Does Accountability Matter in Performance?: Cases from Charity Navigator

Abstract

As the charitable sector continues to grow, so do concerns over its accountability.  Calls for greater accountability for nonprofits have led to not only an increase in government oversight activities, but also the proliferation of accountability standards within nonprofit communities as the sector has been determined to address the issue through self-regulation efforts.  Given the pervasiveness of the standards movement, the purpose of this study is to evaluate whether and to what extent accountability reforms matter in improving organizational performance.  Various theories (e.g., scientific management and organizational learning theories; resource dependence theory and institutional isomorphism) are explored to understand the nature of the accountability-performance relationship.  Analysis of Charity Navigator data (N=943) indicates that accountability measures are positively associated with financial performance (more efficient in using resources, for example).  Reviewing CEOs’ compensation packages is one of the individual accountability features that is particularly impactful in improving performance.  Additionally, our findings shed light on the expansive scope of the standards movement, highlighting the importance of further investigating the connection between accountability and organizational performance beyond finance.