Part One
3.3 To Whom Do Voluntary Organisations Account To?
3.3.12 Important and Unimportant Accountability Relationships
Table 3.2 summaries the status of accountability relationships based on the relevant literature.
Important accountability relationships
Acknowledged but Less Important Accountabilities
Potential or unclear status
Government agencies Members Professional bodies
Volunteers Clients Paid Staff
Large donors Local Communities Governing Board
Peer organisations Small donors
Table 3.2: Important and Less Important Stakeholders 3.3.13 Multiple Accountabilities
The table above shows that voluntary organisations are potentially accountable to a large number of stakeholders. This is also widely recognised in the literature by a number of researchers (refer Leat, 1988; Rochester, 1995; Kumar, 1996; Leat, 1996;
Kumar, 1997; Brown and Moore, 2001).
The tension between the demands of different stakeholders is well documented: in particular, the tension between the accountability demands of funders (upwards) and accounting to users and communities (downwards) (refer Leat, 1988; Rochester, 1995; Kumar, 1996; Kumar, 1997; Brown and Moore, 2001). Edwards (1996: 87) succinctly illustrates this dilemma:
All NGOs have multiple accountabilities … accountability is overwhelmingly
‘upwards’ to trustees and regulators. But since their mission and values emphasise ‘empowerment’, they also want to involve stakeholders in decision making or at least consultation.
FitzGibbon (1997), taking an historical perspective, shows that managing multiple stakeholders and their vested interests has long been a problem for voluntary organisations.
Non profits occupy a unique position in terms of the variety of constituencies to which they are accountable: the public at large, the government, donors, clients, and their own employees. In part, this often places nonprofits at the centre of a complex of conflicting, often irreconcilable demands and vested interests. In the 1870s [in Cleveland, USA], the personal, ad hoc, and independent voluntary associations exhibited a rather straightforward and uncomplicated set of relationships. After the turn of the century, however, as organisations grew
more elaborate, interdependent, and reliant on an ever-broadening pool of public and private funding, the set of relationships into which they were drawn became more intricate and burdensome. A conflict arose over the need of a benevolent organisation to satisfy its many constituencies while trying to retain the traditional flexibility and voluntary impulse of charitable organisations (FitzGibbon, 1997: 34-5).
Walking the fine line between keeping powerful stakeholders happy and resources flowing as well as staying true to the organisations’ purpose of serving clients and communities is considered the key voluntary sector management challenge (Leat, 1988; Kendall and Knapp, 1996; Brown and Moore, 2001).
Given that managing the conflicting demands of multiple stakeholders is a key management challenge, it is surprising that few studies consider the relative importance given to accounting to stakeholders and how tensions are managed.
Kumars’ (1997) UK research attempted to map stakeholder relationships. She found voluntary sector managers she interviewed acknowledged five accountability relationships:
• Ultimate accountability to users;
• A strong sense of two way accountability with the government official in the purchasing organisation with whom they interacted. The relationship was on a personal level, though they were aware of consequences of not being seen to be accountable and potential removal of funding;
• They personally thought they were directly accountable to their line manager within the organisation;
• They rarely observed their line management accountability as extending to the trustees, about whom they spoke in fairly disparaging terms and who were not seen to be in touch with the organisation;
• They also felt they were accountable to their local network of voluntary and statutory organisations; and
• They believed they were accountable to ‘people who put the money in the collecting boxes’ (Kumar, 1997).
Her research studied two large organisations that were selected because they were established social services providers with a long history of contracting to government. She interviewed the managers involved in the service delivery. Given these factors, her findings of the importance of users are not surprising. Had she interviewed the governors she may have found a very different ‘map’, perhaps with more emphasis on the local community. While couching her research in terms of the contractual relationship with government provides useful information about this type of accountability relationship, it is only the perspective of one type of organisation (large, established social service providers) in one type of relationship (long-term contractual relationship with government).
Ospina et al (2002) also attempts to map stakeholder relationships. Their exploratory research with managers in American voluntary organisations looked at how they managed the relationship between their funders and communities. They found that managers create a variety of formal and informal mechanisms to sustain their relationships with the community in the midst of ongoing accountability demands.
Their sample consisted of voluntary organisations selected for their determination to maintain their relationships with the community. So while her research shows that it is possible to balance the relationship between the community and funders, it is very much skewed to ‘successful examples’.
Woodward and Marshall (2002) is the only study found to date that considers what priority voluntary organisations place on stakeholders. Their large scale national survey of over 2000 Australian not-for-profit companies (a specific legal type of voluntary organisation) asked the companies to nominate the top three most important stakeholders.
Members were considered the most important, followed by the organisation’s clients, followed by government. The general public was ranked in the top three by only 11 per cent of organisations. The results did not differ by organisation type. The researchers concluded that the survey technique used, while providing an overview,
could not detect what dynamics and processes were at play, nor suggest explanations, and their open-ended questions yielded limited results. They urged follow-up research, using qualitative techniques (Woodward and Marshall, 2002).
Some authors have theorised about how voluntary organisations should prioritise between stakeholders. Smith (1993) argues decisions on managing multiple stakeholders should be made on a moral basis; Lawry (1995) on an ethical basis; and Bogart (1995) for economic considerations to guide the decisions. Brown and Moore (2001) argue that all three bases as well as legal requirements need to be considered.
Lansley (1996) suggests that many organisations only cope because some stakeholders do not assert their rights for an account, or managers decide who to give account to based on a calculation of the support the organisation can least do without, or base their decisions on ideological positions.
There has been limited theoretical or empirical work to date on the relative priorities assigned to accountability relationships. Given that there is a potentially wide range of stakeholders to account to, and the problems that multiple accountabilities generate, this is an important omission in the literature. Indeed, Leat’s (1996: 62) conclusion still stands:
There is little data on how voluntary organisations define accountability, what priority they attach to it, and what systems and procedures they have in place.
Studies raising the issue of accountability tend to be concerned primarily with accountability to statutory funders.