Nonprofit Accountability: Up, Down, and Sideways

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Nonprofits are held accountable by any number of entities: their boards, their funders, regulators, constituents, and the general public. The Internet has added another level of intensity and speed in being called to public account, in that it allows groups of stakeholders that might have been unaware of each other’s opinions to hear one another out and potentially join forces. What happens when an organization does something that stakeholders see as violating their purpose or stated values?

Stakeholder Resistance in 2013

In an article that appeared in NPQ two years ago, the authors, Sean Buchanan and Patricia Bradshaw discussed “Stakeholder Resistance.” Nonprofit organizations often experience stakeholder resistance as donors and clients—or both—start asking tough questions and demanding change of some kind. Looking back over the past 12 months of newswires posted at NPQ, it could be argued that the sector has entered a brave new world of stakeholder resistance, much of which has been played out very publicly using the Internet, among other venues.

Take, for example, the maelstrom that played out in many places last year regarding the position of the Boy Scouts of America on gay scouts. Multiple stakeholders became involved: United Ways and other funders, which were withdrawing funding on grounds that they could not fund a group with openly discriminatory practices; churches, which threatened to withdraw their sponsorship of troops if the BSA did not continue to discriminate; and former and current scouts and their families. There were demands both for and against the existing exclusionary policies. Both sides of the argument were demanding accountability for the actions of the Scouts, and both claimed that the organization had not been living up to its stated values.

In the end, the BSA essentially attempted to “split the baby” at a national board meeting. It was covered heavily by the press, with protests and demonstrations from both sides outside of the meeting. The final decision was a new policy under which openly gay scouts would be accepted until the age of 18, at which point they would no longer be welcome to participate, which would excluding those young adults who wanted to move on to serve as troop leaders.

That decision, of course, pleased no one completely, and since then, NPQ has tracked some of the fallout and further steps taken by the BSA, including the selection of former Secretary of Defense Robert Gates as its new board president. Gates was a strong proponent of the “don’t ask, don’t tell” policy in the military, and he is a former Eagle Scout. As a symbolic move that indicated direction, this selection appears to have real value.

Elsewhere, the Susan G. Komen saga continued to play out with continuing financial losses both at the central and at the affiliate level. As readers will recall, Komen alienated a good big part of its base of volunteers—the same volunteers who fundraise for them every year—when it announced it would no longer fund Planned Parenthood for breast exams. Komen is an excellent example of what not to do in the face of stakeholder resistance. A portion of its scale and constituency may be lost forever, not because they don’t want to fight breast cancer, but because Komen has been less than straightforward about its original motivations and its subsequent responses to the public outcry. A great example of this is in the strange now-you-see-me-now-you-don’t resignation of Nancy Brinker as CEO. The fact that she landed at the top of the executive committee of the board and remains well paid was duly noted by a skeptical press and constituency, and the losses continue.

Accountability in the nonprofit sector is nothing new, nor are stakeholder demands for answers. However, conflicts that might previously have been contained or slow to mobilize can go from zero to sixty quickly, ending up on a very public stage. This should be understood be by nonprofits as the new operating environment. There are numerous examples of how stakeholders are taking their story to the public using Internet based tools such as websites and social networking sites. The Minnesota Orchestra, for instance, just recently settled its labor dispute. What was interesting about that situation was that the musicians continued to play for the public, and some donors began to think with them about how the orchestral association’s assets might be attached to re-establish the orchestra independently. The dispute ended in compromise, and apparently the tickets for their return concerts are selling like hotcakes, but the situation proved that organizational accountability and governance extends far beyond the board of directors.

Accountability to a Wider Public: Dark Money in 2013

Switching to a more systemic structural issue, NPQ has published numerous stories in 2013 regarding nonprofit organizations with 501(c)(4) designations. These organizations are allowed to withhold the names of their donors from public scrutiny and they are also allowed to actively lobby on behalf of candidates and specific legislation, something organizations with the more common 501(c)(3) designation can do on only a very limited level. In places like Texas and California, battles have been waged to demand that these organizations be required to disclose their donors so the public can see who is trying to sway an election or legislation. Other groups, often the (c)(4) organizations themselves, suggest that the donors would be subject to unnecessary attack if they were revealed. Following the Supreme Court decision known as Citizens United, in which for-profit corporations were given the right to invest heavily in political movements, this issue of dark money has become a hot button: Do nonprofits owe the general public the right to know who is supporting a cause, or is the right to privacy for those supporters just as important? In this case, the argument is playing out in a vey public arena, with decisions affecting the general public being swayed by secretive supporters. It raises the question of what would best reflect the values inherent in a society based on open democracy.

Accountability to a Region: Catholic Hospitals in 2013

Sometimes an entire region can be affected by the behavior of a nonprofit or a group of nonprofits. As NPQ has reported, there has been a growing trend—and a related growing concern—about the mergers and collaborations between secular hospitals and chains of Catholic hospitals. External stakeholders, such as the ACLU, and some internal stakeholders, such as the nurses’ union, are publicly calling out these affiliations as having the potential to seriously compromise the healthcare of women and gays—particularly in smaller communities, where the entity resulting from the merger or affiliation is the only game in town. Stories of women who have been denied options in cases where the carrying of a baby to full term would risk the mother’s life have been told in the press with the goal of proving that the care given was based more on Catholic doctrine than upon the health requirements of the women in question. Once again, the values of the organization are in play: As a hospital, as healthcare providers, do your values suggest you care for the woman, knowing that there is little or no hope for the fetus? Or do the values of the Catholic Church, with which your hospital is at least affiliated, require you to deny termination?

Accountability to a Class of People

Recently, another example of taking a story public involved the policy of Goodwill Industries to pay some of its workers who are disabled as little as 22 cents an hour, far below the standard minimum wage set by the federal government. It turns out that a very little known law allows a certain type of organization to be authorized to circumvent the minimum wage, and Goodwill is one such organization. Stakeholders, such as organizations representing people with disabilities, have called this policy into question, asking how an organization like Goodwill can treat its own clients so poorly.

Accountability to Funders

Accountability between funders and nonprofits is famous for largely being one-way, as is proven by, for instance, the consistently late contract payments by the state of Illinois. But at times that unidirectional responsibility can be deadly. Since early September, NPQ has been following a story out of New Mexico, where 15 behavioral health centers (constituting 80 percent of that system) were summarily closed by the state after they had undergone an audit in the search for overbillings or fraud. The closings occurred through withholding of public payments by the state, and clients were immediately transferred to Arizona-based agencies.

One might assume that there were very dark doings among these nonprofits, but the truth is that nobody knows if there were. The nonprofits never were given the audit findings, and even attempts by the media to get the document through freedom of information requests have come to naught. The Attorney General is now going through the cases one at a time. No criminal charges have been brought, though some cases of overbilling have been resolved. In some cases the agencies have re-opened, but some will end up closed for good. The New Mexico legislature is entertaining legislation that will guarantee such agencies due process in the future.

Conclusions and Takeaways

Is there a moral to this story? The nature of the nonprofit sector is that it accepts donations from the public and from organized philanthropies. It also accepts breaks in the form of exemption from some taxes. It is to be expected, then, that nonprofit organizations will be required to make accounts of how the money the public is making available is being used. What might be the emergent trend is that with the ability to go widely public with a story, using tools that allow one-sided storytelling and that can go viral quickly, stakeholders are able to announce and promote themselves and their positions on issues while asking what are often legitimate questions at the same time.

The groups petitioning Goodwill Industries, for example, seem pretty comfortable knowing that their actions will not bring about change in the near future. However, they have been able to raise awareness of the issue and may be hoping to slowly move towards that infamous “tipping point” while also increasing their own visibility.

In another story NPQ covered, an organization of atheists asked to be part of an overtly faith-based organization’s soup kitchen initiative. They already knew that they would be rejected, but in doing so, and by doing it in the public eye, they were able to raise the visibility of their cause. Did they take this action to call attention to the exclusionary policy of the soup kitchen, or to raise awareness of their own cause?

In this brave new world of accountability, it seems that it is no longer enough for nonprofits to make their financial statements available upon request. It is no longer enough to respond to donor requirements to track outcomes and other measures of success. Now, it is necessary to prepare for stakeholders going public to ask tough questions, with the understanding that such whistleblowing may be as much about the accusers wanting to stake their claim as it is about any real concerns regarding the targeted nonprofit.

In many cases in 2013, the nonprofit under scrutiny acted in a way that was deemed to be out of line with the mission and values or was considered polarizing. This, then, opened the door for the critics to begin asking questions. All too often, the nonprofit seemed surprised, and their lack of a quick and adequate response met with negative results.


Rob Meiksins is the owner of, and a consultant at, Forward Steps Consulting LLC. He has worked in the nonprofit sector for most of his career, in roles ranging from intern to executive director, to board president, and, now, consultant. In addition to writing a few newswires for NPQ, Rob is a BoardSource Certified Governance Trainer, serves as co-chair of the Wisconsin Community Fund of Forward Community Investments, and has been a member of a giving circle for about 10 years. Currently calling Milwaukee home, Rob is proud to be married to a public high school teacher.


  • Rciprotti

    Thanks for this article. It’s an important topic that all those involved with nonprofits need to keep top of mind.