Does Self-Regulation Make Nonprofit Organizations More Accountable? Evidence from the U.S. Arts Sector

Self-regulation is a broad term that describes initiatives within the nonprofit sector that establish standards of behavior and performance beyond what is legally required. Adoption of self-regulation signifies the commitment of nonprofit organizations to accountable management practices. But does the intent to improve accountability translate into measurable results? Do adopters of self-regulation score better on important indicators of accountability than non-adopters? This study seeks to answer these questions by bringing empirical evidence from the nonprofit arts sector. For the purposes of the study, DataArts is chosen as a self-regulation mechanism; accountability is defined as answerability for results and measured along three dimensions: financial, organizational, and mission. Data for the study come from a survey of arts organizations in five Midwestern states and follow-up interviews with survey respondents. Although the study shows that a single self-regulation mechanism even in combination with several organizational factors is unlikely to predict such a complex phenomenon as accountability, it takes us a step further toward understanding why self-regulation may fail to achieve its results. The quantitative results show high baseline levels of accountability of both adopters and non-adopters of DataArts in the survey sample suggesting that the concerns about the ineffectiveness of existing oversight of nonprofit organizations may be exaggerated. Gains in accountability associated with self-regulation are more visible when the accountability baseline is low. When the accountability baseline is high, the gains are harder to detect. The qualitative findings suggest that coercive adoption, burdensome implementation, limited resources, lack of instrumental motivation, and continuing lack of clarity about what non-profit organizations are accountable for may affect the outcomes of self-regulation. Furthermore, the study reveals that in the arts sector, understanding of accountability goes beyond the pragmatic concerns about transparent reporting and efficiency; it includes, among other aspects, aesthetics and sustainability, the elements reflective of arts organizations’ core mission of nurturing creativity for the benefit of community members and society at large. How this expanded concept of accountability can be measured is a question for future research.