Neil Tambe

Husband, Father, Citizen, Professional.

I'm a Detroiter who happens to enjoy writing, national parks, orange juice, the performing arts, and fanciful socks. More than anything though, I aspire to be a good husband, father, and citizen.

The questionable accountability of non-profits

Organization's tend to work better when independent entities (like boards or regulators) hold them accountable for their actions. That's why public companies have boards of directors - to make sure the company's leadership team is effectively advancing the interests of shareholders. Similarly, government entities like the SEC and FDA exist to make sure companies follow the law and aren't causing harm.

Who holds non-profits and foundations accountable for their day-to-day actions?

Non-profits are given tax exempt status because they serve a charitable or other purpose that is in the public interest. Most non-profits I know, though, don't have independent boards that make sure the organization is appropriately serving a charitable purpose or doing it effectively. There also isn't a government entity that regulates the day-to-day management of non-profits.

Sure, non-profits have boards of directors, but those directors aren't independent. Directors are often close allies of the non-profit's founder or are big donors or who have private interests in addition to any public interests they have. And those boards aren't selected or monitored by the public. Rather, the selection and operation of boards are often heavily influenced by the chief executive of the non-profit, further blurring independence.

I'm not suggesting that the non-profit that you or I donate to is corrupt, run poorly, or otherwise complicit in some level of malfeasance.

What I am suggesting, however, is that the systems of governance that most non-profits have in place would make it very hard to know of malfeasance when it occurs, because non-profits police themselves.

On balance, do you know of any institution that polices itself effectively? Do you have any reasons to think non-profit organizations would be better at policing itself than the average institution?