As government continues to decline in providing services due to legal and budget constraints, nonprofits have been filling the void by providing these needed services. But unlike government agencies, nonprofits have not always been held to the same public scrutiny.

As scandals over nonprofit accountability make their way to the headlines of widely read newspapers, nonprofit credibility wanes. As a result, nonprofit organizations' images suffer causing much of the public to decrease donations to all nonprofit organizations, although many of the accusations against nonprofits are spurious. Today, nonprofits face powerful accountability pressures and are asked by funders and the public to justify their delivered services and operations.

How is Accountability Defined?

Webster's Dictionary defines accountability as "the state of being accountable, subject to the obligation to report, explain, or justify something; responsible, answerable." Most academicians use a narrow definition that involves the nonprofit answering to a higher authority in the bureaucratic or interorganizational chain of command.

The public and the media tend to use a broader definition of accountability. Generally, this definition holds nonprofit organizations accountable to higher authorities in the organizations but also holds the nonprofit organization accountable to the public, media, donors, recipients of services, and others. The public and media have an expectation that the organization will have a certain level of performance, responsiveness, ethics, and morality.

How an organization views accountability will play a role in how it makes itself an accountable organization. Two questions should be considered when defining accountability: To Whom are nonprofit organizations accountable and For What activities and levels of performance are nonprofit organizations held responsible.

Levels of Accountability

Donors, such as government and foundations, are now more focused on efficiency and results. As a result, nonprofits have been pressured to prove that they are providing the services they claim and using the least possible resources to provide that service. Clients, such as individuals and in some cases entire communities, are insisting on nonprofit responsiveness. Nonprofits must now contend with pressures from the top of their organizations (donors and Boards of Directors) to the bottom (clients and partners) to demonstrate capacity and performance because the broader definition of accountability used by the public and media has increased.

Accountability falls under three levels: fiscal, process, and program. During audits for donor or internal purposes, fiscal accountability is usually the first to be reviewed to document how funds are spent and to determine the organization has been a good steward over the funds. Process accountability is about determining if the organization has carried out a prescribed course of action. Program accountability is concerned with what products were delivered and to whom did the products serve. Most nonprofits are aggressively seeking measures to show that they are accountable in the fiscal, process, and program levels of their organization.

To Whom and For What?

The answer to this question depends on how accountability is defined. Is the nonprofit only accountable to its donors and Board of Directors or also to its clients, project partners, and the public?

Funding sources can effect the accountability demands on the nonprofit organization. The pressure of securing future funding can also effect accountability activities. As government funding for nonprofit service provision increases, so will demands from the public for accountability and for a more business-like organization.

Paul Light of the Brookings Institution is concerned about the pressure for nonprofits to become something other than nonprofit-like. Light states that nonprofits are pressured to be more business-like and revenue-centered. Light is concerned that this leads nonprofits to spend more time searching for the next dollar and accounting for it to continue receiving funding from the source. Meanwhile, the nonprofit will become less innovative. His other concern is that the drive to be business-like will become a priority over representing nonprofit community stakeholders.