Accountability: How do we measure it?

By David Simkins

What is accountability?  The simplest definition is someone who is held responsible for their actions.  But in the business or nonprofit world, it goes into much more detail.  

A report from the Harvard Business School defines accountability as “the processes through which an organization makes a commitment to respond to and balance the needs of stakeholders in its decision making processes and activities, and delivers against this commitment”  This report also talks about four basic characteristics to the definition for accountability, which I outline below:

Characteristics of Accountability

1. "Transparency, which involves collecting information and making it available and accessible for public scrutiny;
2. "Answerability or Justification, which requires providing clear reasoning for actions and decisions, including those not adopted, so that they may reasonably be questioned;
3. "Compliance, through the monitoring and evaluation of procedures and outcomes, combined with transparency in reporting those findings; and,
4. "Enforcement or Sanctions for shortfalls in compliance, justification, or transparency" (Alnoor Ebrahim, Harvard Business School)

The Need for Accountability

So why do we have an accountability program?  Why do we care to evaluate our nonprofit organization at all?  Typically, something happens to make us take note that we must be held accountable.  Either something in the industry or something in our own organization happens that makes us or our stakeholders determine that from now on we will be held accountable.  But not always, because many times money can be tied to this decision.  If there is federal money attached to this nonprofit then it will be required by The Government Performance and Results Act of 1993 to have an accountability program or evaluation program of some sort as pointed out by the United States Department of Labor. 

I think for a smaller nonprofit company, it makes sense to have some sort of an accountability or evaluation system because it lets your stakeholders know where you stand.  On a large scale nonprofit company level, I think it is essential.

As is pointed out in Nonprofit Management Principles and Practice by Michael J. Worth, nonprofits are held accountable to the rule of law, self-regulation, and transparency.  The rule of law is simply that they must follow the law including all IRS forms and things such as nondiscrimination and the Sarbanes-Oxley Act which is basically a law named after Senator Paul Sarbanes and Representative Michael Oxley that dictate corporations must follow certain laws. 

Self-regulation for nonprofits is a benefit that was reviewed by Congress in June 2005, (Worth, p. 136).  With this autonomy the organization must practice good governance with ethical behavior.  These include financial issues, board meetings and board issues, maintaining the mission, and maintaining stakeholder contacts. 

Transparency just means to be open and honest about the nonprofits business for everyone to see including the donors, the media, and the stakeholders. 

Measuring Accountability

Transparency helps when it comes to measuring performance.  Nonprofits have a few options for measuring performance.  Do they measure their performance based on their finances?  That certainly would paint a picture of success at sustaining the business side; but it doesn’t tell much about how they are doing with employees, customers, stakeholders, or other nonprofits.  Do nonprofits measure against their peers?  That would tell them how they stack up against other nonprofits regarding donors and financials and possibly stakeholders; but again, it wouldn’t tell much about how they are doing regarding employees or their mission. So my recommendation, and the trend, is for nonprofits to measure themselves against their mission.  This would cover all bases and give an overall picture of how they are doing.  Most importantly, this would let the stakeholders know how nonprofits are doing compared to how they want to do.

The bottom line is this: as long as we stay transparent and stay true to our mission, we can be accountable to ourselves.  This will make our board happy which in turn will make our stakeholders happy which in turn should result in a successful nonprofit organization.