The recent scandals engulfing the charity/NGO sector could lead to demands for increased and more sophisticated accountability for non-governmental organisations (NGOs), says a leading academic in the field.
Brendan O’Dwyer, Professor of Accounting at Alliance MBS, has been studying the accounting and accountability of NGOs for more than a decade, during which time the size of the NGO sector has mushroomed with NGOs today employing 23.8 million full-time workers across Europe, some 13% of the workforce.
Yet many of these organisations are heavily reliant on government funds to survive. For instance, Oxfam, which has been hit by allegations of sexual misconduct in recent weeks, has been warned that it could forfeit millions of pounds of UK government money in the wake of the scandal, while the EU - which also funds Oxfam significantly - has demanded “maximum transparency” from the charity.
Prof O’Dwyer says the crisis at Oxfam strikes to the heart of the debate around the accountability of NGOs. “NGOs need to realise that if they are going to hold others to account then they need to have the same values within their organisation that they espouse to others. The Oxfam case was particularly troubling because the alleged victims formed part of communities the charity was actually meant to be helping.
“The significant efforts that have been expended in the past decade to develop mechanisms aimed at improving accountability to NGO beneficiaries risk being undermined by these recent events.”
Governance
Prof O’Dwyer says the governance of the NGO sector has improved significantly over the past decade, more often from a financial perspective. “The mechanisms through which NGOs are held to account are much more sophisticated today, particularly with regards to financial accounting. But one of the big questions is whether this focus on purely using financial accounting is always appropriate for the sector."
“One of the problems is that at the end of the day the purpose of NGOs is not to produce a profit but is focused on social goals. As a consequence there is no institutionalised bottom-line like profit which with to evaluate the performance of NGOs. This makes the sector especially interesting for accounting scholars given the performance measurement challenges, the need for accountability to diverse sets of stakeholders, and the requirement to balance and reconcile aims centred on efficiency and effectiveness.”
Beliefs
Prof O’Dwyer says another related issue is that NGOs are frequently staffed by people who have strong beliefs and values. “That means imposing control systems on these individuals can lead to clashes, with some people having resigned from NGOs because of the control mechanisms and associated administrative burdens foisted upon them."
“There can be strong resistance, or even outright rejection, of attempts to use accounting procedures as part of attempts to operate NGOs like a business. This has led to the development of suites of alternative accounting and accountability mechanisms aimed at offering much broader, stakeholder-influenced assessments of NGO performance.”
Special issue
This key theme is one of many that emerge in a recently published special issue of the top tier accounting journal Accounting, Organisations and Society co-edited by Prof O’Dwyer. The issue examines how different accounting mechanisms are today used to hold a wide range of NGOs to account. “The association between values and beliefs and control mechanisms pervades all four papers,” he adds.
Meanwhile, he says the special issue papers offer numerous opportunities for future research. “There are lots of further questions to ask on this subject. For instance, how do you align individual values with control systems? And how do you engage employees more in the design of accounting and accountability mechanisms?”
