establishing mutual accountability in nonprofit-government … · 2018. 10. 20. · approach...

18 p o p u l a r g ov e r n m e n t

� A neighborhood center receives anallocation from the city to supportan after-school program, but withoutconsulting the city, it decides midyearto spend the money on a differentproject.

� In the last half of the fiscal year, astate government agency tells agroup of its nonprofit contractorsthat the quarterly payments for their

reimbursable grants will be delayedindefinitely.

� A community loses the opportunityto maintain rental units for low-income housing when the nonprofitin charge cannot justify its expendi-tures of the six-figure grant from thestate or its failure to complete therenovations within the projectedtime frame.

P O P U L A R G O V E R N M E N T

Henderson, Whitaker, and Altman-Sauerare the project team for the Project toStrengthen Nonprofit-Government Rela-tionships, at the School of Government,UNC Chapel Hill. Henderson andAltman-Sauer are research associates.Whitaker is a faculty member whospecializes in local public management.Contact them at [email protected], [email protected], or [email protected].

Establishing Mutual Accountability in Nonprofit-Government Relationships

Margaret Henderson, Gordon P. Whitaker, and Lydian Altman-Sauer

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The success of a community festival like Hillsborough Hog Day is highly and immediately visible to sponsors, supporters, and participants. The sponsor of Hog Day is the Hillsborough/Orange County Chamber of Commerce.

Among its in-kind supporters are the city and the county.

� An audit reveals that an organiza-tion’s internal financial controls are not adequate to ensure thatdesignated funds will be spent incompliance with the funders’specifications.

Governments, nonprofits, philan-thropies, and businesses all talk aboutthe value of partnering to maximize theimpact of their resources. Ironically, inday-to-day life, the ways in whichpeople actually work together often failto reflect that philosophy of partner-ship. This article discusses ways tomove beyond the buyer-seller relation-ship often embodied in government-nonprofit contracts, toward sharedresponsibility for improving publicservices. It presents a framework ofgoals, questions, and tools that canhelp people in government and non-profit organizations focus on how theirwork for and with each other canimprove public service.

An Alternative to Adversarial Approaches

Traditional adversarial approaches toaccountability concentrate attention onblame and punishment rather thanshared interests and joint decisionmaking. “Mutual accountability,”however, creates more complete andhonest communication for the durationof the relationship. It encourages sharedresponsibility and shared learning. Theprocesses that characterize mutualaccountability enhance opportunitiesfor partners to learn from and with eachother about public needs, and to decidehow best to meet them.

Cross-organizational relationshipscan be complex and are stronglyaffected by several factors:

� The personalities involved

� Participants’ political philosophies

� Mandates from the state or federalgovernments

� Emergencies or natural disasters

� Available economic or environmentalresources

� The mix of public problems facingthe community

Even when all the players work hardto balance this com-plex set of factors, a change in one changes the wholeequation, sometimesdramatically. Theprocesses of mutualaccountability antici-pate change, how-ever, and build strongrelationships so thatmanaging change be-comes less stressful.

Reasons to Care aboutAccountability

accountable adj.1. Liable to becalled on to render an account;answerable. 2. Capable ofbeing accountedfor; explicable.—Webster’s1

Governments and nonprofits shouldwork to establish healthy accountabilitypractices for at least two reasons. First,partnering can stretch available publicresources. No government has all theresources, power, or authority that itneeds to address important public needscomprehensively. To fill the gap betweencapacity and need, the trend is to en-courage governments to establishrelationships with other organizations.In fact, today more and more public ser-vices in the United States are paid for by governments but delivered and aug-mented by nonprofit organizations.2

The potential for meeting public needswhen two or more organizations divideresponsibilities depends, in part, on howclearly they define and understand theirexpectations of each other. Service deliv-ery by multiple organizations does notfit well into traditional buyer-seller mod-els of democratic accountability whenprogram goals are broad and serviceconditions highly variable—exactly thekinds of public service problems fre-quently addressed by nonprofits. Thebuyer-seller model often reinforces uni-

lateral decision makingand fault-finding ratherthan partnership.

The second reasonfor governments andnonprofits to establishhealth accountabilitypractices is their needto demonstrate respon-sible stewardship oftaxpayer dollars. Pub-lic service organizationsand partnerships havea responsibility toserve the greater goodof their communities.The public credibilityof an organization orits funders can be dev-astated by a high-profile scandal re-ported in the media.No matter what thefacts are, the reputa-tions of both the non-profit and its gov-ernment partner arelikely to suffer. Atten-tion is diverted from

serving the public to fixing the problemsthat arise from the perceived breach offaith and to taking measures to rebuildtrust with community stakeholders. It isno wonder that much of the focus on ac-countability is on restraints and reports.

As an authority on accountabilityputs it, “[A]ccountability means punish-ment.”3 In other words, people oftenapproach accountability only as a wayto establish whom to blame if somethinggoes wrong. Traditional accountabilitypractices often reflect and support anadversarial rather than a cooperativerelationship, diverting attention fromthe public services that are the reasonfor the partnership.

A Focus on More than Money

How can accountability systems be de-signed to go beyond conducting sur-veillance to encouraging better publicservice? What accountability practicescan help partners improve program per-formance while verifying that public re-sources are being used appropriately?4

The general public commonly equatesaccountability with fiscal integrity,

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To fill the gap betweencapacity and need, the trendis to encourage governmentsto establish relationshipswith other organizations.In fact, today more and more public services in theUnited States are paid for by governments but de-livered and augmented by nonprofit organizations.

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focusing on finances instead of fairnessand on process rather than performance.Although this convention is easy tofollow, especially given concerns aboutnegative public attention, it is not ade-quate for creating partnerships thatprovide the most effective services. Amore service-oriented focus views ac-countability goals as multidimensional,including three general categories:5

� Fairness, which addresses theexpectation that standards will apply

to all people equally, whether thesubject is hiring practices for staff oreligibility standards for clients

� Finances, which refers to the expec-tation that funds will be adminis-tered honestly and responsibly,usually in accordance with generallyaccepted accounting principles

� Performance, which refers toexpectations about the manner inwhich activities will be carried outand the success that will be achieved

As stewards of public funds, bothgovernments and nonprofits have theresponsibility to ensure that funds arespent for their intended purposes.Rightly or not, the public may be moreinterested in finances than in fairness orperformance. For example, the publicmay be aroused more by a rumor thatthe director of a nonprofit literacy coun-cil used funds inappropriately than by asuggestion that the director hired friendsover more qualified job applicants orthat fewer people than expected actuallylearned to read through the council’sservices. Yet all three categories areimportant and should be considered inany comprehensive approach to de-fining and implementing accountability.

To ensure that all three goals foraccountability are addressed, they mustbe built into the tools used in theserelationships. That is, discussions aboutmutual expectations, and the contracts,reports, audits, and one-to-one contactsthat reflect those expectations, shouldaddress all three goals.

Alternatives for Setting UpAccountability Practices

The difference between (traditional)hierarchical accountability and mutualaccountability is readily apparent intheir contrasting approaches to settingup expectations for accountability:

� Hierarchical accountability:Government decides on account-ability processes. Nonprofits followthem. Without a conversation witha nonprofit, the government mightsimply send it a contract that setsout the terms of the relationship,and expect it to return a signedcopy. The communication aboutexpectations and responsibilityflows in one direction, from thebuyer to the seller, often in a take-it-or-leave-it manner.

� Mutual accountability: Governmentsand nonprofits together decide onaccountability processes. Both followthem. The relationship begins with a conversation in which both partiesnegotiate and agree on the terms of the relationship. Communicationis two-way.

Two initiatives are under way in NorthCarolina to define standards foreffective nonprofits. These standardsguide nonprofits in developing thecapacity to carry out commitments.Also, they provide a way for nonprofitsto demonstrate that capacity at theoutset of a relationship.

At the state level, the North CarolinaCenter for Nonprofits is distributing anew tool for self-evaluation, Standardsfor Excellence: A Self-Help Tool forNonprofits’ Organizational Effective-ness.1 The publication presents a volun-tary program intended to promotehealthy organizational practices thatnonprofits can implement throughpositive, not punitive, measures. Theprogram has three basic components:

� Eight guiding principles of goodpractice that establish fifty-fivebenchmarks for effective, account-able conduct in nonprofit leader-ship, management, and operations

� An array of technical assistanceresources, including educationalpackets and training, designed tohelp nonprofits achieve thestandards

� Public education, aimed at a broadaudience, that helps stakeholdersinterested in the nonprofit sectorunderstand the principles and thestandards

For more information, visit the center’s website at www.ncnonprofits.org, or contact Trisha Lester at (919)790-1555 ext. 104 or [email protected].

At the local level, the Alliance forHuman Services in Henderson Countyhas developed a self-evaluation matrixfor nonprofits requesting funding bycounty government, the CommunityFoundation of Henderson County, andthe local United Way. The standards inthe matrix are based on thosedeveloped by nonprofit centers inMinnesota and Maryland. Level 1 is fororganizations with little or no staff,level 2 for legally established, smallnonprofits, and level 3 for mature,small organizations. The standardsaddress only management structure,not programmatic structure or success.

Kathryn McConnell, program officerof the Community Foundation ofHenderson County, reports thatnonprofits initially resisted the conceptof local accreditation but now supportthe process. For example, somedirectors use the standards to defineand encourage positive change inboard activities and practices. Also, thematrix illustrates to people enthusiasticabout starting a new organization the amount and the types of effortsrequired to maintain a healthy com-munity nonprofit.

For more information, contact LeighStanton at (828) 693-4074 [email protected].

Note

1. NORTH CAROLINA CENTER FOR NONPROFITS,STANDARDS FOR EXCELLENCE: A SELF-HELP TOOL FOR

NONPROFITS’ ORGANIZATIONAL EFFECTIVENESS

(Raleigh: the Center, 2002; adapted from a1998 publication by the Maryland Ass’n ofNonprofit Organizations).

Standards for Organizational Effectiveness of Nonprofits

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The differences in the two ways ofsetting expectations establish differenttones for the duration of the relationship.To focus attention on encouraging betterpublic service, both parties have to dis-cuss their accountability to each otherand to the public. It is inconsistent forone party to decide how relationshipsare to be mutually accountable and thenforce that decision on the other partner.

Appropriate Circumstances forMutual Accountability

Mutual accountability requires acertain level of readiness. Both partiesmust have or be willing to develop thefollowing attributes. Not having one ofthem creates an obstacle to success.

� A strong interest in serving the public

� A willingness to discuss possibilitiesfor change

� A willingness to devote time andattention to improving services

� A willingness to learn from and witheach other

� A willingness to devote resources tobuilding and maintaining mutualaccountability

Being interested in learning fromeach other is a good start, but it is notenough to ensure accountability to thepublic. The parties—particularly theparties with authority to act and moneyto spend—must be willing and able to

devote resources to considering changesand improving services in order toaddress public needs better.

If government officials have confi-dence that a nonprofit is well managed,they may be more willing to invest timeand attention in learning from it. Trustcan be built on the nonprofit’s record ofsuccessfully managing projects. Trustalso can be fostered through programsthat show how a nonprofit meetsstandards of management effectiveness.The equivalent of a Good House-keeping Seal of Approval for nonprofitscan reassure governments, foundations,and other funders that bearers of theseal will use funds effectively and withintegrity. (For a description of twoinitiatives under way in North Carolinato define standards for effectivenonprofits, see the sidebar, opposite.)

Building mutual accountability takestime. It calls for considerable humaninvestment as well. People representingthe various stakeholders have to agreeon expectations. They also have tocarry out their responsibilities, reporton their successes and failures, andreview the consequences with the otherstakeholders. That requires theirattention, their time, and their trust, aswell as the support of the broadergroup of stakeholders whom theyrepresent and serve. Too often, govern-ment and nonprofit officials do nothave adequate resources, interest, orsupport to create mutual accountability.

In some instances a government maynot be sure what kind of service isappropriate to meet the public needthat it wants to address. Similarly, anonprofit may not be certain how todeliver the service or outcome thatgovernment wants. Acting unilaterallyrestricts opportunities to learn fromexperience and adapt expectations tocreate more effective public service. Byworking together to learn what kindsof services are needed and how theycan best be delivered in that particularcommunity, government and nonprofitorganizations can save money in thelong run.

For example, Charlotte recentlypartnered with a city-funded nonprofitto evaluate the nonprofit’s success ineconomic development in its servicearea. The partners learned that

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A member of the staff of theDispute Settlement Center ofOrange County talks with aclient. The nonprofit organiza-tion receives about 40 percent of its funding from state andlocal governments.


After learning together how the pro-gram was working, city and nonprofitrepresentatives developed revisedexpectations for their relationship,supported new approaches by the non-profit, and increased public funding.6

Several case studies suggest somecommon ways in which mutualaccountability develops:7

� One person typically convenes orinitiates discussions, but otherswillingly join in the deliberationsabout accountability expectations.

� When others join in, they often do sobecause they have a strong interest insolving a public problem or helpingclients.

� Usually, expectations about andcommitment to working togethergrow as the parties take tentativefirst steps and are willing to learnfrom and build on small initialaccomplishments.

� Time and space are available topermit the parties to develop mutualexpectations.

� Often, someone is able to protectstakeholders from pressures thatwould force them to decide imme-diately or to ignore some voices.

(For a summary of key considerations forgovernments and nonprofits when dis-cussing whether to establish mutual ac-countability, see the sidebar on this page.)

Establishing MutualAccountability

If government and nonprofits arewilling to share decision making, taketime to deliberate and experiment, andrespect the different perspectives of theorganizational representatives whiledesigning new accountability patterns,they can begin to decide how they wantto work together. Although the stepsjust listed may look like a sequentialprocess, in reality, people can start atany point in the process: They can starta new project together, collaborate incollecting data on an ongoing project,or review a project together and decidewhat to do next.

Regardless of where the partiesbegin, eventually their work toward

mutual accountability will lead them toaddress the following four questions.Answers to the questions shape theaccountability relationship.8 Althoughexternal authorities (such as federalregulations or accreditation standards)may limit flexibility, usually the partiescan determine many aspects of account-ability directly with each other.

1. Responsibility: Who is expected tocarry out which actions for whom? Shared development of expectationsabout responsibility does not mean thatthe parties need to decide all the detailstogether. It means only that they needto decide together what each is com-mitted to doing. Thus, governmentrepresentatives might decide to leavemanagement of a homeless shelter totheir nonprofit partner. They might besatisfied to agree to general expecta-tions for how operation of the shelterwill change conditions in the com-munity. Clarity about the government’sresponsibilities to the nonprofit and tosupport of the work the nonprofit isdoing under the partnership forms akey element in mutual accountability.

2. Responsiveness: Who is expectedor has the authority to invoke or altermutual expectations,especially if circum-stances do not work out as planned?People who have responsibilities to eachother must be clear about how muchdiscretion each party has in carryingout those responsibilities. Responsive-ness concerns the day-to-day function-ing of the relationship. Who can initiatechanges within the context of the cur-rent understanding? For example, how much latitude does a nonprofithave to change services unilaterally in response to clients’ requests? An-swering the responsiveness questiondefines the degree of flexibility thatexists within the broad framework of expectations.

The specificity of the service affectsthe degree of autonomy that each of thepartners enjoys. For example, if a non-profit is expected to collect recyclablesfrom a specified number of houses in aparticular neighborhood, thenredefining the service area is notacceptable without renegotiating withthe governmental funder. If the non-profit is charged with a broader goal,

Before nonprofit and governmentalpartners consider a new or changedrelationship, they might benefit byconsidering some fundamentalquestions about why they have therelationship in the first place. Ifpartners agree with the followingstatements, they are ready to beginimplementing mutual accountabilitypractices:

� Our relationship is about morethan money.

� We recognize that each of us hasknowledge and resources that,when shared, produce a betterproduct for our community.

� Forces both internal and externalto our organizations support ourrelationship.

� Each of us trusts the other to beaccountable to the general publicas well as to our individualstakeholders.

� We expect that we can reach aconsensus on an ideal workingrelationship.

� Basic resources will be available tosupport us as we work tostrengthen our partnership.

� We have the interest, the motiva-tion, and the autonomy to improveour relationship in the future onthe basis of what we learntogether now.

Having variations in the degree ofagreement by the different parties isnatural. However, strong disagree-ment with, or disinterest in, one ormore of the statements presents asignificant obstacle to success. Theparties could begin to work together,but they might not achieve truemutual accountability.

Considerations inDeveloping MutualAccountability

although the nonprofit had achievedonly seven of the twelve initiatives ithad undertaken, the benefits alreadywere notable: the assessed value ofproperty in the service area had goneup 20 percent in two years, comparedwith only about 4 percent citywide.

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such as educating the general public ondisaster preparedness, then the govern-ment might agree to considerableflexibility for the nonprofit to decidehow or where to present this service.

3. Reporting: Who should providewhat information to whom about howresponsibilities are carried out?Mutual accountability should encouragethe sharing of information to promoteimproved performance. Discussionsabout expanding traditional notions ofhow to report on program performanceor how to treat clients equitably mightbegin by collecting information that canbe used to define successful results—information like diverse demographicprofiles, the number or nature ofcomplaints, demonstrated mastery ofcourse content, or the feedback fromevaluation processes. Some organiza-tions invest resources to developsophisticated ways to track their opera-tions and the results they produce.9 Thedata and the conclusions from these canbe used not only for internal decisionsbut also for reports to partners.

The degree of flexibility in reportingon a relationship also depends on the

specificity of the expected performance.Responsibilities might be stated in termsof specific activities, general services, oreven more general outcomes, such aschanged conditions. More generallydefined responsibilities or a broaderdegree of responsiveness typicallyentails more flexible reporting. Forexample, counts of meals served, nightsof shelter provided, and other serviceactivities describe service quantity butsay little about the quality of service orabout changes in conditions, whichmay be the focus of performanceexpectations. Narrative descriptions ofthe services or of changes in the con-dition of clients or the community mayprovide richer information about whatthe nonprofit has accomplished butrequire greater flexibility in reportingrequirements because the focus is notso much on numbers as on stories.

4. Reviewing: Who is expected to usewhat information to make decisionsabout the future of the relationship? Reviewing expectations about whomay end or alter the relationship canhelp create mutual accountability. Ifboth government officials and non

profit leaders assume that the nonprofitneeds funding more than the govern-ment needs the nonprofit’s services, anasymmetrical relationship will becreated in which both expect thegovernment to review the relationshipand decide on its future. That asym-metry, in turn, creates expectations thatthe nonprofit should be responsive tothe government’s requests, not viceversa, and that the nonprofit shouldreport to the government on its perfor-mance, not the other way around. Inthis way, accountability often getsfocused on government monitoring ofnonprofit compliance with governmentguidelines, rather than on ways therelationship currently serves the publicor might improve public service.

Mutual accountability depends oninvolving all key stakeholders or theirrepresentatives in reviewing the relation-ship and deciding how to change it.Through joint review of the expectationsthat establish mutual accountability, theparties can refine and revise thoseexpectations to reflect what they havelearned about working together and tofit new circumstances or challenges.10

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A retiree in Knightdale volunteers for Meals on Wheels.


Spelling out Mutual ExpectationsWho answers these questions aboutresponsibility, responsiveness, reporting,and reviewing, and what those answersare, in large part determine whetheraccountability is an adversarial or acollaborative process. (For an illustra-

tion of how the four questions might beanswered to establish mutual account-ability for fairness, finances, and per-formance, see Table 1.)

The appropriate context for holdingconversations about mutual expectationswill vary. Some conversations might

take place in large groups because theyapply to all the organizations and peopleinvolved. Others are more appropriatelyheld one-on-one. The crucial issue is toidentify and involve the key stakeholdersin setting performance and process ex-pectations. If the stakeholders do not

FairnessStandards apply to all people equally.

Governmental practices are applied to allnonprofits similarly.

Nonprofit applies same standards to staff,volunteers, and clients.

FinancesFinancial management is honest andresponsible.

All parties agree on amount and terms ofpayment, as well as definition and numberof services to be provided.

Government clarifies practices to be usedfor requesting and providing installmentsof financial support.

Nonprofit agrees to adhere to generallyaccepted accounting practices.

Performance“Service” and “success” are defined.

Government defines type of nonmonetarysupport it is willing to provide to itsnonprofit partners.

Nonprofit has clear definition of any otherexpectations government might have forpartnership.

Government and nonprofit jointly defineservice to be provided, criteria for success,and content or plan for evaluation.*

Responsibility Who is expected to carry out which actions for whom?

Reporting Who should provide what information to whom about how responsibilities are carried out?†

Table 1. Examples of the Dimensions of Mutual Accountability

Government provides information about itsfunding and monitoring practices to public.

Nonprofit provides documentation of itshiring, client service, and personnel policiesto government.

Government provides summary data andwritten clarification of funding agreement.

Nonprofit reports specific financialinformation at particular times and allowsits records to be reviewed on request.

Parties agree to inform each other in timelyfashion of turnover in key staff or othermajor changes in working environment.

Parties agree on kinds of reporting toolsthat adequately describe and documenthow things are going. Parties agree oncontent, format, and time intervals inwhich to deliver reports.‡

Reviewing Who is expected to use what information to make decisions about the future of the relationship?

The parties decide which questions offairness, financial probity, and performancequality will be answered by government,which by nonprofit, which by bothtogether, and which by outside entity.

The parties decide who will reviewinformation about relationship and makedecisions about changing it.

The parties decide what kinds of changesto relationship each may make indepen-dently and what kinds of changes must bejointly agreed on.

Responsiveness Who is expected or has the authority to invoke or alter mutual expectations?

Both parties clarify how much discretiongovernment has in deciding which projectexpenditures to reimburse.

Both parties clarify how much discretionnonprofit has in deciding which clientsto serve.

Both parties clarify how much flexibilitygovernment has in deciding when to makepayments to nonprofit.

Both parties clarify how much flexibilitynonprofit has in redirecting funds withoutbudget amendment.

Both parties clarify how much variationthere is in number or type of clientsgovernment expects nonprofit to serve.

Both parties clarify how much nonprofitcan revise program content withoutgovernment approval.

*If government officials have a precise definition of what tasks need to be done and how to do them, then the government can easily set up its own program or buy theservice from a vendor. Given a clear understanding of what government needs to have done, performance contracts can provide appropriate accountability expectations.Robert D. Behn & Peter A. Kant, Strategies for Avoiding the Pitfalls of Performance Contracting, 22 PUBLIC PRODUCTIVITY AND MANAGEMENT REVIEW 470 (1999). Picking up andprocessing recyclables is an example of a specific service that is relatively simple to define.

To accomplish broader goals, such as prevention of child abuse, defining either the plan of action or the responsibilities for what would be considered effective publicservices may be more challenging. People might understandably be unclear about how best to authorize responsiveness, organize reporting, or conduct reviewing. In thosesituations, discussions of mutual accountability could help the parties organize their expectations to learn how to better meet the needs of those to be served.

†Before defining the reporting expectations, the government should evaluate how much and what kind of information it has the capacity to review. Similarly, the nonprofitshould evaluate how much and what kind of information it has the capacity to produce.

‡Nonprofits generally have multiple funders, each with its own expectations for reporting. Being required to present similar information in an array of different formatsresults in time inefficiencies for the nonprofits and ultimately the whole community. To minimize the amount of effort it takes nonprofits to compose the reports, governmentsmight consider either (1) specifying the content but not the format of the reports or (2) coordinating the expectations of report content and format with other local funders.

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explore and define these mutual expecta-tions together, they may well be opera-ting on different assumptions aboutwhat each party is to do. That can causedifficulties in the relationship, especiallywhen unexpected changes happen.

To explore how unexpected changesmight affect a relationship, a possiblestrategy is to use “What if?” scenarios.Discussing what each partner might doin several possible situations helps eachparty explore responsibilities, respon-siveness, reporting, and reviewing inthe context of fairness, finances, andperformance.

� What if a key staff person leaves?

� What if a program does not developas planned?

� What if clients’ needs or requestschange?

� What if the outcomes are not whatyou expected?

� What if a funding source disappears?

� What if criticism develops in thecommunity?

� What if changes in the environmentforce unexpected change?

One expectation that may emergefrom discussing these different scenariosmay be “Don’t set us up for surprises.

Keep us informed.” Staff can easilybecome so focused on managing newsituations that they forget to inform orconsult with their partners. Having thiskind of conversation at the beginningof the relationship, rather than during acrisis, can help maximize the supporteach partner offers the other.

Assembling Accountability Tools

Four tools can help establish account-ability:

� Contracts: Legal documents that describe the mutual expectations of the nonprofit-government

Table 2. What Accountability Tools Can and Cannot Accomplish

What This Tool Can Do What This Tool Cannot Do Alone

Contracts Explicitly state mutual expectations Ensure that mutual expectations are met

Provide some protection for both nonprofit Generate problem-solving or proactive planningand government in case of nonfulfillment

Periodic Reports Provide quantitative or qualitative Ensure that mutual expectations are metinformation on program operations

Generate problem-solving or proactive planningTrack progress toward fulfilling mutual expectations

Financial Audits Find evidence of gross fiscal misconduct Ensure that mutual expectations are met

Identify ways to strengthen financial Generate problem-solving or proactive planningmanagement practices Ensure that recommended improvements take place

Periodic One-to-One Keep track of progress or problems Substitute for legal weight of contract that definesContacts* Generate problem-solving or proactive planning mutual expectations

Build mutual trust

Exchange information

Strengthen personal and professional relationships

Permit shared understanding or interpretation ofdata and events

*One-to-one contact can take many forms, such as individual conversations, site visits, and client surveys or interviews.

Table 3. Options for Using Accountability Tools

Packages ofAccountability Goal

Accountability Tools Application for Financial Program Management(in increasing degrees of Government Reporting Reporting Practices complexity, top to bottom) Support (Finances) (Performance) (Fairness)

Level 1 Letter of request Copies of receipts Narrative about Statement ofcompleted activity; intention,copies of media contained in lettercoverage

Level 2 2-page application Printout of check Program activity Checklist of policies register for expenses statistics

Level 3 10-page application Program budget report; Program activity Copies of documentswith attachments audit of program or and results statistics; proving policies have

organization outcome evaluation been followed


funding relationship.11 Answers to all four accountability questionsshould be made explicit whendrafting a contract.

� Periodic reports:Relatively informaldocuments that summarize activities,program accomplishments, or finan-cial transactions, or more elaboratedocuments that provide answers tospecific questions or require sup-porting evidence. They may be pro-duced separately by one or anotherof the parties, be a joint product ofboth, or be produced by a third party.

� Financial audits: A fiscal review by acertified pubic accountant thatverifies the financial situation of thenonprofit. Programmatic or othertypes of reviews provide a similarafter-the-fact examination of otheroperational facets.

� Periodic one-to-one contacts:Personal interactions among thestaff, volunteers, and board membersof the nonprofit and government thatmay include site visits and oppor-tunities to view services.

Of these tools, contracts and finan-cial audits are commonly the mostformal ones, using the expertise of legaland accounting professionals. Periodicreports and one-on-one contacts mightrange from the informal (a conversa-tion) to the formal (a defined presenta-tion of information).

All four tools cover importantaspects of the relationship, yet nosingle tool can ensure that anydimension of accountability is upheldall the time. The most effective strategyis to use a combination of both formaland informal tools. (For a summary of the usefulness of each tool, see Table 2.)

Finding the Right Match between Tools and SituationsPackaging reporting tools differently forrelationships of different levels is appro-priate and desirable. In the interest offairness, however, the same package oftools would be used for all relationshipswithin a particular level. (For some op-tions for using accountability tools, seeTable 3.)

The following examples clearly re-quire different levels of accountabilityand therefore different packages of tools:

� Level 1: A neighborhood centerwants $500 for a neighborhoodcleanup day and beautificationcontest. The expected outcome is aninexpensive, time-limited event.

� Level 2: A neighborhood centerwants $5,000 to start a SaturdayAcademy to tutor local children,managed by volunteers. Theexpected product is a continuingservice that involves one-on-onecontact between adults and children.

� Level 3: A neighborhood centerwants $50,000 to enhance its daycare services for low-income familiesby training care providers andimproving the on-site educationalopportunities for children. Theproject is ongoing and expensive,and the goal is broadly defined andpotentially open to interpretation.

A number of differences amongindividual nonprofit-government

Government Smart Start funds help

Primrose School ofCary run a program

for infants.

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relationships might encourage shiftsbetween levels:

� The amount of funding: Will the de-sired outcome cost $500 or a muchlarger amount? The greater theamount, the greater the risk involvedin the project. With greater invest-ment, formal accountability becomesmore important to the credibility ofboth the local government and thenonprofit in making appropriateand responsible funding decisions.

� The expected duration of theproject: Is the desired outcome aone-day event or a continuingservice? In comparison with a one-time event, a service that continuesover a long period warrants adifferent kind of scrutiny to ensurethat it happens as planned.

� The complexity of the goal or thespecificity of the service: Is the goalto provide a specific number of ser-vices (say, meals for the homeless) or to accomplish a broader goal (for example, reduce homelessness)?Potential projects or services mayrange from very detailed ones to those promoting broad commu-nity benefits.

� The visibility of the goal: How likelyis it that the goal will be publiclyscrutinized? Confidential servicesprovided by a twenty-four-hour crisisline are not easily witnessed. Incontrast, a street fair or neighbor-hood cleanup day is a public event.

� The amount of trust between theorganizations: Do both the nonprofitand the government trust eachother’s capacity to fulfill expecta-tions? Is either one a young orunstable organization? Does eitheremploy key staff members who areunpredictable, inconsistent, orunfamiliar with the mutual expecta-tions? Frequent communication canhelp build and sustain trust and becritical in guiding any necessaryproject changes (anticipated orunanticipated). When trust existsbetween nonprofits and government,and when both enjoy stability,informal accountability measuresbecome more acceptable.

� Recent community events or shiftingpolitical philosophies:What has beenhappening on the local landscape? Ascandal in one nonprofit-governmentrelationship might generate negativepublicity that affects all others.Political support or philosophies canchange with a single election. In thisinstance an increase in the use ofaccountability tools may be what ittakes for the community or newlyelected officials to regain or buildtrust with the nonprofits.

Given all thesevariables, it is dif-ficult to definearbitrary cutoffpoints between thelevels in Table 3when considering theamount of fundingand the duration ofthe outcome.However, in theinterest of fairness,governments shouldnot jump from levelto level on the basisof subjectiveopinions (forexample, “We likeyou; therefore youonly have to write usa letter and ask formoney rather thancomplete anapplication”).

Holding allnonprofits to thesame accountabilitystandards, regardlessof the service or theamount funded, doesnot make senseeither. Different packages ofaccountability tools may be appropriateand desirable for different types ofnonprofit-government relationships, aslong as there is clear and consistent logicused to support the plan.

Examining the Effects ofAdministrative Infrastructure

Aside from the differences in specificrelationships, the administrative infra-structure of both a government and a

nonprofit can affect the way a relation-ship is documented. A government’sadministrative infrastructure deter-mines its ability to request account-ability reports responsibly. What is itscapacity to collect, review, analyze, anduse the information that it requestsfrom nonprofits? No one benefits ifreams of reporting documents are re-quired but neither the government northe nonprofit uses the information togenerate a useful outcome or decision.

Local governments often requirenonprofits to provideperiodic reports thatconvey critical infor-mation, yet the govern-ments frequently donot assign staff tomonitor these docu-ments. If no one fol-lows up on the contentof these reports, thenboth the governmentand the nonprofit losea critical opportunityto strengthen relation-ships, review progress,and troubleshootunanticipated prob-lems. As a result, thereports provide apaper trail only ifsomething goes wrong.

For a nonprofit thedepth of its adminis-trative infrastructurecan determine thekinds of funds forwhich it can apply.Many nonprofits aresmall and focus theirresources on servicesto clients rather thanon administrative

infrastructure and management. Theymust carefully evaluate whether theyhave the capacity to collect andassimilate the information required forreports. A particular small nonprofitwith little infrastructure may be exactlythe right partner for the government inall other respects. In this case thenonprofit and the government have todecide how much they need each otherto meet shared programmatic goals. Doany other nonprofits reach that particu-lar population or hold that specialized

A common assumption isthat requiring reportsstimulates better account-ability practices on the part of nonprofits. In fact,requiring expansive reportsmight create another hoop that only the moresophisticated nonprofits can jump through.

only the more sophisticated nonprofitscan jump through. If the governmentdoes not monitor the content of thesereports, their value is limited.

Administrative Capacity ofNonprofits and Government

A diagram consisting of two inter-secting axes that create four quadrants(see Figure 1) provides a frameworkfor discussing the implications thatvarying degrees of administrativeinfrastructure have for the nonprofit-government relationship. Striving tobe in a particular quadrant of thediagram is not the goal. Each of thequadrants offers unique strengths andchallenges. Instead, the goal is for thepartners to recognize the quadrant inwhich their relationship lies and to usethat knowledge to understand thedynamics of the relationship.

Quadrant 1: Neither the governmentnor the nonprofit has much capacity to manage complex accountabilitypractices. The inclination is to keepthings simple. Because the two sectorsmatch in their administrative infra-structure, they might readily understandeach other’s perspectives. Especially in a small community, some of the


expertise? Do any other funders offerfinancial support with fewer stringsattached? If the answer to thesequestions is no, then the governmentand the nonprofit should have a con-versation to explore what it would take to enable the nonprofit to build its internal capacity to meet the gov-ernment’s expectations or how thoseexpectations might be modified toreduce the nonprofit’s administrativecosts of compliance.

In regard to setting accountabilityexpectations, both governments andnonprofits can benefit from an honestself-evaluation of the limitations of theirrespective administrative infrastructures,as well as a consideration of the impli-cations any mismatch might have fortheir relationships. If the local govern-ment does not have the administrativecapacity to track formal reports, re-quiring them does not contribute togreater accountability. If the nonprofitdoes not have the administrative capacityto track services adequately, the formalreports it produces might not containuseful or accurate information.

A common assumption is that re-quiring reports stimulates better ac-countability practices on the part ofnonprofits. In fact, requiring expansivereports might create another hoop that

most effective accountability practicesare likely to be everyday occurrences.For example, conversations in the local grocery store can provide mean-ingful opportunities for exchanginginformal progress reports or serviceevaluations.

A complication may arise, however,if the needs of the community havegrown in size or complexity, and thedevelopment of the public sector’sinfrastructure has not kept pace withthat change. Instead of merely takingout their frustration on each other,nonprofits and governments couldchoose to unite as allies and educate thepublic about the need to enhance theiradministrative infrastructures.

Quadrant 2: The nonprofit has morecapacity than the government and mighteven be able to overwhelm the govern-ment with more information than necessary. The absence of a matchbetween the two sectors does notnecessarily create a problem. Thegovernment can ignore any extraneousdocumentation that the nonprofitprovides, and the nonprofit can easilyrespond to any request that the govern-ment makes of it.

Quadrant 3: Both the nonprofit andthe government have the capacity toturn out and monitor complex docu-mentation. The two sectors match. Thechallenge in this situation might lie inensuring that the net gain in improve-ment of community services and pro-ducts actually justifies the expensesassociated with all the reports, outcomeevaluations, meetings, and discussions.

Quadrant 4: In this situation thegovernment has many more resourcesthan the nonprofit does and higherexpectations than the nonprofit is likelyto be able to meet. The two sectors donot match. Excessive accountabilitymeasures may discourage nonprofitsfrom partnering with governments. Thenonprofit might not be able to do whatis necessary to receive funding unless italso can receive support to develop itsinfrastructure.

The government has four options fordealing with the situation representedby Quadrant 4:

� Lower its expectations for the non-profit and accept the accountability

Quadrant 4 Quadrant 3

Quadrant 1 Quadrant 2

HighLowNonprofitCapacity

High

Low

GovernmentCapacity

Figure 1. Administrative Capacity of Nonprofits and Governments

f a l l 2 0 0 3 29

measures that thenonprofit is ableto provide

� Help the nonprofitenhance its admin-istrative capacityso that it is able toprovide the ex-pected account-ability products

� Fund the nonprofit,then penalize itwhen it cannot meet expectations

� Decide not to fund the nonprofit

Either of the first two options couldbe appropriate if the nonprofit meets ahigh-priority need or if the governmentuses this situation to develop graduatedlevels of expectations that will beequally applied to all nonprofits in thefuture. The third choice is not helpfulfor anyone, although it happens all toooften. In the fourth option, the govern-ment has to consider how importantthe potential partnership is in regard toits strategic goals, especially if fewother organizations serve a high-priority population.

In summary, an important aspect ofmutual accountability is fitting account-ability tools with the administrativecapacity of both the government andthe nonprofit to put those tools to use.Stakeholders in each of the quadrantsface advantages and disadvantages. Ifthere is a match between the govern-ment and the nonprofit, the conversa-tion might be easier to have simplybecause they are more likely to be usingthe same vocabulary, yet otherchallenges are likely to be present.

Is it ever acceptable to use differentaccountability measures for differentorganizations? Yes, for the reasons dis-cussed in the previous section. Govern-ments can design packages of assortedaccountability measures based on thetype of service to be funded and theirown capacity and interest to monitorand evaluate the measures that they require of nonprofits. Nonprofits pro-viding dissimilar kinds of services wouldprovide different packages of account-ability measures. But nonprofits withsimilar programmatic characteristicswithin the same quadrant in Figure 1

would use the samelevel of accountabilitymeasures.

Whatever tools arechosen to report andreview accountability,parties must keep inmind the availableadministrative infra-structure. Nonprofitsneed people, time, andreporting tools tocount clients served,

evaluate programmatic success, createcumulative reports, and prepare foraudits. Both governments and non-profits need resources to receive, read,evaluate, and process the informationcontained in those reports.

Conclusion

No single practice, process, or docu-mentation can adequately ensure thatmutual expectations for accountabilitywill be met. Governments and non-profits should employ good contractsand written reports, but these are notsubstitutes for personal relationshipsthat can build mutual respect and trust,and lead to shared learning. Govern-ments sometimes give nonprofits aconflicting message when they talkabout the importance of buildingmutual trust but offer no acknowledg-ment for the nonprofit’s living up to orsurpassing expectations. Instead,governments generally require one-size-fits-all accountability practices thatconvey the unspoken expectation thatnonprofits continually prove they arenot doing wrong, no matter how stellartheir performances might be.

Negative behavior and outcomes bynonprofits can stimulate reactions bygovernment, such as increased monitor-ing through paperwork, reduction infuture support, repayment of pastsupport, or development of an adver-sarial relationship. Positive behaviorsand outcomes can be rewarded bylonger contracts, more support, cele-bration of common success, or simpleacknowledgment for work well done.

More articles and guides on localgovernment–nonprofit relations can beviewed online at www.nplg.unc.edu.

Notes

1. WEBSTER’S REVISED UNABRIDGED

DICTIONARY (Plainfield, N.J.: MICRA, Inc.:1998).

2. Support that nonprofits received fromall levels of government increased 195percent between 1977 and 1997. Lester M.Salamon, The Resilient Sector: The State of Nonprofit America, in THE STATE OF

NONPROFIT AMERICA 3 (Lester M. Salamoned., Washington, D.C.: Brookings Inst. Press,2002).

3. ROBERT D. BEHN, RETHINKING DEMO-CRATIC ACCOUNTABILITY 3 (Washington, D.C.:Brookings Inst. Press., 2001).

4. For a discussion of collaborativeevaluation processes, see Maureen Berner &Matt Bronson, Program Evaluation in LocalGovernments: Building Consensus throughCollaboration, POPULAR GOVERNMENT,WINTER 2003, p. 29.

5. BEHN, RETHINKING.6. Berner & Bronson, Program

Evaluation.7. These practices are drawn from the

cases presented by EUGENE BARDACH,GETTING AGENCIES TO WORK TOGETHER: THE

PRACTICE AND THEORY OF MANAGERIAL

CRAFTSMANSHIP (Washington, D.C.:Brookings Inst. Press, 1998); KEVIN P. KERNS,MANAGING FOR ACCOUNTABILITY: PRESERVING

THE PUBLIC TRUST IN PUBLIC AND NONPROFIT

ORGANIZATIONS (San Francisco: Jossey-Bass, 1996); and Beryl A. Radin & BarbaraS. Romzek, Accountability Expectations in an Intergovernmental Arena: The National Rural Development Partnership,26 PUBLIUS: THE JOURNAL OF FEDERALISM 59(1996).

8. These questions are developed more fully in Gordon P. Whitaker, LydianAltman-Sauer, & Margaret Henderson,Mutual Accountability: From Surveillance to Service, Paper Presented at the Ass’n for Research on Nonprofit Organizationsand Voluntary Action, Montreal, Canada(Nov. 16, 2002).

9. For a good overview of performancemeasurement as a tool for assessing how tomeet accountability expectations, see DAVID

N. AMMONS, ACCOUNTABILITY FOR PERFOR-MANCE: MEASUREMENT AND MONITORING

IN LOCAL GOVERNMENT (Washington, D.C.:Internat’l City/County Management Ass’n,1995).

10. For a report on a collaborativeprogram evaluation in which Charlotte and alocal nonprofit the city funds joined inreviewing the nonprofit’s work, see Berner &Bronson, Program Evaluation.

11. For a description of the requirementsand limitations of contracts between local governments and nonprofits, seeFrayda Bluestein & Anita R. Brown-Graham, Local Government Contracts with Nonprofit Organizations: Questions andAnswers, 67 POPULAR GOVERNMENT, FALL

2001, p. 32.

Governments and nonprofitsshould employ goodcontracts and writtenreports, but these are notsubstitutes for personalrelationships that can buildmutual respect and trust,and lead to shared learning.

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