Is it Time to Address Selective Disclosure for Nonprofit Organizations?

Over the past two decades, there have been several highly publicized nonprofit scandals that have eroded the publics confidence in the sector (Aviv 2004). Significant changes in nonprofit regulation have been implemented to address these concerns that have expanded the financial information available to the public. Interestingly, the calls for more nonprofit accountability have not focused on an important concern, that of selective disclosure. This is a practice under which an organization provides material information to some constituents while withholding it from others. This paper argues that practice is frequently observed in the nonprofit sector. As the New Era Philanthropy scandal highlighted, this practice can pose substantial risks to the nonprofit sector by facilitating fraud and harming the publics trust. The paper describes the existing nonprofit reporting requirements and potential shortcomings. It examines two alternative disclosure environments, the Freedom of Information Act (FOIA) in the federal government and corporate securities regulation, particularly Regulation Fair Disclosure, and their limitations. It will then discuss what measures could be taken to address selective disclosure in the nonprofit sector.This publication is Hauser Center Working Paper No. 33.7. Hauser Working Paper Series Nos. 33.1-33.9 were prepared as background papers for the Nonprofit Governance and Accountability Symposium October 3-4, 2006

Reengineering Nonprofit Financial Accountability: Toward a More Reliable Foundation for Regulation

Today, the annual IRS Form 990 tax filing is the principal annual disclosure mechanism of nonprofit organizations. Over time, considerable thought has been put into finding ways to improve access and use of the 990 Form, with only scant attention focused on whether the 990 is the right data source on which to build a system of nonprofit accountability. This paper takes a broader perspective, assessing not only the quality of the financial data and its availability, but also the entire financial reporting model. The paper begins with a framework for thinking about organizational accountability. It then examines the current structure of nonprofit financial reporting and contrasts it with alternative systems developed for publicly traded firms and credit unions. The paper concludes with recommendations for improving nonprofit accountability by reengineering the reporting and oversight systems in the sector.This publication is Hauser Center Working Paper No. 4. The Hauser Center Working Paper Series was launched during the summer of 2000. The Series enables the Hauser Center to share with a broad audience important works-in-progress written by Hauser Center scholars and researchers

The Price of Doing Good: Executive Compensation in Nonprofit Organizations

This article examines whether nonprofit executive pay patterns are consistent with the espoused social mission of these organizations. We find that nonprofit CEOs are paid a significant fixed component, and many CEOs also receive additional pay associated with managing larger sized organizations. Our analysis indicates that nonprofit executive compensation is not significantly related to CEO performance, as measured either by improved fund-raising results or better administrative efficiency. This weak pay-for-performance link may be due in part to nonprofits concern about violating the non-distribution constraint in the sector, which prohibits the distribution of excess earnings. While nonprofits may not be breaching the letter of the law, some organizations appear to challenging its spirit: We present evidence that CEO compensation is significantly higher in organizations where free cash flows is present, as measured by commercial revenues, liquid assets and investment portfolios.This publication is Hauser Center Working Paper No. 8. The Hauser Center Working Paper Series was launched during the summer of 2000. The Series enables the Hauser Center to share with a broad audience important works-in-progress written by Hauser Center scholars and researchers

Misreporting Fundraising: How do Nonprofit Organizations Account for Telemarketing Campaigns?

The purpose of this study is to examine the frequency, determinants and implications of misreporting fundraising activities. We compare state telemarketing campaign reports with the associated information from nonprofits annual Form 990 filings to directly test nonprofits revenue and expense recognition policies. Our study indicates that smaller nonprofits, and those with less accounting sophistication, are more likely to inappropriately report telemarketing costs as a component of net revenues rather than as expenses. In addition, less monitored firms are more likely to report telemarketing campaign revenues net of expenses. Additionally, among those firms that do report telemarketing costs as expenses, we find that smaller firms, and those with relatively less officer compensation, are more likely to allocate telemarketing expenses to non-fundraising expense categories.This publication is Hauser Center Working Paper No. 37. The Hauser Center Working Paper Series was launched during the summer of 2000. The Series enables the Hauser Center to share with a broad audience important works-in-progress written by Hauser Center scholars and researchers

The Single Audit Act: How Compliant Are Nonprofit Organizations?

Audits are an important legal accountability tool used by resource providers (donors, grantors, and others) to assure that resources are spent by nonprofit organizations in accordance with the resource providers intentions. This paper reports on audits that are required by the government of the United States for organizations receiving large amounts of federal financial assistance. Since 1990, nonprofits receiving substantial federal funds are required to undergo this rigorous and expensive form of federal oversight. We report on 11,841 nonprofit entities that underwent such audits, and the 3,592 audit firms that conducted them, from 1997 to 1999. Overall, compliance with federal regulations appears to be high. Our study indicates that smaller nonprofits, those that are new to government grants, and those with prior audit findings have a significantly higher rate of adverse audit findings. Perhaps for cost or other reasons, these nonprofits are being audited by less experienced auditors. Current federal funding does not provide any additional funds for Single Audit Act compliance. One policy implication of our work might be to provide federal funding specifically for Single Audit Act compliance to these nonprofits.This publication is Hauser Center Working Paper No. 16. The Hauser Center Working Paper Series was launched during the summer of 2000. The Series enables the Hauser Center to share with a broad audience important works-in-progress written by Hauser Center scholars and researchers

Measuring Operations: An Analysis of the Financial Statements of U.S. Private Colleges and Universities

As events in the business sector have highlighted, companies can play by the rules and yet produce misleading financial statements. This study examines the nongovernmental organizations that provide a substantial portion of higher education in the United States. We seek to determine whether private colleges and universities take advantage of the discretion available to them under accounting and auditing standards by presenting an operating measure in their statement of activities. We find that nearly 60 percent of schools report an operating measure but the items included or excluded from operations vary widely.This publication is Hauser Center Working Paper No. 17. The Hauser Center Working Paper Series was launched during the summer of 2000. The Series enables the Hauser Center to share with a broad audience important works-in-progress written by Hauser Center scholars and researchers

Assessing Financial Vulnerability in the Nonprofit Sector

Effective nonprofit governance relies upon understanding an organization's financial condition and vulnerabilities. However, financial vulnerability of nonprofit organizations is a relatively new area of study. In this paper, we compare two models used to forecast bankruptcy in the corporate sector (Altman 1968 and Ohlson 1980) with the model used by nonprofit researchers (Tuckman and Chang 1991). We find that the Ohlson model has higher explanatory power than either Tuckman and Chang's or Altman's in predicting four different measures of financial vulnerability. However, we show that none of the models, individually or combined, are effective in predicting financial distress. We then propose a more comprehensive model of financial vulnerability by adding two new variables to represent reliance on commercial-type activities to generate revenues and endowment sufficiency. We find that this model outperforms Ohlson's model and performs substantially better in explaining and predicting financial vulnerability. Hence, the expanded model can be used as a guide for understanding the drivers of financial vulnerability and for identifying more effective proxies for nonprofit sector financial distress for use in future research. This publication is Hauser Center Working Paper No. 27. The Hauser Center Working Paper Series was launched during the summer of 2000. The Series enables the Hauser Center to share with a broad audience important works-in-progress written by Hauser Center scholars and researchers

The Role of Government in Corporate Governance

Numerous corporate scandals in the past several years have fueled widespread debate over proposals for government action. The central challenge for government is how to restore corporate integrity and market confidence without overreacting and stifling the dynamism that underlies a strong economy. To examine this challenge, the Center for Business and Government\u27s Regulatory Policy Program organized a conference in May 2004 on The Role of Government in Corporate Governance. The conference brought together government officials, business leaders, and academic researchers to discuss three fundamental public policy issues raised by recent corporate abuses. First, who should regulate corporate management - government agencies or self-regulatory organizations? Second, how should regulatory commands be designed, either as detailed rules or broad principles? Finally, how should regulations be enforced? This report synthesizes the conference dialogue organized around these three questions and explores conditions under which different configurations of regulatory institutions, standards, and enforcement practices can further both corporate integrity and productivity

Physiotherapy students and clinical educators perceive several ways in which incorporating peer-assisted learning could improve clinical placements: a qualitative study

AbstractQuestion: What are the experiences of students and clinical educators in a paired student placement model incorporating facilitated peer-assisted learning (PAL) activities, compared to a traditional paired teaching approach? Design: Qualitative study utilising focus groups. Participants: Twenty-four physiotherapy students and 12 clinical educators. Intervention: Participants in this study had experienced two models of physiotherapy clinical undergraduate education: a traditional paired model (usual clinical supervision and learning activities led by clinical educators supervising pairs of students) and a PAL model (a standardised series of learning activities undertaken by student pairs and clinical educators to facilitate peer interaction using guided strategies). Results: Peer-assisted learning appears to reduce the students’ anxiety, enhance their sense of safety in the learning environment, reduce educator burden, maximise the use of downtime, and build professional skills including collaboration and feedback. While PAL adds to the clinical learning experience, it is not considered to be a substitute for observation of the clinical educator, expert feedback and guidance, or hands-on immersive learning activities. Cohesion of the student-student relationship was seen as an enabler of successful PAL. Conclusion: Students and educators perceive that PAL can help to position students as active learners through reduced dependence on the clinical educator, heightened roles in observing practice, and making and communicating evaluative judgments about quality of practice. The role of the clinical educator is not diminished with PAL, but rather is central in designing flexible and meaningful peer-based experiences and in balancing PAL with independent learning opportunities. Registration: ACTRN12610000859088. [Sevenhuysen S, Farlie MK, Keating JL, Haines TP, Molloy E (2015) Physiotherapy students and clinical educators perceive several ways in which incorporating peer-assisted learning could improve clinical placements: a qualitative study. Journal of Physiotherapy 61: 87–92

Genetic Risk Score for Essential Hypertension and Risk of Preeclampsia

Preeclampsia is a hypertensive complication of pregnancy characterized by novel onset of hypertension after 20 weeks gestation, accompanied by proteinuria. Epidemiological evidence suggests that genetic susceptibility exists for preeclampsia; however, whether preeclampsia is the result of underlying genetic risk for essential hypertension has yet to be investigated. Based on the hypertensive state that is characteristic of preeclampsia, we aimed to determine if established genetic risk scores (GRSs) for hypertension and blood pressure are associated with preeclampsia