3.1 Accountability

At a glance

About 45 minutes, including a 15-minute reading. By the end of this lesson you will be able to

• explain what accountability means and its four core components

• describe accountability to whom, for what and how

• compare compliance-driven and learning-driven accountability

After the 2010 Haiti earthquake, the American Red Cross raised nearly US$500 million. Investigations later questioned its financial tracking, transparency and the small number of permanent homes it reported building. The case forces a question that every nonprofit faces: who has the right to demand answers, and what power should follow from that right?

When accountability fails

The Haiti case shows why financial disclosure alone is not enough. An organization may account upward to donors and regulators while communities still lack understandable information or influence over decisions. Accountability must therefore ask three connected questions: to whom is the organization accountable, for what, and through which mechanisms?

A study of 215 US nonprofits with reported misconduct found that financial misconduct by individuals against their own organization, such as embezzlement, was the most common type, at 32%. Compared with 150 well-rated nonprofits, those with misconduct were far less likely to have independent audits (34% against 87%), and nonprofits with independent boards were about 28 times more likely to be free of scandal (Lamothe et al., 2022).

What accountability means

The three questions raised by the Haiti case give us a route through the concept. We begin with what it means to account, then ask who receives the account, what it covers and how it can influence action.

Accountability is the process of holding an organization to account for delivering on its mission. Alnoor Ebrahim identifies four core components. Transparency means collecting information and making it available for public scrutiny. Compliance or monitoring means tracking behavior and results. Justification or answerability means explaining decisions so they can be questioned. Enforcement means rewards or sanctions. Funders often hold the power to reward or sanction, which gives their demands particular weight.

Accountability to whom?

Figure. Accountability runs upward to funders and government, downward to people and communities, inward to mission and organizational members, and horizontally to partners and peer organizations.

Accountability runs in several directions. Upward accountability is to donors, foundations, investors and governments, and often focuses on money. Downward accountability is to clients, beneficiaries and communities. Internal accountability is to the mission and to staff, board members and volunteers. Horizontal accountability is to partner organizations and networks, whose collective reputation the organization shares.

The type of organization matters. Members of a cooperative or a union can vote or leave, while clients of a service NGO often have little choice, so upward accountability to funders tends to dominate. When demands pull in different directions, organizations can suffer from what Jonathan Koppell called multiple accountability disorder. During Nepal's COVID-19 lockdowns, for example, the central government restricted movement while local governments and clients expected more services, and NGOs had to balance these demands with the needs of their own staff (KC, 2025).

Accountability for what?

Knowing the direction of accountability is only part of the picture. Different stakeholders may also care about different dimensions of the organization's conduct.

Nonprofits answer for four things. Financial accountability covers how money is used and reported. Governance accountability covers how boards oversee the organization in the interest of the people it serves. Results accountability covers what the organization achieves, though some social change takes years and resists measurement. Process accountability covers how the work is done, including relationships with communities.

Accountability how?

Those responsibilities become meaningful only when a mechanism turns them into information, dialogue or consequences.

Four main mechanisms are available. Their value depends on who can use the information or process and whether that person has real influence.

• Disclosure statements and reports, such as audited accounts and annual reports, mainly serve funders and regulators and are often written in technical language.

• Evaluation and impact assessment track results, though choosing what to measure, and who controls the evaluation, can create tension with funders.

• Industry standards and codes of conduct set shared norms, checked by anything from self-certification to independent verification.

• Participation and feedback processes, such as public hearings and feedback loops, offer the strongest direct route to downward accountability among these mechanisms. They matter most when communities know what decisions are open, receive a response and can see how their input affected the outcome.

Ebrahim argues that leaders cannot be accountable to everyone for everything, so they need to prioritize the accountabilities that matter most for the mission, above all to the people they serve. He calls for a shift from compliance-driven accountability, which satisfies the most powerful actors, to learning-driven accountability, which uses the same tools to understand what is working and to improve.

Example. When transparency rules become control

Rules meant to ensure transparency can also be used to control civil society. India amended its Foreign Contribution (Regulation) Act to tighten rules on foreign funding. NGOs must use a designated bank account, cannot pass foreign funds on to other organizations, and can spend only a limited share on administration. Organizations such as Oxfam India have had their licenses to receive foreign funds cancelled. Lesson 4.1 looks at this trend more widely.

Read

• Accountable Now. The Global Standard for CSO Accountability. The 12 commitments. https://accountablenow.org/the-global-standard-the-12-commitments-copy/

The standard is free to read online. Choose three of the 12 commitments and look for evidence of them on the website of an organization you know.

Go further, with library access. Ebrahim, A. (2016). The many faces of nonprofit accountability. In D. O. Renz & R. D. Herman (Eds.), The Jossey-Bass handbook of nonprofit leadership and management (pp. 102-123). Wiley.

Lamothe, M., Ter-Mkrtchyan, A., Ruddle, T. B., & Kuyon, K. (2022). Examining the efficacy of accountability systems in preventing nonprofit misconduct. Nonprofit and Voluntary Sector Quarterly.

KC, D. (2025). Balancing up, down, and in. NGO perspectives during Nepal's Covid-19 crisis. Nonprofit Policy Forum, 16(3), 395-428.

Try it

Use the full framework rather than treating accountability as a synonym for reporting. For each practice, name its main direction (upward, downward, internal or horizontal), what the organization is answering for and the mechanism it uses. Then open the answers.

1. An NGO publishes its audited financial statements on its website each year.

2. A health NGO holds public hearings where villagers comment on its services.

3. A donor requires an external evaluation against set targets before renewing a grant.

4. Members of a national NGO federation agree to follow a shared code of ethics.

5. The board reviews the director's performance against the strategic plan.

Key takeaway

Accountability is a relationship in which someone can ask for information, question a decision and sometimes influence what happens next. Because nonprofits face many such relationships, the central task is to prioritize those that protect the mission and give meaningful voice to the people the organization serves.