Skip to main content Accessibility help
×
Hostname: page-component-848d4c4894-sjtt6 Total loading time: 0 Render date: 2024-07-03T06:37:24.423Z Has data issue: false hasContentIssue false

1 - Voluntary regulation of NGOs and nonprofits: an introduction to the club framework

from The club framework

Published online by Cambridge University Press:  10 November 2010

Mary Kay Gugerty
Affiliation:
University of Washington
Aseem Prakash
Affiliation:
University of Washington
Get access

Summary

The global nonprofit and nongovernmental (NGO) sector has expanded substantially during the past two decades. As a result of this “global associational revolution” – marked by massive infusion of funds from governments, international organizations, foundations, and individuals – the nonprofit sector became a major component of the social service delivery system in most countries (Salamon et al., 2003; Salamon, 1994). This growth also thrust nonprofits and NGOs into the middle of contemporary policy debates over the appropriate role for governments and markets in the provision of public services (Giddens, 1998; Anheier and Salamon, 2006). With this expansion, the nonprofit sector also became a target for increased scrutiny, in part because it appeared to attract “bad apples” along with well-intentioned, principled organizations. Scandals and charges of nonprofit mismanagement and misappropriation have been extensively covered by the media (Fremont-Smith and Kosaras, 2003; Gibelman and Gelman, 2004; Greenlee et al., 2007). As a result, nonprofits face growing demands for accountability from resource providers as well as from the constituents they claim to serve (Edward and Hulme, 1996; Spiro, 2002; Brody, 2002; Ebrahim, 2003).

While scandals tend to impose costs on the specific wrongdoers, they can muddy the reputation of all actors with similar sectoral scope or organizational characteristics. Indeed, high-profile cases of governance failure have tended to impose negative reputational externalities on all nonprofits. A recent global opinion survey found that in a number of countries worldwide, the nonprofit sector is now less trusted than government or business (Edelman Trust, 2007).

Type
Chapter
Information
Voluntary Regulation of NGOs and Nonprofits
An Accountability Club Framework
, pp. 3 - 38
Publisher: Cambridge University Press
Print publication year: 2010

Access options

Get access to the full version of this content by using one of the access options below. (Log in options will check for institutional or personal access. Content may require purchase if you do not have access.)

References

Akerlof, G. A. 1970. The Market for “Lemons”: Quality Uncertainty and the Market Mechanism. Quarterly Journal of Economics 84(3): 488–500.CrossRefGoogle Scholar
Alchian, Armen A. and Demsetz, Harold. 1972. Production, Information Costs, and Economic Organization. American Economic Review 62(5): 777–795.Google Scholar
Almond, Gabriel and Verba, Sidney. 1965. The Civic Culture: Political Attitudes and Democracy in Five Nations. Boston: Little, Brown.Google Scholar
Anheier, Helmut and Salamon, Lester. 2006. The Nonprofit Sector in Comparative Perspective. In Powell, W. and Steinberg, Richard, eds. The Nonprofit Sector: A Research Handbook. New Haven: Yale University Press, pp. 89–116.Google Scholar
Arumi, A. M., Wooden, R., Johnson, J., Farkas, S., Duffett, A., and Ott, A.. 2005. The Charitable Impulse. New York: Public Agenda.Google Scholar
Bekkers, René. 2006. The Benefits of Accreditation for Fundraising Nonprofits. Paper presented at the 2006 Conference of the Association for Research on Nonprofit Organizations and Voluntary Action (ARNOVA).
Ben-Ner, A. and Gui, B.. 2003. The Theory of Nonprofit Organizations Revisited. In Anheier, H. and Ben-Ner, A., eds. The Study of Nonprofit Enterprise: Theories and Approaches. New York: Kluwer, pp. 3–26.CrossRefGoogle Scholar
Berle, A. A., and Means, G. C.. 1932. The Modern Corporation and Private Property. New York: Harcourt, Brace and World.Google Scholar
Bessen, S. M. and Saloner, G.. 1988. Compatibility Standards and the Market for Telecommunication Services. Santa Monica, CA: Rand.Google Scholar
Biglaiser, Gary. 1993. Middlemen as Experts. The RAND Journal of Economics 24(2): 212–223.CrossRefGoogle Scholar
Bothwell, R. O. 2001. Trends in Self-Regulation and Transparency of Nonprofits in the U.S. International Journal of Not-for-Profit Law 2(3). Accessed via www.icnl.org/journal/vol2iss3/arn_bothwell.htm, November 2007.
Bowman, H. W. 2006. Should Donors Care about Overhead Costs? Do They Care?Nonprofit and Voluntary Sector Quarterly 25: 288–310.CrossRefGoogle Scholar
Bradley, Bill, Jansen, Paul, and Silverman, . 2003. The Nonprofit Sector's $100 Billion Opportunity. Harvard Business Review (May): 272–294.
Brady, Henry, Schlozman, Kay, and Verba, Sidney. 1995. Beyond SES: A Resource Model of Political Participation. American Political Science Review 89(2): 271–294.CrossRefGoogle Scholar
Brody, Evelyn. 2002. Accountability and Public Trust. In Salamon, L., ed. The State of Nonprofit America. Washington, DC: Brookings Institution and the Aspen Institute.Google Scholar
Buchanan, J. M. 1965. An Economic Theory of Clubs. Economica 32: 1–14.CrossRefGoogle Scholar
Chhaochharia, Vidhi and Ghosh, Suman. 2008. Do Charity Ratings Matter? Working paper, University of Miami.
Cornes, R. and Sandler, T.. [1986] 1996. The Theory of Externalities, Public Goods, and Club Goods 2nd edn. Cambridge University Press.Google Scholar
DeMarzo, P., Fishman, M., and Hagerty, K.. 2005. Self-Regulation and Government Oversight. Review of Economic Studies 72(3): 687–706.CrossRefGoogle Scholar
Ebrahim, Alnoor. 2003. Accountability in Practice: Mechanisms for NGOs. World Development 31(5): 813–829.CrossRefGoogle Scholar
Ebrahim, Alnoor. 2005. Accountability Myopia: Losing Sight of Organizational Learning. Nonprofit and Voluntary Sector Quarterly 34(1): 56–87.CrossRefGoogle Scholar
Ebrahim, Alnoor and Weisband, Edward, eds. 2007. Global Accountabilities. Cambridge University Press.CrossRef
,Edelman Trust. 2007. Edelman Trust Barometer 2007. Accessed via www.edelman.com/trust/2007/trust_final_1_31.pdf.
Edwards, Michael and Hulme, David, eds. 1996. Beyond the Magic Bullet: NGO Performance and Accountability in the Post-Cold War World. West Hartford, CT: Kumarian Press.
Fama, Eugene and Jensen, Michael. 1983. Separation of Ownership and Control. Journal of Law and Economics 26: 301–326.CrossRefGoogle Scholar
Fearon, James. 1994. Domestic Political Audiences and the Escalation of International Disputes. American Political Science Review 88(3): 577–592.CrossRefGoogle Scholar
Freeman, R. E. 1984. Strategic Management: A Stakeholder Approach. Boston: Pitman.Google Scholar
Fremont-Smith, M. and Kosaras, A.. 2003. Wrongdoing by Officers and Directors of Charities: A Survey of Press Reports, 1995–2002. Working Paper No. 20, Hauser Center for Nonprofit Organizations, Harvard University, Cambridge, MA.Google Scholar
Gibelman, Margaret and Gelman, Sheldon. 2004. A Loss of Credibility: Patterns of Wrongdoing among Nonprofit Organizations. Voluntas 15(4): 355–381.CrossRefGoogle Scholar
Giddens, Anthony. 1998. The Third Way: The Renewal of Social Democracy. Cambridge, UK: Polity Press.Google Scholar
Gourevitch, Peter and Shinn, James. 2005. Political Power and Corporate Control: The New Global Politics of Corporate Governance. Princeton University Press.Google Scholar
Grant, Ruth and Keohane, Robert. 2005. Accountability and Abuses of Power in World Politics. American Political Science Review 99(1): 29–43.CrossRefGoogle Scholar
Greenlee, Janet, Fischer, Mary, Gordon, Teresa, and Keating, Elizabeth. 2007. An Investigation of Fraud in Nonprofit Organizations: Occurrences and Deterrents. Nonprofit and Voluntary Sector Quarterly 36: 676–694.CrossRefGoogle Scholar
Gugerty, Mary Kay. 2008. The Effectiveness of NGO Self-Regulation: Theory and Evidence from Africa. Public Administration and Development 28 (May): 105–118.CrossRefGoogle Scholar
Gugerty, Mary Kay, 2009. Signaling Virtue: Voluntary Accountability Programs among Nonprofit Organizations. Policy Sciences 42: 243–273.CrossRefGoogle Scholar
Hannan, Michael and Freeman, John. 1989. Structural Inertia and Organizational Change. American Sociological Review 49(2): 149–164.CrossRefGoogle Scholar
Hansmann, Henry B. 1980. The Role of Nonprofit Enterprise. Yale Law Review 89: 835–898.CrossRefGoogle Scholar
Henderson, Sarah L. 2002. Selling Civil Society: Western Aid and the Nongovernmental Organization Sector in Russia. Comparative Political Studies 35(2): 139–167.CrossRefGoogle Scholar
Hirschman, A. O. 1970. Exit, Voice, and Loyalty. Cambridge, MA: Harvard University Press.Google Scholar
Holmstrom, Bengt. 1982. Moral Hazard in Teams. Bell Journal of Economics 13(2): 324–340.CrossRefGoogle Scholar
Iannaccone, Laurence. 1998. Introduction to the Economics of Religion. Journal of Economic Literature. 36 (September): 1465–1496.Google Scholar
,Independent Sector. 2005. Strengthening Transparency Governance Accountability of Charitable Organizations: A Final Report to Congress and the Nonprofit Sector. Resource Document. Independent Sector. Accessed via http://info.ethicspoint.com/files/PDF/resources/Panel_Final_Report.pdf, November 20, 2008.
,Independent Sector. 2007. Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundations. Resource Document. Panel on the Nonprofit Sector, Independent Sector. Accessed via www.nonprofitpanel.org/report/principles/Principles_Guide.pdf, October 1, 2007.
Johnson, Erica and Prakash, Aseem. 2007. NGO Research Program: A Collective Action Perspective. Policy Sciences 40(3): 221–240.CrossRefGoogle Scholar
Kearns, Kevin. 1994. The Strategic Management of Accountability in Nonprofit Organizations: An Analytical Framework. Public Administration Review 54(2): 185–192.CrossRefGoogle Scholar
Keck, M. and Sikkink, K.. 1998. Activists beyond Borders: Advocacy Networks in International Politics. Ithaca: Cornell University Press.Google Scholar
Kiewert, D. Roderick and McCubbins, Mathew. 1991. The Logic of Delegation. University of Chicago Press.Google Scholar
King, , Andrew, A. and Lenox, Michael J.. 2000. Industry Self-Regulation without Sanctions: The Chemical Industry's Responsible Care Program. Academy of Management Journal 43(4): 698–716.Google Scholar
King, Andrew A., Lenox, Michael J., and Terlaak, Ann. 2005. The Strategic Use of Decentralized Institutions: Exploring Certification with the ISO 14001 Management Standard. Academy of Management Journal 48(6): 1091–1106.CrossRefGoogle Scholar
Lenox, Michael and Nash, Jennifer. 2003. Industry Self-Regulation and Adverse Selection: A Comparison across Four Trade Association Programs. Business Strategy and the Environment 12: 343–356.CrossRefGoogle Scholar
Light, Paul, 2004. Fact Sheet on the Continuing Crisis in Charitable Contributions. Accessed via http://wagner.nyu.edu/news/confidence.pdf, October 20, 2009.
Lloyd, Robert. 2005. The Role of NGO Self-Regulation in Promoting Stakeholder Accountability. One World Trust.
Lloyd, R. and las Casas, L.. 2005. NGO Self-Regulation: Enforcing and Balancing Accountability. Alliance Extra. Accessed via www.alliance magazine.org/node/2025.
McCubbins, Matthew and Schwartz, Thomas. 1984. Congressional Oversight Overlooked: Police Patrols versus Fire Alarms. American Journal of Political Science 28: 16–79.CrossRefGoogle Scholar
McCubbins, Matthew, Noll, Roger G., and Weingast, Barry. 1989. Structure and Process as Solutions to the Politician's Principal Agency Problem. Virginia Law Review 74: 431–482.CrossRefGoogle Scholar
McGuire, M. 1972. Private Good Clubs and Public Goods Club. Swedish Journal of Economics 74: 84–99.CrossRefGoogle Scholar
Mahon, John. 1993. Shaping Issues/Manufacturing Agents. In Mitnick, Barry M., ed. Corporate Political Agency. Newbury Park, CA: Sage, pp. 187–212.Google Scholar
Manne, Henry. 1965. Mergers and the Market for Corporate Control. Journal of Political Economy 73(2): 110–120.CrossRefGoogle Scholar
March, James and Olsen, Johan. 1989. Rediscovering Institutions: The Organizational Basis of Politics. New York: Free Press.Google Scholar
Miller, Gary, 2005. The Political Evolution of Principal–Agent Models. Annual Review of Political Science 8: 203–225.CrossRefGoogle Scholar
Mitchell, R. K., Agle, B. R. and Wood, D. J.. 1997. Towards a Theory of Stakeholder Identification and Salience: Defining the Principle of Who and What Really Counts. Academy of Management Review 22: 853–886.CrossRefGoogle Scholar
Mitnick, Barry M. 1982. Regulation and the Theory of Agency. Policy Studies Review 1(3): 442–453.CrossRefGoogle Scholar
Moe, Terry. 1984. The New Economics of Organization. American Journal of Political Science 28: 739–777.CrossRefGoogle Scholar
Nunez, J. 2007. Can Self-Regulation Work? A Story of Corruption, Impunity and Cover-Up. Journal of Regulatory Economics 31: 206–233.CrossRefGoogle Scholar
Olson, M. 1965. The Logic of Collective Action. Cambridge, MA: Harvard University Press.Google Scholar
Ortmann, Andreas and Schlesinger, Mark. 2003. Trust, Repute and the Role of Nonprofit Enterprise. In Anheier, Helmut and Ben-Ner, Avner, eds. The Study of Nonprofit Enterprise: Theories and Approaches. New York: Kluwer.Google Scholar
Ortmann, Andreas and Svítková, Katarina. 2007. Certification as a Viable Quality Assurance Mechanism in Transition Economies: Evidence, Theory and Open Questions. Prague Economic Papers 2. Accessed via www.rse.cz/pep/pdf/300. pdf, October 20, 2009.
Ostrower, F. and Stone, M.. 2006. Governance: Research Trends, Gaps and Future Prospects. In Powell, W. and Steinberg, R., eds. The Nonprofit Sector Research Handbook. New Haven: Yale University Press.Google Scholar
,Panel on the Nonprofit Sector. 2007. Principles for Good Governance and Ethical Practice: A Guide for Charities and Foundations: Reference Edition. Washington, DC: Independent Sector.Google Scholar
Pfeffer, J. and Salancik, G.. 1978. The External Control of Organizations: A Resource Dependency Perspective. New York: Harper and Row.Google Scholar
Potoski, M. and Prakash, A.. 2009a. Information Asymmetries as Trade Barriers: ISO 9000 Increases International Commerce. Journal of Policy Analysis and Management 28(2): 221–238.CrossRefGoogle Scholar
Potoski, M. and Prakash, A.. eds. 2009b. Voluntary Programs: A Club Theory Perspective. Cambridge, MA: MIT Press.CrossRef
Prakash, A. and Gugerty, M. K.. 2010. Trust but Verify? Voluntary Regulation Programs in the Nonprofit Sector. Regulation and Governance 4(1): 22–47.
Prakash, A. and Potoski, M.. 2006. The Voluntary Environmentalists. Cambridge University Press.CrossRefGoogle Scholar
Prakash, A. and Potoski, M. 2007. Collective Action through Voluntary Environmental Programs: A Club Theory Perspective. Policy Studies Journal 35(4): 773–792.CrossRefGoogle Scholar
Pratt, John W. and Zeckhauser, Richard J., eds. 1985. Principals and Agents: The Structure of Business. Cambridge, MA: Harvard Business School Press.
Putnam, Robert, with Leonardi, Robert and Nanetti, Raffaella. 1993. Making Democracy Work. Princeton University Press.Google Scholar
Romzek, Barbara S. and Dubnick, Melvin J.. 1987. Accountability in the Public Sector: Lessons from the Challenger Tragedy. Public Administration Review 47: 227–238.CrossRefGoogle Scholar
Rose-Ackerman, S. 1996. Altruism, Nonprofits, and Economic Theory. Journal of Economic Literature 34: 701–728.Google Scholar
Ross, Stephen A. 1973. The Economic Theory of Agency: The Principal's Problem. American Economic Review 62: 134–139.Google Scholar
Rubenstein, Jennifer. 2007. Accountability in an Unequal World. Journal of Politics 69(3): 616–632.CrossRefGoogle Scholar
Salamon, Lester. 1994. The Rise of the Nonprofit Sector. Foreign Affairs (July/August): 3–64.
Salamon, Lester, Sokolowski, W. J., and ,Regina List. 2003. Global Civil Society: An Overview. Baltimore: Center for Civil Society Studies, Johns Hopkins University.Google Scholar
Sasser, E., Prakash, A., Cashore, B., and Auld, G.. 2006. Direct Targeting as NGO Political Strategy: Examining Private Authority Regimes in the Forestry Sector. Business and Politics 8(3): 1–32.CrossRefGoogle Scholar
Shaked, A. and Sutton, J.. 1981. The Self-Regulating Profession. Review of Economic Studies 48(2): 217–234.CrossRefGoogle Scholar
Shapiro, S. P. 2005. Agency Theory. Annual Review of Sociology 31 (August): 263–284.CrossRefGoogle Scholar
Sidel, Mark. 2003. Trends in Nonprofit Self-Regulation in the Asia Pacific Region: Initial Data on Initiatives, Experiments and Models in Seventeen Countries. Mimeo, University of Iowa Law School.
Smith, Steve Rathgeb and Lipksy, Michael. 1993. Nonprofits for Hire. Cambridge, MA: Harvard University Press.Google Scholar
Spar, Debora and Dail, James. 2002. Of Measurement and Mission: Accounting for Performance in Non-Governmental Organizations. Chicago Journal of International Law 3(1): 171–181.Google Scholar
Spence, M. 1973. Job Market Signaling. Quarterly Journal of Economics 88: 355–374.CrossRefGoogle Scholar
Spiller, Pablo. 1990. Politicians, Interest Groups, and Regulators: A Multiple-Principals Agency Theory of Regulation, or “Let Them Be Bribed.” Journal of Law and Economics 33(1): 65–101.CrossRefGoogle Scholar
Spiro, Peter. 2002. Accounting for NGOs. Chicago Journal of International Law 3(1): 161–169.Google Scholar
Steinberg, R. and Gray, B.. 1993. The Role of Nonprofit Enterprise in 1993: Hansmann Revisited. Nonprofit and Voluntary Sector Quarterly 22(4): 297–316.CrossRefGoogle Scholar
Terlaak, Ann and King, Andrew. 2006. The Effect of Certification with the ISO 9000 Quality Management Standard: A Signaling Approach. Journal of Economic Behavior and Organization 60: 579–602.CrossRefGoogle Scholar
Tiebout, C. M. 1956. A Pure Theory of Local Public Expenditures. Journal of Political Economy 64: 416–24.CrossRefGoogle Scholar
Vakil, Anna C. 1997. Confronting the Classification Problem: Toward a Taxonomy of NGOs. World Development 25(12): 2057–2070.CrossRefGoogle Scholar
Warren, Shana and Lloyd, Robert. 2009. Civil Society Self-Regulation: A Global Picture. One World Trust Briefing Paper No. 119, June.
Waterman, Richard W. and Meier, Kenneth J.. 1998. Principal–Agent Models: An Expansion?Journal of Public Administration Research and Theory 8(2): 173–202.CrossRefGoogle Scholar
Weisbrod, Burton. 1988. The Nonprofit Economy. Cambridge, MA: Harvard University Press.Google Scholar
Wiseman, J. 1959. The Theory of Public Utility Pricing: An Empty Box. Oxford Economic Papers 11(1): 88–97.CrossRefGoogle Scholar
Wood, B. Dan. 1988. Principals, Bureaucrats, and Responsiveness in Clean Air Enforcements. American Political Science Review 82: 213–234.CrossRefGoogle ScholarPubMed

Save book to Kindle

To save this book to your Kindle, first ensure coreplatform@cambridge.org is added to your Approved Personal Document E-mail List under your Personal Document Settings on the Manage Your Content and Devices page of your Amazon account. Then enter the ‘name’ part of your Kindle email address below. Find out more about saving to your Kindle.

Note you can select to save to either the @free.kindle.com or @kindle.com variations. ‘@free.kindle.com’ emails are free but can only be saved to your device when it is connected to wi-fi. ‘@kindle.com’ emails can be delivered even when you are not connected to wi-fi, but note that service fees apply.

Find out more about the Kindle Personal Document Service.

Available formats
×

Save book to Dropbox

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Dropbox.

Available formats
×

Save book to Google Drive

To save content items to your account, please confirm that you agree to abide by our usage policies. If this is the first time you use this feature, you will be asked to authorise Cambridge Core to connect with your account. Find out more about saving content to Google Drive.

Available formats
×