Accountability Standards for Nonprofit Organizations: Do Organizations Benefit from Certification Programs?

ABSTRACT

Stakeholders are demanding nonprofit organizations (NPOs) continually improve and work effectively in an ever-changing environment. While there are many ways to approach this operational challenge, this paper examines the impact of acquiring an accountability certification, specifically the Standards for Excellence® Certification. Using a sample of 102 NPOs that have received the Standards for Excellence certification, we find that the certification is associated with increases in public support relative to a control group that did not receive the certification. These results suggest that some stakeholders favorably respond to the certification process, and NPOs can realize tangible benefits from becoming certified.

KEYWORDS:

• Accountability
• nonprofit accreditation
• nonprofit certification
• nonprofit organizations
• Standards for Excellence

Acknowledgments

The authors wish to thank Amy Coates Madsen, the Director of the Standards for Excellence Institute, for her assistance to provide the initial list of organizations that obtained the Standards for Excellence Institute. We also thank anonymous reviewers and participants of 2012 American Accounting Association Northeast Region Meeting and 2013 American Accounting Association Governmental and Nonprofit Mid-year Meeting for their helpful comments.

Notes

¹ As noted by Bertrand, Duflo, and Mullainathan (2004), researchers must be careful in employing DID estimators if they run the model on many years of data. We address this concern by only running our model over a three- or four-year window (with only two observations, before and after certification) for each organization.

² The Standards for Excellence institute does not systematically collect the application date for each organization. However, for the average nonprofit, they felt three years before the certification year was a good approximation of the commencement of the application process.

³ GuideStar USA, Inc. (www.guidestar.org) provides a database that contains Form 990s of 1.8 million IRS-recognized tax-exempt organizations as of 2014. We obtained the digitized data of Form 990s from GuideStar for a fee.