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Accountability in non-profit organizations introduction to the symposium.

The interest in non-profit organizations is as vital for the wellbeing of a democratic society today as it was when Alexis de Tocqueville wrote about political associations in the early 19th century. There is a renewed attention in the world and a focus on non-profit organizations as their role evolves. Universally, as governments shrink and or become constrained by budgetary aspects at all levels, non-profit organizations are expected to address individual and societal needs by delivering a variety of social programs. As expectations and needs increase for nonprofit organizations, the current economic downturn in the global economy has placed a strain on non-profits organizations in terms of limited resources. As a result, various stakeholders both inside and outside of the organization are requiring non-profit organizations to demonstrate that resources are being used efficiently and effectively. The expectation of accountability for non-profits has increased, along with internal and external reviews and evaluation. Stakeholders are requiring non-profit organizations to conduct various types of evaluations in an effort to meet performance expectations. As a result, non-profits have entered a new era in which they are expected to be accountable for the resources and to demonstrate transparency. This increased focus and attention for accountability and transparency is also a result of misappropriation of funds. What is perceived as "swindling donors" or inefficient spending that includes a significant percentage of contributions spent on high administrative costs and significant compensations for employees has resulted in the demand for transparency. Regardless of the circumstances, non-profits are now increasingly required to increase their efforts in analyzing performance which is costly and time consuming which some argue is taking away from their purpose of delivering a good or service to those in need. The purpose of this symposium is to view and analyze how various non-profits around the world are dealing with the demand of increased measures of performance on non-profit organizations in an effort to address demands and expectations of stakeholders. A better understanding of the actions taken by non-profits and identifying any trends could make a significant contribution to the literature and the wellbeing of the non-profit sector.

The article, Performance Management in the Third Sector: A Literature-Based Analysis of Terms and Definitions, introduces to us the inconsistencies in terminology on performance evaluation facing non-profits. In the competition for scarce resources, non-profit organizations have embraced the importance of accounting for every dollar. Lena Maria Woerrlein and Barbara Scheck have reviewed the current literature and find that the "efficiency principle" is the dominant value in holding non-profit organizations accountable. The authors are critical, and rightfully so, of the central forms being used inconsistently and in some cases, "contradictorily" in measuring the performance of non-profits. The authors indicate that there are no academic articles in the context of performance management that sets forth a holistic overview of overt definitions of terms. They indicate a need for agreed-upon terms in order for credibility to be established in the field. Second, the authors stress the importance of clear concepts shared across the field as an important component for strategic planning and assessment. Third, clarity of terms and definitions are important for when communicating with current donors and potential funders of organizations. It is important for expanding the discipline and academic field of study. The authors make a successful argument in filling the literature gap by showing differences in defining terms through the performance measurement process and by advocating a normative approach on how performance management should be understood in the third sector. The authors suggest recommendations on improving the process based on the work of the Development Assistance Committee (DAC) of the organizations for Economic Cooperation and Development (OECD).

In the article, Accountability reporting in Austrian nonprofit organizations--more than a compliance instrument?, Dorothea Greiling and Sandra Stoetzer begin by postulating that the purpose of performance measurement systems is to demonstrate results. The authors examine the "design" and "instrumental purposes" of Austrian non-profits' performance measurement systems in order to disclose the challenges nonprofit organizations (NPOs) are facing when measuring performance. Their contribution illuminates how NPOs balance both internal management needs and external accountability obligations. The authors base their research findings in "stakeholder theory, contingency theory and resource development theory." Based on the previously mentioned theories guiding their research, the authors found stakeholders expected accountability outcomes to be multifaceted and even competing in some cases within a specific non-profit agency. The authors identify various contingency factors that influence the balance of external accountability with internal management needs in non-profit organizations. They conclude by suggesting that performance evaluation systems utilized by non-profit organizations need to reflect both stakeholders demands and the needs of management operating the daily activities of the nonprofit organization.

The article, Non-Profit accountability in least developed nations: lessons learned from West Africa, by Gregory A. Porumbescu indicates that non-profits play a substantial role in less developed countries by providing basic goods and services, especially in countries where government stability and credibility is routinely challenged. The author conducted a series of training seminars of non-profit managers from Ghana, Nigeria and Burkina to address challenges facing African non-profits in delivering sound accountability through their performance management systems. Using a case study method, the author collected feedback during training sessions in the form of semi-structural face-to-face interviews with selected personnel from West Africa. The findings from this article suggest that establishing mechanisms of accountability to meet all stakeholder demands was extremely difficult. This is a difficult challenge because of the importance viewed by managers in regards to the numerous types of stakeholders with interests in their organization. For instance the respondents indicated that some managers responded differently towards international stakeholders compared to local stakeholders. Also, the respondents tend to suggest that vague line of organizational authority indicating who is responsible for what hinders the accountability process. Furthermore, many employees were unclear of their specific role in the organization or were given too many different "hats to wear." The author suggest that for meaningful measures of performance to be established which demonstrates transparency and accountability in West Africa, organizations are in need of clear lines of authority, discretion and a good understanding of the non-profit organizations mission in administering programs for those in need.

In, Charities and Good Governance: A Case for a Common Measure for Public Accountability, Chester Robinson and Gloria Billingsley raise the question, "will a common yardstick in measuring the social expectations of performing good works in a community ever be established?" The authors provide the reader with specific cases demonstrating that a large portion of donated proceeds actually do not make it to providing goods and services for those in need. The authors cite private entity marketing costs and high administrative overhead as the culprits depleting non-profits of valuable resources. Also, the authors suggest that inefficient and sometimes even questionable non-profit organizations end up spending very little on community programs. All these issues have resulted in placing more accountability on non-profit organizations by donors, funders, and the public. So what mechanisms are available to stakeholders that will hold non-profit organizations accountable without placing too much of a burden on non-profit organizations in the form of measuring performance? One means to holding non-profit organizations accountable is for the Internal Revenue Service to revise tax laws and ensure the charities operate for charitable purposes. The call for such measures is to ensure that bad non-profit organizations are marginalized from exploiting the charitable operating system. Second, the lack of data verification reported by non-profit organizations, and those who regulate the non-profit system, lead some to question the reliability and dependability of performance reporting. The authors call for uniform data verification and reporting systems for non-profit organizations. A final form of accountability is a rating system for non-profit organizations that indicates which NPOs are actually spending the largest portion of proceeds they receive for community goods and services. This will allow the public and potential donors the necessary information they need to support an organization that is utilizing resources most effectively.

One way for establishing reliable measures in measuring the performance of non-profits is to allow a central recognized authority construct an assessment formula such as in the article, Performance Evaluation and Publicity in Higher Education: An Analysis of the CHE-research Ranking of German Business Schools from an Accounting Perspective by Marcel Clermont and Alexander Dirksen. The Center for Higher Education (CHE) in Germany records the benefits of universities by publishing university rankings. This institution balances the challenges with performance measurements and evaluation in the context of cost and activity accounting in financial reporting. The centralized formula utilized by CHE, in an effort to rank German business schools, is quite complicated and according to the authors can lead to misguided incentives for participating business schools. Despite the complicated formula that CHE is using to rank universities, it has numerous limitations that need to be corrected in order to re-establish its credibility such as providing a detailed explanation of the method used for ranking its business schools. A centralized ranking for non-profits should consider the limitations of this model to ensure that such concerns are addressed before it is universally applied.

In Assessing Changing Accountability Structures Created by Emerging Equity Markets in the Non-profit Sector, Cleopatra Grizzle and Margaret F. Sloan deal with the issue of one emerging source of revenue called "Venture Philanthropy." Venture Philanthropists use venture capital funding model for funding philanthropic projects. The revenue provided by these organizations is welcomed by non-profit organizations, especially in a time of fierce competition for resources among non-profit organizations. The author's outline five key elements that make up venture philanthropy.

* Involves a long-term investment for social change;

* A managing partner relationship;

* Accountability for results process;

* Provision of cash and expertise;

* Exit strategy for the donors;

The authors also stress the importance of understanding the demands of venture philanthropy for non-profits because many of these organizations are staffed and managed by employees from the private sector that have tremendous negotiating skills acquired while working in the private sector. By nature, many non-profit managers have never acquired such techniques and can tend to be out maneuvered by these individuals if they are not careful. The author's provide this information about venture philanthropists in hopes of leveling the playing field between them and non-profit organizations. The authors discuss several primary dangers facing non-profit organizations when dealing with venture philanthropists including giving away too many seats on their boards as a tradeoff for their capital.

We find that several common themes tend to emerge from the articles. First, non-profit organizations face the challenge of understanding how to balance the interest of outside stakeholders with the mission of their organizations. As outside pressure increases, non-profits need to focus on an effort to avoid mission creep to distract from the overall strategic purpose of the organization. Non-profit organizations should focus on professionalizing the evaluation process. Of special interest and concern is the need to become better evaluators of their programs by developing, keeping and analyzing more reliable data that can actually demonstrate their overall performance. Using more empirical approaches will be of great value. Non-profit organizations that can demonstrate efficiency and effectiveness through the performance measurement process are more inclined to receive continued funding from outside stakeholders, especially those in emerging funding markets and those receiving funds from governments or foundations. Finally, nonprofits must understand that there are only so many hours in a given day. By strategically planning to balance the interests of the organization, and the clients served, with outside stakeholders, is the best approach for meeting the needs of internal and external stakeholders. Non-profit organizations have a historic role as a key institution of democracy, and have an increased role to address the void left by shrinking governments around the world. Therefore, focusing too much on "proving" efficiency and effectiveness can result in losing their primary orientation which is to support those underserved populations that need goods and services. On the other hand marinating internal control with quality, efficiency and effectiveness are keys for providing services and goods. There is a need to focus on developing the appropriate framework which will assure that the strategic mission is carried out while being responsive to diverse stakeholder's expectations. Non-profits will continue to have a major role in sustaining a viable democratic society. This is a strategic juncture that requires adjustments. To meet these copious demands, non-profits will need to become more entrepreneurial in their approach to balancing these important organizational concerns. The next symposium regarding this topic should examine specific examples of non-profits that are practicing entrepreneurial processes assisting in maintaining accountability and transparency while measuring organizational performance and using this information for organizational learning.

DOROTHEA GREILING

Johannes Kepler University

MICHAEL HARRIS

Tennessee State University

RODNEY STANLEY

Tennessee State University

ACKNOWLEDGEMENTS

Putting such a symposium together involved the cooperation of several organizations and many individuals. To start with, the Johannes Kepler University of Linz and the Tennessee State University provided logistical support that allowed the editors to collaborate on this project. However, without the involvement of the Editorial Board of PAQ and many other practitioners and academicians from all over the world this project could not have come to fruition. These individuals volunteered their time to facilitate the blind review process in order to verify that the quality of the papers met the high standards of this journal. Participants in the review process include the following individuals to whom we are indebted: Ken Chilton, Raymond W. Cox III, Howard A. Frank, Birgit Grueb, Baerbel Held, Yongbeom Hur, Ronald Jon Hy, William Earle Klay, Cynthia Lynch, William C. Rivenbark, Cara Robinson, Meg Streams, Thomas Schillemans, William N. Schwartz, Fred Thompson and Kimberly Triplett. The robust reviews of these individuals helped us decide which papers to accept, as well as, with the more difficult decisions about which ones we must leave out for reasons of quality or relevance.
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Author:Greiling, Dorothea; Harris, Michael; Stanley, Rodney
Publication:Public Administration Quarterly
Date:Jun 22, 2016
Words:2304
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