Performance Accountability as a Driver for Changes in Nonprofit–Government Relationships: An Empirical Insight from Austria

Abstract

New Public Management (NPM) and follow-up reforms have extended the external accountability duties of nonprofit organizations (NPOs). They are increasingly obliged to demonstrate performance in terms of efficiency and effectiveness and to introduce performance measurement systems (PM systems) for this purpose. This is also the case in Austria, a country with a strong (neo-)corporatist tradition. In the field of social services, nonprofit-government relations are now commonly regulated by performance-based contracts (PBCs) entailing specific accountability obligations. We assume that these externally imposed performance accountability demands affect both NPOs' strategic focus and their relationships to important stakeholders including state authorities, and thereby influence the system of societal governance. Thus, we investigate NPOs' stakeholder focus, (power) relations between NPOs and public funders and explore to what extent the latter exert influence on PM system development and how nonprofit executives assess the cost-benefit ratio of PM systems imposed on them.

Nonprofit Strategic Management Revisited

“…The linkage between performance and funding is well appreciated but poorly studied, measured, or specified Strategy implementation: Determinants revisited Nonprofits are using strategy implementation in response to stakeholder pressure and competition for resources. Donors and funders increasingly expect nonprofits to demonstrate that they are being managed both efficiently and effectively (Arvidson & Lyon, 2014) and to be transparent about their efforts (Greiling & Stötzer, 2015;LeRoux & Wright, 2010;Marlin, Ritchie, & Geiger, 2009). Stakeholders require evidence of improved management through a variety of processes, including mechanisms of organizational control (Keyt, 2001;Tucker & Parker, 2013), the introduction of performance management systems (Greiling & Stötzer, 2015), performance measurement systems (Sheehan, 1999), and staff professionalization (LeRoux & Wright, 2010).…”

“…Strategy implementation is mostly used to measure or track performance in the organization. Funders, and to a lesser extent the Board of Directors, tend to have the most influence in both the use and focus of performance measurement systems (Fine, Thayer, & Coghlan, 2000;Herman & Renz, 1999), and these systems are more often found in larger nonprofits over smaller ones (Greiling & Stötzer, 2015). Performance measurement efforts generally do not include any industry standards or benchmarks common within a nonprofit's operating sector (LeRoux & Wright, 2010), as the resulting systems or programs are often purpose-built for a specific nonprofit's mission.…”

Accountability in Ontario's Health Care System: The Role of Governance and Information in Managing Stakeholder Demands

“…Notably, there is empirical support for the idea that certain types of accountability demands impede mission achievement Cordery & Baskerville, 2011;O'Dwyer & Unerman, 2008;Young, 2002). Other studies have also noted that the complexity of accountability demands depends on the nature of the types of stakeholders Greiling & Stötzer, 2015), such that some stakeholders may require, among other things, more formal forms of account giving than others.…”

“…Accountability demands include the pressures, obligations and requirements exerted on an organisation by its stakeholder environment. Examples of accountability demands may ask organisations to demonstrate that funded projects are successful (Greiling & Stötzer, 2015), prevent fraud, ensure efficient use of resources, ensure resources are adequate to fulfill mission, fulfill specified expectations, adopt certain mechanisms, perform certain tasks, deploy resources to specific areas or to communicate in certain ways.…”

“…which accountability demands must be managed. Some research has looked at how different stakeholders have attempted to escalate their accountability demands (Cordery & Baskerville, 2011;Greiling & Stötzer, 2015;O'Dwyer & Unerman, 2008). Other studies have looked at how organisations can potentially influence the accountability demands exerted upon them .…”