2005
J POLICY ANAL MANAG

Voluntary environmental programs are codes of progressive environmental conduct that firms pledge to adopt. This paper investigates whether ISO 14001, a voluntary program with a weak sword-a weak monitoring and sanctioning mechanism-can mitigate shirking and improve participants' environmental performance. Sponsored by the International Organization for Standardization (ISO), ISO 14001 is the most widely adopted voluntary environmental program in the world. Our analysis of over 3,000 facilities regulated as major sources under the U.S. Clean Air Act suggests that ISO 14001-certified facilities reduce their pollution emissions more than non-certified facilities. This result persists even after controlling for facilities' emission and regulatory compliance histories as well as addressing potential endogeneity issues between facilities' environmental performance and their decisions to join ISO 14001. © 2005 by the Association for Public Policy Analysis and Management

A Public Management for All Seasons?

Article

Mar 1991
PUBLIC ADMIN

Christopher Hood

This article discusses: the doctrinal content of the group of ideas known as ‘new public management’(NPM); the intellectual provenance of those ideas; explanations for their apparent persuasiveness in the 1980 s; and criticisms which have been made of the new doctrines. Particular attention is paid to the claim that NPM offers an all-purpose key to better provision of public services. This article argues that NFM has been most commonly criticized in terms of a claimed contradiction between ‘equity’ and ‘efficiency’ values, but that any critique which is to survive NPM's claim to ‘infinite reprogrammability’ must be couched in terms of possible conflicts between administrative values. The conclusion is that the ESRC'S Management in Government’ research initiative has been more valuable in helping to identify rather than to definitively answer, the key conceptual questions raised by NPM.

Determinants of Donations in Private Nonprofit Markets

Article

Feb 2000
J PUBLIC ECON

We estimate the responsiveness of donations to a number of economic variables, including price, advertising, and the availability of revenue from such other sources as government grants and program service sales. Utilizing a set of IRS data on individual nonprofit organizations in each of seven industries — including hospitals and higher education — for the years 1982–1994, we find distinct overall patterns as well as notable variation across industries. A nonprofit organization’s fundraising expenditures are estimated to exert two countervailing effects on donations — the direct, advertising and information, effect augments donations, while the indirect effect, on the ‘price’ of donating, has a negative effect. We do not find evidence that fundraising is carried to the profit-maximizing levels. In some industries fundraising is substantially short of that level, while in other industries it is excessive, implying that the marginal return to fundraising is exceeded by the cost. Focusing on whether revenue from other sources affects donations to a nonprofit organization, we find evidence that revenue from either government grants or from the organization’s own program sales activity generally does not crowd-out private donations. To the contrary, in most industries there are significant positive effects.

Information As Regulation: The Effect of Community Right to Know Laws on Toxic Emissions

Article

Jan 1997

There is growing academic and policy-level interest in the use of information as quasi-regulatory mechanisms, such as toxic release inventory (TRI) and “green labels.” Mandatory disclosure requirements have been touted as “market-based incentives” that may affect firm behavior. We provide new evidence on the effectiveness of disclosure requirements by examining firm behavior in response to disclosures of TRI emissions. We find that firms with the largest stock price decline on the day this information became public subsequently reduced emissions more than their industry peers. This is consistent with the view that financial markets may provide strong incentives for firms to change their environmental behavior.

The Impacts of the 'Right to Know': Information Disclosure and the Violation of Drinking Water Standards

Article

Mar 2008

Information disclosure regulations are increasingly common, but their effects on the behavior of regulated firms are unclear. The 1996 Amendments to the Safe Drinking Water Act mandated that community drinking water suppliers issue to customers annual consumer confidence reports (CCRs), containing information on violations of drinking water regulations and on observed contaminant levels. We examine the impact of mandatory information provision on drinking water violations by 517 community water systems in the Commonwealth of Massachusetts from 1990 to 2003. Results suggest that larger utilities required to mail CCRs directly to customers reduced total violations by between 30% and 44% as a result of this policy, and reduced the more severe health violations by 40–57%.

Charity Watchdogs and the Limits of Information-Based Regulation

Abstract

No full-text available

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