Accountability.org: Online Disclosure by U.S. Nonprofits

Abstract

Why do some nonprofits signal their respect for accountability via unilateral website disclosures? We develop an Accountability Index to examine the websites of 200 U.S. nonprofits ranked in the Chronicle of Philanthropy’s 2010 “Philanthropy 400.” Our intuition is that nonprofits recognize that the “non-distributional constraint” by itself may not generate sufficient trust. We expect nonprofits’ incentives for website disclosures will be shaped by their organizational and sectoral characteristics. Our analyses suggest that nonprofits appearing frequently in newspapers disclose more accountability information while nonprofits larger in size disclose less. Religion-related nonprofits tend to disclose less information, suggesting that religious bonding enhances trust and reduces incentives for self-disclosure. Nonprofits in the health sector disclose less information, arguably because governmental regulations in which they are embedded reduce marginal benefits from voluntary disclosures. Education nonprofits, on the other hand, tend to disclose more accountability information perhaps because they supply credence goods.

Keywords: accountability, website disclosures, Internet, transparency