Measuring What Is Not Seen—Transparency and Good Governance Nonprofit Indicators to Overcome the Limitations of Accounting Models

Round 1

Reviewer 1 Report

I read your article with great interest as your topic is surely an important one. Here are three questions I hope will prove helpful as you continue to refine this work. First, I think there are a number of places across the manuscript, which I believe may be improved with careful English language editing. Second, there are some conceptual issues that I hope you can address including your discussion of how NGOS came to be involved so deeply in government social service provision, which struck me as lacking in nuance. I had a similar concern regarding your treatment of accountability, which is not simply accounting and which, certainly encompasses a number of stakeholder types and measures. Finally, I find myself wondering why you used a sustainability oriented framework for your organization scale aspirations.It frankly seems incommensurate with the other frame you employ, not least because NGOs cannot properly be held accountable for nation state goals. In that same vein I was also not clear how you merged the indicators from the two frames for your analytical purposes; that is, how you decided which were similar items and which not and how you parsed their similarities too. 

And one more thought: corruption and the correct use of resources are not the same thing and NGOs might have many reasons to focus first on their missions in addition and part from the utilitarian calculus you ascribe to them, e.g. it will bring in donations.

Author Response

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Reviewer 2 Report

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Round 2

Reviewer 1 Report

I have once again reviewed this article and have a number of reactions. First, I suggest that you consider deleting your reference to the SDGs altogether and begin the article on or about line 87, where you first begin to address your substantive focus and provide a specific rationale for it. This change would help to focus your piece and make it much clearer to your readers what you are seeking to contend and why. Second, you continue to treat transparency and good governance as instrumental,  but most relevant NGO scholars see them as important for their own sake as they relate so closely to mission attainment. Thus, while organizationally, they may build social trust or secure donations, they are not pursued foremost for those purposes, but instead as appropriate and necessary for goal attainment. Another way to say this is to contend that accountability (wickedly complex for most NGOs) is important for organizational effectiveness and mission alignment and aspiration and not merely for  securing donations or building social confidence. Third, you stress corruption as a reason for these processes and practices. I am fine with that in context. Incidents of misuse of funds, however, are rare, irrespective of their salience, and that caveat is empirically and analytically important. I suggest you ensure that you include it and not leave the impression that transparency and accountability are only important inso far as they yield donations or credibility leading to donations.  Fifth, I fear I was not clear in my earlier comments concerning my question about how you combined the two sets of indicators you shared with your expert panel. On page 12, you note that you have combined the two sets by dropping those from the Loyalty Foundation that do not correspond to the CONGDE battery. I was not sure why? The opposite approach would seem the intuitive one? I can imagine that some may not be relevant for whatever reasons, but all 20 and a priori? I was puzzled again by this choice on this read. Finally, NGO governing boards (not government or governance boards) are charged with stewardship and leadership and not with management. Line 582 assigns a management role to governing boards that, in general, except during organizational start-up perhaps, they should not ply. Relatedly, except in the most general use of the term, NGO governing boards are not "corporate," a term usually reserved for market organization boards. Finally, I was struck that, following your experts, you assign priority to processes in lieu of those operating them. While interesting, I suspect you would be on much firmer conceptual ground either to contend that once in place (i.e. institutionalized, a process which take considerable time and is not automatic) appropriate processes can help guide management and trustee behavior in fairly routinized ways or to contend that in principle both matter. Accountants are routinely taught, for example, that an audited set of books does not mean that misuse may not be occurring, only that appropriate practices and processes appear to have been employed in bookkeeping and the development of relevant financial statements.In short, irrespective of what the panel seemed to argue, it might be worthwhile to suggest this issue needs continuing attention. Processes do not animate themselves and by their existence guarantee nothing.

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Reviewer 2 Report

Well done. Still need to proofread the paper carefully.

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Round 3

Reviewer 1 Report

Thank you very much for your attentiveness to my previous comments. I reviewed this version of your article with interest. I also thank you for your considered written response. I had a number of smaller queries on this read and, as I share those, I assume you will be working with a line and copy editor on the manuscript to address the writing issues it still evidences as well. As far as queries go, here goes. First, a methods question: why did you eliminate the indicators you could not match? Were none significant despite their apparently detailed character? If significant, could you have incorporated them in some other way? (Lines 426-427). Second, and related, what do you mean by suggesting you "redefined" the common indicators in line 407? This may just be a writing glitch but it left me confused. Your description on the non-distribution constraint in line 109 is not quite correct. You will want to revisit this. Likewise, line 89 does not seem to describe what you did accurately? You did not unify the constructs so much as draw from each to create an alternate one? In line 201 you allude to a "correct" use of resources and I do not know what that term implies? You mean appropriate? Or reasonable? Or perhaps even socially accepted? I again caution you not to seem to argue, as you now appear to do in line 153 that good governance is valuable principally as an image producing device. I would suggest it is valuable for its own sake and because it allows for effective pursuit of organizational mission. In your conclusion in line 687 you suggest that funds must be entirely allocated to the NPO mission. If you mean that broadly and include within it funds to support the organization as well, I have no quibble. If you mean, however, as is so often suggested in too many press accounts to name, that funds for administration or overhead costs are not legitimate, I think this statement will need revision. Such assertions are not only false, they are pernicious as they can hamper effectiveness. In line 739, I think you mean budget execution or implementation rather than "liquidation"? I also suggest you revisit how you describe your experts' role. You did not seek them out for their "opinions," which anyone can have and which often are uninformed. You instead sought them out to provide their expert judgments (a very different thing). I suggest you describe them and their role consistently in such terms.   Finally, wherever you now employ "trustfulness" I think you mean trustworthiness?

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