The Disclosure Panacea: A Comparative Perspective on Charity Financial Reporting

This article examines the charity financial reporting regimes of three common law jurisdictions: Ireland, the UK and the US. It assesses whether these respective disclosure models improve either nonprofit behaviour or enforcement odds. Three core aspects of the regimes are reviewed: the reliability of the disclosed information, the consistency of such information and its ability to facilitate comparison between charities, and the level of enforcement arising from disclosure. Particular attention is paid to oversight mechanisms, including audits, and their rates of effectiveness in the regulation of charities. The article examines ongoing efforts to reform broader international accounting standards and considers the impact such moves are likely to have at both regional and national level for charity accountability. It concludes that given the markedly different spheres in which for-profits and nonprofits operate, care should be taken in modelling charity disclosure regimes on those developed for for-profit entities.     

NPO,Internal Controls,and Supervision Mechanisms in a Developing Country

The premise of this paper is that effective supervision and proper internal control system (ICS) can promote accountability and transparency, and this will attract more donors. However, in a developing country like Malaysia, it is common that proper accounting standards are not available, the laws are not enforced, and charities often struggle for survival. Debates on regulating nonprofit organizations (NPOs) have been sensitive to many and are often left unresolved, and some quarters believe that NPOs should be left to handle their own affairs. This paper provides evidence from a survey of 60 charities on the status of their ICS. It briefly describes the current state of regulations in Malaysia and makes a case for better monitoring of the sector, as this might be the reason NPOs are lacking in their ICS. We propose what type of regulation and assistance can be provided by the authorities to this sector, not only in Malaysia but also in other developing countries facing similar challenges.     

Asymmetric obligations

Are people more likely to infringe on a legal obligation if they perceive it as unfair? This question is especially relevant in situations with low potential punishment for disobeying an obligation, i.e., with expressive law. To explore this issue, we present experimental evidence on how expressive law affects behavior if the law defines asymmetric obligations for ex ante identical individuals. To implement expressive law we introduce very weakly incentivized obligations, i.e., minimum contribution levels, in a repeated public goods experiment. Our main finding is that, in an environment with asymmetric obligations, people adhere to their individual obligation to the same extent as in an environment with symmetric obligations. This result is compatible with the argument that expressive law affects behavior by attaching an emotional cost of disobeying the own obligation such as a loss in self-esteem. We only find a significant temporary effect of obligations that vanishes in the long run.     

Charity Watchdogs and the Limits of Information-Based Regulation

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.     

Governing police practice: limits of the new accountability

The advent of public-sector managerialism has brought with it a new principle of police accountability in Western democracies such as Australia and Britain. The new accountability gives emphasis to managerial rather than legal or public-interest standards, favours external oversight combined with self-regulation rather than centralized control, and promotes risk management rather than rule enforcement. This article makes use of the experience of an Australian police force to show that the new accountability has not been successful in holding police accountable, while elements of the old accountability have re-emerged to dominate public debates. It is argued that in the area of police governance, the neo-liberal state does not necessarily pursue a coherent strategy of 'acting at a distance' (cf. Miller and Rose 1990), partly because of the inability of accountability technologies to deliver substantially the promised policy outcomes and partly because of the sensitivity of its political arm to the public's moral outrage against corruption (cf. Garland 1996).     

Public reporting: A neglected aspect of nonprofit accountability

Nonprofit organizations have a compulsory external accountability (largely involving financial reporting) to government agencies such as the Internal Revenue Service and state regulators. They also have a pragmatic “must‐do” accountability to their funders, clients, and other obvious stakeholders. But are nonprofits also accountable to the public at large? If so, how can such accountability be implemented, given the diffuseness and breadth of the public as an audience? This article suggests that nonprofits should consider the citizenry as a stakeholder, if only due to the substantial taxpayer subsidy of the sector. The theory of public reporting that emerged in public administration literature beginning in the 1920s and 1930s can be helpful. Using principles, templates, and examples from public administration, nonprofit organizations can pursue more vigorous public reporting as one method to increase citizen confidence in their activities and in the sector as a whole.     

Conversion Ratios, Efficiency and Obfuscation: A Study of the Impact of Changed UK Charity Accounting Requirements on External Stakeholders

Key stakeholders in the UK charity sector have, in recent years, advocated greater accountability for charity performance. Part of that debate has focussed on the use of conversion ratios as indicators of efficiency, with importance to stakeholders being contrasted with charities’ apparent reluctance to report such measures. Whilst, before 2005, conversion ratios could have been computed from financial statements, changes in the UK charity SORP have radically altered the ability of users to do this. This article explores the impact on the visibility of such information through an analysis of the financial statements of large UK charities before and after the 2005 changes. Overall, the findings suggest that, despite the stated intention of increasing transparency in respect of charity costs, the application of the changes has resulted in charities ‘managing’ the numbers and limiting their disclosures, possibly to the detriment of external stakeholders.     

Social accountability as social movement outcome: Protests in a Chinese city

ABSTRACT

Social accountability is a concept that has been used much in development studies and democratic theory to study informal ways for civil society to achieve social change and hold governments accountable. Surprisingly, it has been far less used in social movement scholarship and we argue that social accountability, understood as a combination of answerability, legal claim attainment, and sanction, is a useful way to examine social movement outcomes in China. Social accountability directs the focus of research towards the target of protest and not only whether the protest resulted in policy changes or not. Based on field work in 2013–2015, this article examines four cases of social protests in the Chinese city of Hangzhou. In line with previous research we find that when citizen claims accord with government policies and protesters are well-organized, local authorities tend to accommodate the protesters’ claims. However, answerability and sanction do not always follow the same pattern. Answerability can be relatively high also when legal claims are unsuccessful. This means that cases that are commonly seen as unsuccessful protests because the legal demands were not accommodated may still result in partial social accountability. In addition to the presentation of original empirical findings, the study makes a theoretical contribution by linking the two research fields of social movement and social accountability, which will be of interest to a wider scholarly audience.     

Should NPOs Follow International Standards for Financial Reporting? A Multinational Study of Views

Financial reporting is an important aspect of not-for-profit organisations’ (NPOs’) accountability. Globally, numerous and varying regimes exist by which jurisdictions regulate NPO financial reporting. This article explores whether NPOs should be required or expected to follow sector-specific international financial reporting standards. We investigate stakeholder perceptions on the nature and scope of any such developed standards, interpreting our findings through the lens of moral legitimacy. Using an international online survey of stakeholders involved in NPO financial reporting, we analyse 605 responses from 179 countries. Based on our findings, we argue that diverse stakeholder groups, especially those who are involved with NPO financial reporting in developing countries, are likely to grant moral legitimacy to developed NPO international accounting standards if the consequences are to enhance NPO accounting and accountability information, subject to agreement as to whether all or only NPOs of a certain size should comply and whether any such standards should be mandatory.     

Immigration Detention under the Global Compacts in the Light of Refugee and Human Rights Law Standards

The article explores how immigration detention is addressed in the Global Compact on Refugees (GCR) and Global Compact for Safe, Orderly and Regular Migration (GCM) and investigates the potential implications of the compacts on the existing legal framework regulating the use of immigration detention. While Objective 13 of the GCM largely reflects detention‐related standards under international human rights law, the GCR makes only scarce references to detention in §60. Overall, the compacts risk inhibiting gradual endorsement of the norm of non‐detention of children. On the other hand, they rightly restate the priority for alternatives to detention for adults. States should implement the provisions of the compacts in line with their obligations under international human rights and refugee law. The compacts cannot be used as a pretext to lower domestic detention‐related standards or to diminish the validity of the existing framework governing immigration detention.     

Accountability and nonprofit organizations: An ethical perspective

Given limited market regulation and no direct voter regulation, how nonprofit organizations can be made accountable is a serious and long-standing issue for the sector. The expectations and demands of various constituent groups associated with nonprofits are often conflicting and even contradictory. Nonprofits need to come to terms with legitimate expectations, base them on reasonable standards, and work through each of them in ways consistent with the others and with the respective missions of the organizations.     

The influence of accountability for the crisis and type of crisis communication on people’s behavior,feelings and relationship with the government

In this paper we investigated to what extent the willingness of people to take advice from the local government, people’s feelings of collective efficacy and empowerment, and their relationship with the local government, is dependent on whether the local government was accountable for the crisis or not. In addition, we were interested in the influence of empathic versus neutral crisis information on people’s behavior, feelings and their relationship with the local government. The results indicate that people’s intention to follow the advice of the local government is generally high, even when the local government is held accountable for the crisis. However, accountability negatively influenced people’s relationship with the local government, as well as collective efficacy. Our research shows that this negative outcome for people’s relationship with the local government cannot be countered by empathic crisis information. However, conveying empathic concern in the crisis information did enhance level of collective efficacy.     

Accountability in Action?: Program Evaluation in Nonprofit Human Service Agencies

Program evaluation can be used as an excellent tool to promote nonprofit human service organizations' accountability. This article lays out several conditions that need to be met before evaluation achieves its potential. Application of this framework to nonprofits in Dallas, Texas, indicates the usefulness of the approach. Results show that considerable numbers of evaluation are being conducted but that the quality of the research methods and measures is low. This indicates that evaluation cannot currently be said to be providing the level of accountability possible. Additional efforts by all stakeholders to promote the use of evaluation to hold agencies accountable for efforts and results are necessary.     

Racial accountabilities: the legal legibility of racial state violence in the Special State’s Attorney Report on Police Torture in Chicago

Public inquiries command significant political capital for liberal democratic states that premise their authority on being accountable to a generalized public sphere. By attending to the particular relations of visibility that are generated by these investigative state institutions, this article reveals the differentiated forms of legal and political accountability that structure the proceedings and case history of the 2006 Special State’s Attorney Report, which investigated the torture of African American suspects by Chicago police officers under the supervision of former Commander Jon Burge. More specifically, this article documents the racial relations of power that shape how state actors and institutions are made to answer for their conduct, explicating the ‘racial accountabilities’ that mediated this public inquiry as well as the practices of state violence it was tasked with investigating. On the one hand, these forms of accountability focused blame on the individualized actions of particular state actors, abstracting their conduct from the broader systemic conditions that have rendered African American populations vulnerable to racial state violence. On the other hand, this article explains how the forensic gaze deployed throughout the legal investigations into torture reconstituted its victims as objects of law with differential access to its forms of protection and technologies of redress. By detailing the force and dimensions of these racial accountabilities, this article illustrates how public inquiries and other institutions of law can reproduce and extend racial fields of violence while also regenerating public confidence in the efficacy and equality of the state.     

Charity Transgressions, Trust and Accountability

This research demonstrates how sustained charity fraud is supported when organisations do not develop strong accountability links to salient stakeholders. Whilst increased regulation is one response to reduce charity fraud and to increase organisational accountability, regulators seldom recognise the myriad heterogeneous needs of stakeholders. This research explores the tactics employed by beneficiaries and the donating public to escalate their accountability demands on such charities. By preferring the most powerful stakeholders, charities miss the opportunity to design effective processes to discharge accountability to meet their moral obligations to legitimate stakeholders. This article calls for increased ??stakeholder understanding?? by charity governors as a policy to recognise the moral rights of these stakeholders and to reduce charity transgressions.     

Using the lessons learned from US and English law to create a regulatory framework for charities in evolving democracies

The evolving democracies of Eastern Europe and the former USSR republics are keenly interested in establishing charities. They have little law on this issue because their former governments did not encourage the development of charities. This article compares US and English regulation of charities and proposes a regulatory framework based on what the authors believe are the best attributes of both. Although the framework is based on the common law system, it can be adapted to the civil law systems of the Eastern European nations and the former USSR republics. The article includes such issues as developing a body of law, tax relief and creating a regulatory agency.Mr Hopkins is a lawyer with Powers, Pyles & Sutter, 1275 Pennsylvania Ave., N.W., Washington, D.C. 20007, and author ofThe Law of Tax-Exempt Organizations (1992a).Ms Moore is also a lawyer, 5908 N. 35th St., Arlington, Virginia 22207.The authors would like to thank Mssrs Kersi Shroff and Stephen F. Clarke, Senior Legal Specialists, American-British Law Division, Library of Congress, and Mr. William H. Morris, an attorney at Steptoe & Johnson, Washington, D.C., for their kind assistance during the researching of this article.     

The governance of nonprofit organizations: Law and public policy

Who should have the right to set the objectives of nonprofit organizations, hire their managers, set compensation standards, and in general control these organizations? Current law and public policy do not provide answers to these questions. Often, nonprofit organizations are controlled by managers and members of the boards of directors or trustees (many of whom are appointed by management). The goals of these individuals may not best serve the interests of those who support the operation of nonprofit organizations. This article proposes a legal and policy framework for empowering consumers, donors, and sponsors—those who have an economic demand for the nonprofit form of organization. The framework establishes a formal status of membership, accords standing in the court of law to members, enhances direct information dissemination by nonprofit organizations, and empowers state-sponsored agencies to support and oversee nonprofit organizations.     

Is collective bargaining a collective good?

This study argues that legislation imposes on collective bargaining an artificial collective goods characteristic as a legal property, which should be distinguished from collective goods in the economic sense. The law creates an artificial freerider problem. Congressional intent was to require compulsory unionism to the extent that all workers would be required to share in the expenses incurred by the union in the negotiation and administration of collective bargaining agreements. Recent court decisions have attempted to define the obligation of employees, employers, and labor unions in terms of this legislative intent.     

Returns on Fundraising Expenditures in the Voluntary Sector

There has been much interest of late in the relative efficiency of various forms of fundraising activity. It is the purpose of this article to establish the typical returns that might be expected to accrue from a variety of fundraising methods. Based on a postal survey of the United Kingdom's top five hundred fundraising charities, this article presents the average returns for nine different forms of fundraising. The authors also examine whether differences in returns between charities can be explained by size or sector effects.