Dominant stakeholders, activity and accountability discharge in the CSO sector

• DOI: http://doi.org/10.1111/faam.12144
• Published date: 01 February 2018
• Date: 01 February 2018

Received: 30 April 2015 Revised: 9 May2016 Accepted: 9 May 2016

DOI: 10.1111/faam.12144

ORIGINAL ARTICLE

Dominant stakeholders, activity and

accountability discharge in the CSO sector

Carolyn J. Cordery1Dalice Sim2

1VictoriaUniversity of Wellington, Wellington,

NewZealand

2Universityof Otago, Dunedin, New Zealand

Correspondence

CarolynCordery, School of Accounting and Com-

mercialLaw, Victoria University of Wellington,

PO Box 600, Wellington, New Zealand.

Email:Carolyn.Cordery@vuw.ac.nz

DaliceSim, Biostatistical Services, University of

Otago,P O Box 7343, Newtown, Wellington.

Email:Dalice.Sim@otago.ac.nz

Abstract

Civil society organisations (CSOs) comprise a diverse range of asso-

ciations, including non-governmental organisations (NGOs), com-

munity groups, political parties and social networks. Nevertheless,

despite heterogeneity, regulators, funders and donors often treat

CSOs as homogeneous when demanding accountability. This paper

highlights differences in to whom CSOs across different categories

(or types) perceive themselves to be accountable, what for and

the different practices they undertake to discharge accountability.

It calls for stakeholders to acknowledge diversity in accountability

across different CSO types. This survey-based research finds CSOs

weight upwards and downwards stakeholders equally, and under-

take voluminous reporting. They would benefit from negotiating

multiple-use mechanisms, especially with dominant stakeholders. In

combining stakeholder and accountability theory,the research high-

lights specific CSO types needing further study.

KEYWORDS

advocacy CSOs, charities, CSO accountability, foundation account-

ability,infrastructure CSOs, membership CSOs, social service CSOs

1INTRODUCTION

Unprecedented growth in civil society organisations (CSOs) evidences a global associational revolution(Salamon et al,

2012).1Extensivecross-country research finds that, on average, voluntary and paid CSO staff represents 7.4% of coun-

tries’ total workforces and CSOs contribute 4.5% to GDP (Salamon et al, 2012). While most literature analyses non-

governmental organisations (NGOs), an iceberg-like body of CSOs ‘beneath’ NGOs includes community groups, polit-

ical parties and social networks (Edwards, 2000). CSOs are formal, private organisations, separate from government,

self-governing, non-profit-distributing, and have a meaningful degree of voluntary participation (Salamon & Anheier,

1992b). Some CSOs are very large, operatinginternationally in aid or social services (SustainAbility,Global Compact &

United Nations Environment Programme, 2003), but the great majority are small and locally based.

CSOs raise funds from members, private donors, businesses, service recipients and governments. Nevertheless,

information asymmetry means that CSOs may act opportunistically with governments’ and donors’ funds (Cordery

& Baskerville, 2011; Desai & Yetman,2005). Further, CSOs may digress from their goals and mission (Koppell, 2005;

Financial Acc & Man. 2018;34:77–96. wileyonlinelibrary.com/journal/faam c

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78 CORDERY ANDSIM

Lehman, 2007; Loft,Humphrey, & Turley,2006). Accordingly, Hyndman and McDonnell (2009, p. 5) note ‘growing pub-

lic expectationsfor accountability and transparency’ brings increasing regulation of CSOs, particularly charities. CSOs’

stakeholders hold divergent expectations of how CSOs should execute their missions (Valentinov, 2011), but their

activities are important. Forexample, an advocacy CSO may be held accountable for the impact of its political activities

(Unerman & O'Dwyer,2006b), or a development CSO/NGO for its engagement with local communities (Dixon, Ritchie,

& Siwale, 2006; Goddard & Assad, 2006). In addition, different mechanisms may be expected (Ebrahim, 2003b); with

funders demanding formal reports, but recently,more democratic reporting (Hyndman & McDonnell, 2009).

Individual case studies of accountability are increasingly common and evidence diversity (e.g. Awio, Northcott, &

Lawrence, 2011; Brown & Moore, 2001; Cordery,Baskerville, & Porter, 2011; O'Dwyer & Unerman, 2008). Neverthe-

less, theoretical and pan-sector research (e.g. Najam, 1996; Roberts, 1991; Valentinov, 2011) seldom suggests that

differently funded CSOs might perceive accountability differently (exceptfor Brown & Moore, 2001; Ebrahim, 2003b).

Further, CSOregulators operate as if CSOs’ dominant stakeholders and their accountability expectations are similar

(Cordery,Sim, & van Zijl, 2017). Alternatively, this pan-sector research describes similarities and differences, enquiring

how diversity in dominant stakeholders and activity affect accountability discharge across the CSO sector.We argue

that accountability (i.e. to whom, for what and how) is not homogeneous, but dependent on CSOs’ dominant stake-

holders and their activity and that, when CSOs are categorised into sub-sectors or types, each cluster exhibits unique

accountability profiles.

In defining and describing CSOs’ accountability similarities and differences, this research responds to Hyndman and

McDonnell's (2009, p. 28) call for ‘quantitativeanalysis looking at forms of accountability’ and its discharge. Further, it

extends Brown and Moore's (2001) structuraldifferences argument from three to six CSO types, with empirical back-

ing. Thus, we contribute to the literature in three ways. We highlight variations between different CSO types, inviting

CSOs’ stakeholdersto adapt their accountability expectations. Secondly, in focussing on CSOs’ perceptions of account-

ability, we add to Cordery et al.’s (2017) six-type CSO categorisation. Thirdly,while that categorisation is developed

from theories about why CSOs form and how they are funded, this research responds to Gray et al.’s (2006) call for a

principles-based approach to accountability. Without a suitable theoretical and empirical schema, our understanding

of CSOs is limited (Vakil,1997); accountability theory development is also impeded. Although others infer differences,

this research overtly assesses conceptual nuances of accountability across different CSO types at a meso-level.

The paper first explains CSO categorisation, then accountability theory. The context and research methods are

described and findings presented, before the discussion, limitations and future research opportunities.

2CATEGORISING CSOS

CSO definitions include the de facto approach (CSOs are nongovernment, nonprofit) and the de jure approach (struc-

turally legally incorporated). However, CSOs’ activities are important (Teegen, Doh, & Vachani, 2004; Unerman &

O'Dwyer, 2006a). Therefore, Salamon and Anheier's (1992a and 1992b) structural/operational categorisation com-

bines de facto and de jure definitions, further categorising CSOs by 12 different activities.2Other researchers

dichotomise CSO activities, or focus on one CSO type. For example, Unerman and O'Dwyer (2006b) bifurcate CSOs

into welfare providers or advocacy NGOs; Dawson (1998) divides international NGOs into ‘Southern’ NGOs (serving

developing countries) and ‘Northern’NGOs (advocating in developed nations).

Alternatively, organisational theorists categorise CSO management/control. For example, Hansmann (1986)

dichotomises CSOs as either mutuals (member-controlled) or independently managed. Further, Hansmann (1986)

states CSOs are either ‘donative’, (receive donations), or ‘commercial’, charging for goods and services. Connolly,

Dhanani, and Hyndman (2013) bifurcate charities into fundraisers and grantors.

Focussing on funding and control makes stakeholders fundamental to categorising CSOs. Stakeholders are ‘any

group or individual who can affect or is affected by the achievement of the organisation's objectives’ (Freeman,1994,

p. 46). They include powerful regulators and key resource providers who may marginalise less-powerful stakehold-

ers such as beneficiaries, local communities, media, employees and suppliers (Cordery & Baskerville, 2011; Irvin,