Accountability and the Public Interest in the Nonprofit Sector: A Conceptual Framework

In all parts of the world, nonprofit organizations are under increasing pressure to demonstrate their congruence with the public interest through the use of effective accountability mechanisms. The paper clarifies the nature of nonprofit accountability by distinguishing between the substantive and processual understandings of the public interest. The major theories of the nonprofit sector are shown to imply that this sector's activities correspond to the public interest only in its processual understanding, but not in the substantive one. The proposed argument explains why nonprofit accountability has highly contingent nature and why it is increasingly required to embrace more than merely mission outcome-related measures. The practical implications of this argument are twofold. First, nonprofits should not be criticized for pursuing particularistic missions. The public interest legitimacy of nonprofit missions merely requires these to be legal and responsive to their stakeholders. Second, it has been argued that the development of nonprofit accountability mechanisms is importantly driven by the need to communicate the processual dimension of nonprofits' activities, in the sense of crystallizing nonprofits' contributions to democracy building, civic participation, and social capital.