Call for Greater Accountability within the U.S. Nonprofit Sector

By Smith, Pamela C.; Richmond, Kelly A. | Academy of Accounting and Financial Studies Journal, May 2007 | Go to article overview

Call for Greater Accountability within the U.S. Nonprofit Sector


Smith, Pamela C., Richmond, Kelly A., Academy of Accounting and Financial Studies Journal


ABSTRACT

The U.S. Senate Finance Committee has announced plans to analyze the activities of nonprofit organizations. This analysis is in response to documented incidents of unethical behavior and fiscal mismanagement. As a result, the nonprofit sector has been inundated with calls for greater accountability and ethics among management and employees.

The purpose of this paper is to initiate discussion within the public sector concerning the documented cases of fiscal mismanagement. Incidents of potential corporate malfeasance have raised concern over the applicability of governance reforms within the nonprofit sector, such as the Sarbanes-Oxley Act of 2002. This paper also discusses how certain provisions of the Act may restore confidence in the nonprofit sector as well as improve corporate governance. Awareness of alternative strategies to restore confidence and improve corporate governance within the nonprofit sector is timely for both researchers and management.

INTRODUCTION

According to the American Association of Fundraising Counsel (AAFC), contributions to U.S. nonprofit organizations in 2003 totaled more than $240.7 billion and are estimated to be 2.2 percent of the gross domestic product (AAFC, 2004). Bradley and colleagues in the May 2003 issue of Harvard Business Review argue that there is concern that nonprofit organizations do not use charitable dollars as efficiently as possible to advance their charitable mission (Bradley, Jansen, & Silverman, 2003). This potential lack of efficient flow of funds contributes to the need to examine accountability within nonprofit governance. An examination of nonprofit governance is relevant and timely due to the recent calls by Federal and state regulators to analyze the activities of nonprofit organizations within the United States.

The Senate Finance Committee has raised questions concerning improved corporate governance and accountability within the nonprofit sector. According to Senator Chuck Grassley, it is important for charities to "keep their trust with the American people" (U.S. Senate Committee on Finance, 2004), and many of the problems within nonprofit organizations are based upon poor governance or "failure to abide to best practices". Senator Grassley further argues that the Committee must concentrate on "more general reforms to address recurrent problems in the nonprofit sector" (U.S. Senate Committee on Finance, 2004). The Independent Sector, a coalition of nonprofits and corporations serving to strengthen nonprofit initiatives, commissioned the Panel on the Nonprofit Sector to investigate strategies to improve the oversight and governance of charitable organizations. The Panel was created in order to provide guidance on increased accountability, governance, and ethical conduct within the industry. The Panel calls on nonprofit organizations to implement measures to improve their governance and financial disclosure methods.

Calls for greater accountability within the nonprofit sector have occurred in response to several documented cases of fiscal mismanagement. One of the more prominent cases of fiscal mismanagement emerged amid disclosure of the William Aramony scandal within the United Way (Kolb, 1999). More recently, Oral Suer, former chief executive of the United Way of the National Capital Area, was sentenced to 27 months in prison for his role in a financial scandal involving the charity (Markon, 2004). Gibelman and Gelman (2001) document numerous scandals within the nonprofit sector reported in the press during the period 1992 through 2000. The United Way, Red Cross and New Era Philanthropy are several of the more highly publicized nonprofit scandals involving fiscal mismanagement in the United States. As a result of financial corruption within nonprofit organizations, calls for greater accountability and ethics among boards of directors, members of management, and employees have increased.

This paper discusses the existence of fiscal mismanagement within the nonprofit sector and the empirical research addressing ethical behavior in the nonprofit sector. …

The rest of this article is only available to active members of Questia

Already a member? Log in now.

Notes for this article

Add a new note
If you are trying to select text to create highlights or citations, remember that you must now click or tap on the first word, and then click or tap on the last word.
One moment ...
Default project is now your active project.
Project items

Items saved from this article

This article has been saved
Highlights (0)
Some of your highlights are legacy items.

Highlights saved before July 30, 2012 will not be displayed on their respective source pages.

You can easily re-create the highlights by opening the book page or article, selecting the text, and clicking “Highlight.”

Citations (0)
Some of your citations are legacy items.

Any citation created before July 30, 2012 will labeled as a “Cited page.” New citations will be saved as cited passages, pages or articles.

We also added the ability to view new citations from your projects or the book or article where you created them.

Notes (0)
Bookmarks (0)

You have no saved items from this article

Project items include:
  • Saved book/article
  • Highlights
  • Quotes/citations
  • Notes
  • Bookmarks
Notes
Cite this article

Cited article

Style
Citations are available only to our active members.
Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

(Einhorn, 1992, p. 25)

(Einhorn 25)

1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

Cited article

Call for Greater Accountability within the U.S. Nonprofit Sector
Settings

Settings

Typeface
Text size Smaller Larger Reset View mode
Search within

Search within this article

Look up

Look up a word

  • Dictionary
  • Thesaurus
Please submit a word or phrase above.
Print this page

Print this page

Why can't I print more than one page at a time?

Help
Full screen

matching results for page

    Questia reader help

    How to highlight and cite specific passages

    1. Click or tap the first word you want to select.
    2. Click or tap the last word you want to select, and you’ll see everything in between get selected.
    3. You’ll then get a menu of options like creating a highlight or a citation from that passage of text.

    OK, got it!

    Cited passage

    Style
    Citations are available only to our active members.
    Buy instant access to cite pages or passages in MLA, APA and Chicago citation styles.

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn, 1992, p. 25).

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences." (Einhorn 25)

    "Portraying himself as an honest, ordinary person helped Lincoln identify with his audiences."1

    1. Lois J. Einhorn, Abraham Lincoln, the Orator: Penetrating the Lincoln Legend (Westport, CT: Greenwood Press, 1992), 25, http://www.questia.com/read/27419298.

    Cited passage

    Thanks for trying Questia!

    Please continue trying out our research tools, but please note, full functionality is available only to our active members.

    Your work will be lost once you leave this Web page.

    Buy instant access to save your work.

    Already a member? Log in now.

    Author Advanced search

    Oops!

    An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.