In the United States, the IRS now requires charities to publicly disclose any significant asset diversion, which is the theft or unauthorized use of assets, that the charity identifies during the year. We use this new disclosure to investigate whether strong governance reduces the likelihood of a charitable asset diversion. Specifically, for a sample of 1528 charities from 2008 to 2012, we simultaneously examine eleven measures of governance that capture four broad governance constructs: board monitoring, independence of key individuals, tone (...) at the top, and capital provider oversight. We find consistent evidence that good governance across all four constructs is negatively associated with the probability of an asset diversion. Of the eleven governance measures, our results indicate that monitoring by debt holders and government grantors, audits, and keeping managerial duties in-house are most strongly associated with lower incidence of fraud. Our results also indicate that the likelihood of a fraud is negatively associated with a board review of the Form 990, the existence of a conflict of interest policy, and the presence of restricted donations. In addition, we document that the likelihood of an asset diversion is negatively associated with program efficiency and positively associated with growth and organizational complexity. (shrink)

Non-governmental organizations are increasingly important drivers for businesses’ self-regulation to operate in a sustainable way. We shift the perspective on NGOs from focusing on their advocacy role to focusing on their accountability for having sustainable internal operations. In a multiple case analysis, we explore the question ‘What are the drivers and barriers to sustainable conduct of NGOs that are sustainability advocates?’ Drawing on institutional theory, we obtain novel insights into the legitimacy-seeking motivations for sustainable conduct in the specific context of (...) advocacy NGOs. We found that, affected by its mission, the cultural-cognitive drive is particularly high, with sustainable conduct as an internally ‘taken-for-granted’ behavior, followed by the normative drivers, with the balance between perceived vulnerability of needing to ‘walk the talk’ and the sense of immunity due to lack of external scrutiny, and there are hardly any regulative drivers. Furthermore, these organizations face idiosyncratic trade-offs when balancing investments in their advocacy missions with investments in sustainable operations, reflecting ethical dilemmas. In a broader sense, this research elucidates the way advocates cope in situations of institutional complexity, with conflicting institutional demands between their mission and role-model function. (shrink)

In examining how reform-leading supranational institutions respond to public criticism, this article advances current theory on their institutional accountability mechanisms and extends research on this topic by focusing on their responses to public criticism of alleged reform failures. We consider the case of the International Monetary Fund’s (IMF’s) involvement in the Greek economic crisis, as the structural adjustment reforms it imposed to stabilize the economy. We show how these controversial and, by many accounts, failed policies have profoundly impacted the well-being (...) of the recipient country by reducing social cohesion and impoverishing the most vulnerable groups. In explaining the IMF’s institutional response mechanism for fending off such criticism, we offer moral regulatory appropriation (MRA) as a processual framework and present the IMF’s organizing logic of institutional legitimation processes in four domains of action: agentic mission, reform policies, institutional policy negotiations, and moral appropriation. We argue that this enables institutions to maintain moral legitimacy despite evidence of their reforms’ policy failure and various negative consequences for their populations. The proposed framework has theoretical implications for conceptualizing the rhetorical deployment of moral legitimation to secure and defend institutional accountability. We also highlight the limitations and boundaries of such an approach by the IMF and similar reform-leading institutions. (shrink)

This study examines the participation strategies of an environmental non-governmental organization (NGO) in community-based conservation (CBC) initiatives in the developing country context of Pakistan. We use local Pakistani concepts and terms to interpret and narrate our study. Drawing on the micro-mobilization literature, our analysis embeds a situated analysis of the ‘biradari’ (kinship) structures that pervade Pakistani social and cultural milieu. We shed light on the importance of various gatekeepers in providing access and ongoing support for CBC initiatives, suggesting NGOs must (...) navigate complex cultural and social structures to manage participation in developing country contexts. Here our findings point to the importance of local knowledge not just in articulating community needs but also in articulating participation strategies. Furthermore, even though ‘elite’ structures have the potential to jeopardize equitable participation and project long-term sustainability, our analysis suggests interacting and gaining ‘bharosa’ (trust) of communities’ via these structures is critical to participation. While previous research has called into doubt the efficacy of CBC in advancing conservation, we suggest that frequent and culturally atoned engagement is a must for environmental NGOs working in socially entrenched developing nations. Our research brings to light the complex ethical terrain navigated by environmental NGOs in CBC projects, illuminating the inherent potential for both empowering and subjugating outcomes. (shrink)

Humanitarian social enterprises (HSEs) are facing mounting pressure to incorporate social innovation into their practice. This study thus identifies how HSEs leverage organizational capabilities toward developing social innovation. Specifically, it considers how resource scarcity and operating circumstances affect the capabilities used by HSEs for developing social innovation, using a longitudinal case study approach with qualitative data from 12 hunger-relief HSEs operating in the United States. Based on 59 interviews with 31 managers and directors and related documents, several propositions are posited. (...) The findings suggest that resource availability (i.e., scarcity vs. abundance) leads some HSEs to focus on developing social innovation using their collaborative capabilities, while others leverage their absorptive capacity. Further, HSEs adjust their approach to developing social innovation based on whether they are operating in ordinary circumstances (i.e., before the COVID pandemic) or extraordinary ones (i.e., during the COVID pandemic). Interestingly, the findings suggest that the organizational capabilities used by HSEs are adjusted as these enterprises become more familiar with extraordinary operating circumstances. For example, at the onset of the COVID-19 pandemic, resource-scarce HSEs focused on parallel bricolage to develop social innovation. Subsequently, they focused on selective bricolage. The findings offer novel insights by relating the social innovation of social enterprises to crisis management. (shrink)