Private nonprofit organizations comprise a vast and growing sector of the national economy, and they are a vital partner with government in the provision of a wide range of social and human services.(1) Growth in the size and influence of the nonprofit sector has led to increased visibility and public scrutiny by diverse stakeholders including government oversight agencies, private donors and foundations, clients, the media, and the public at large.
Anyone who doubts the growing importance of accountability in the nonprofit sector need only scan the headlines of the professional periodicals and newspapers for evidence to the contrary. One recent issue of The Chronicle of Philanthropy (January 26, 1993) contained stories on: the attempts of a special Senate committee to crack down on lax financial reporting by selected charities; modifications of IRS = forms requesting more information on salaries of charities' top officials; a report from California's attorney general on nonprofit fund raising in that state; and the reluctance of charities to conduct performance evaluations of their volunteers.
Attention to issues of accountability in the nonprofit sector is not a new phenomenon (Commission on Private Philanthropy and Public Needs, 1975). In fact, public scrutiny and controversy over the appropriate role of the sector has existed for more than 200 years, since the emergence of the third sector in the United States (Hall, 1987a). The debate was revived with intensity following last years controversy in the national office of the United Way of America which sparked a fire storm of interest in the national media, among the general public, and especially in nonprofit professional circles. Today, throughout the nonprofit sector, there is renewed interest in issues such as: measuring the value-added performance of nonprofit organizations in terms of actual outcomes and impacts (Kanter and Summers, 1987; O'Connell, 1988; Drucker, 1990); ensuring that trustees and other volunteers understand and fulfill their legal and professional responsibilities (Dayton, 1987; Carver, 1990; Panus, 1992); public disclosure of operating practices related to fund raising and executive compensation (Council of Better Business Bureaus, 1982; Hills Bush, 1992; Kahn, 1992); and fulfilling explicit or implicit obligations associated with public subsidies (i.e., tax exemptions) of nonprofit activities (Ackerman, 1982; Simon, 1987; Gaul and Borowski, 1993).
Rationale for Focusing on Accountability in Nonprofit Organizations
The general notion of accountability is quite familiar to most government officials, whether elected or appointed, but perhaps less familiar to nonprofit professionals. In the substantial literature dealing with distinctions between public and private management, the contributing elements of accountability-political constituencies, public mandates, oversight agencies, checks and balances, and media scrutiny--are presented as core differences in the respective managerial contexts of governmental and for-profit organizations (Allison, 1980; Miles, 1982, pp. 39-41). Also, accountability is a prevalent theme in the curricula of schools of public policy and management. Therefore, even before they begin their careers, prospective public servants are exposed to the concept of managing public expectations and working within specific legal and procedural frameworks of accountability.
In the business sector, as well, the concept of public accountability has received more attention in the last three decades. Today, most standard business texts contain chapters on social responsibility, business ethics, and interactions with government, and many business schools now offer full courses on these topics.
The interest in accountability in government and business has produced a wealth of literature on the topic that has focused on operational definitions of accountability (Shafritz, 1992, p. …