Accountability in Nonprofit Management

Accountability has become a buzz word in nonprofit management in recent years. Where it used to be enough just to “do good work” or establish your organization’s efforts as a “good cause,” increasingly organizations are being held accountable for financial records, services provided and by the clients who receive those services. Organizations must now make provisions for this expectation of accountability and improve the efficiency of their operations. In recent years, high profile news stories about mismanagement within some national nonprofit organizations have put the spotlight on accountability for all of us.

A nonprofit organization should be challenged in terms of it’s fiscal responsibility and relevance. In reality, a nonprofit has entered into a “contract” with a community to provide a service – the “service” being defined in the organization’s mission statement. In addition to having a clearly defined mission, an organization needs to have criteria in place to evaluate whether or not they are adequately delivering the services required of that mission. Systems need to be in place to track this criteria – not just in terms of numbers, but also incorporate feedback from clients, staff and volunteers to help evaluate whether things are successful and useful, or not.

In terms of financial records – fundraising, grant award administration, payroll and personnel, facility records, etc. – accountability is incredibly important. As a nonprofit organization, many of your records should be public record. You are required to file IRS form 990 annually which shares some financial accounting information, but the public does have a right to hold your organization accountable in regards to finances. Depending on where your funds come from, there may be specific criteria for record-keeping. For example, if you receive government grants or funds from private or public foundations, there will be requirements set by the funders and you will be asked to file a report.

It is important to be above board and honest about your accounting. If you hold a fundraiser and specify that the money raised will be going toward a particular program or project – be sure this is true. Nonprofits get into trouble (and create public ill will) when they spend funds raised for one declared purpose on something else. In the same vein, if you receive a grant award for a specific project, keep accurate records and use the money as you promised. If you don’t, it could jeopardize your chances of getting additional funding in the future.

Put checks and balances in place to help ensure accountability. By having an external, professional audit at the end of each fiscal year and by including professional legal and financial advisors on your board or as part of your advisory council, it will help your organization stay legal and above public scrutiny.

The best advice I could share would be to create a culture of accountability in your organization. From board members, to staff, to policies and procedures – if you can set systems in place and foster a feeling of respect and accountability to the public, funders and donors, and your clients – it will go a long way in setting your organization apart as a responsible, efficiently run organization.