Decoupling Under Scrutiny: Consistency of Managerial Talk and Action in the Age of Nonprofit Accountability

Abstract

Decoupling theory suggests inconsistencies in what nonprofits do and what they claim to do. Accountability is a potential antidote to such inconsistencies in the nonprofit sector. To test whether different features of accountability prevent decoupling, I examine the divergence in statements about managerialism among nonprofit organizations in a major U.S. metropolitan area. The analysis compares a survey of organizations to public discourse based on five-million-word website text. Professionalism and evaluation indeed prevent organizations from embellishing their discourse. However, inconsistencies between managerial practices and managerial discourse remain frequent: Organizations continue to present symbolic displays of managerialism to the general public, particularly when their missions are tangible. Furthermore, ratings generate inconsistencies by leading organizations to downplay managerial practices. This study develops an institutional understanding of managerial talk and action, shows that the problem of decoupling in the “age of accountability” is multifaceted, and has implications for the estimation of nonprofit practices using automated text analysis.

Keywords

nonprofit managerialism decoupling organizational accountability discourse quantitative text analysis institutional theory

Introduction

Nonprofit scholarship has used the idea of decoupling between talk and action to understand how nonprofits manage external expectations and conflicting organizational identities (Åberg, 2013; Arvidson and Lyon, 2013; Dick & Coule, 2017; Pope et al., 2018). Decoupling typically manifests as inconsistencies between organizational practice and discourse. These inconsistencies can undermine the organization’s legitimacy—the “appropriateness of an organization in the social system” in the eyes of supporters (Deephouse et al., 2017, p. 28; also see MacLean et al., 2015; Meyer & Scott, 1983).

When Meyer and Rowan originally proposed the concept of decoupling in 1977, they claimed that organizations seek to avoid external monitoring and conceal internal routines to avoid being seen as illegitimate. Organizational researchers have therefore argued that external and internal accountability can create barriers to decoupling (Bromley & Powell, 2012; Turco, 2014). Decoupling between practices and discourse is arguably more difficult for organizations that face high standards of accountability.

Accountability—understood broadly as the “process of holding an organization responsible for its behavior and performance” (Young, 2002, p. 3)—has become ubiquitous and taken many shapes in the nonprofit sector (Carman, 2010; Dick & Coule, 2017; Sloan, 2009). Management professionals and private foundations have triggered a movement toward accountability, which is reinforced by web-based auditors (Brandtner et al., 2017; MacIndoe & Barman, 2013; Saxton & Guo, 2011). As information about nonprofits becomes easier to access, organizational practices related to performance and outcome measurement flourish (Brandtner, 2017; Espeland & Sauder, 2016; Hallett, 2010). Like other organizations, nonprofits have entered an “age of accountability” (Power, 1997; Strathern, 2000).

The “right to know” (Schudson, 2015) has made the boundaries between organizations’ internal and external accounts more permeable. Different features of accountability have thus made it difficult for organizations to curate and manage others’ impressions (Benjamin, 2008; Morley, 2016; Scott & Lyman, 1968). These observations raise the question of how features of accountability affect nonprofits’ ability to decouple talk and action. This article examines whether features of accountability reduce decoupling between nonprofits’ practices and discourse.

To understand the effects on consistency of discourse and practice, I study three features of nonprofit accountability: internal monitoring through professionals, external monitoring through online rating agencies, and tangible missions, which make it easier to track an organization’s performance. Although these aspects do not account for all nonprofit accountability, they reflect diverse features of the accountability movement (Carman, 2010; Ebrahim, 2019; Williams & Taylor, 2013; Young, 2002).

Drawing on neo-institutional theory, I propose that not all features of accountability have the same effect on whether decoupling is feasible. I illustrate this argument in the context of nonprofit managerialism, which in recent decades has reshaped both nonprofit language and practice (Maier et al., 2014). I formulate the following expectations. (1) Organizations that are externally monitored to avoid exaggerating their managerial practices. Organizations may also adopt behaviors that rating agencies consider legitimate. (2) Tangible goals increase managerial discourse because they are compatible with managerialism, but without demonstrable effects on practices. This is because, organizations with more tangible goals are typically less susceptible to altering their ways in response to external pressures. (3) In contrast, professionals—that is, paid and credentialed staff—seek to align accounts of talk and practice. Thus, accountability not only curbs baseless impression management but also leads to inconsistencies that original formulations of decoupling theory conceal.

These expectations are tested through comparative research drawing on two different methods. I compare survey data about the practices of 127 nonprofit organizations representative of 501(c)(3) public charities in the San Francisco Bay Area to the results of quantitative content analyses of these organization’s online representations. The web page analysis draws on recent computational work to measure managerial language (Powell et al., 2016a, 2016b). The measure for managerial practices mirrors work on nonprofits becoming business-like (Guo, 2006; Hwang & Powell, 2009; for a review, see Maier et al., 2014).

The analysis contributes to our understanding of how nonprofits enact and talk about managerialism in light of accountability. Comparing practices to discourse provides insight into how nonprofits manage their organization professionally without being perceived as pretending to be managerial when they are not. By examining the conditions under which organizations refrain from presenting managerial accounts, the study responds to Maier et al. (2014, p. 79) call to “go beyond documenting conflicts or harmonious combinations and aim to identify the organizational and environmental factors that promote one or the other.” The article also captures intended and unintended consequences of accountability by showing how external scrutiny can lead to new inconsistencies between accounts of managerialism. The article finally contributes to understanding nonprofit discourse by comparing publicly available text data containing rich survey information to organizational practices (see Fyall et al., 2018; Litofcenko et al., 2019; Paxton, Velasco, & Ressler, 2020). It shows that computer-aided analyses of nonprofit activities should be interpreted with caution because public rhetoric need not align with internal routines.

Theoretical Framework

Institutional Theories of Decoupling

To examine how accountability affects the consistency of organizational accounts, it is worth considering that such accounts can be incongruent in different ways. I draw on institutional theories of decoupling as a theoretical framework to conceptualize this problem. The original meaning of decoupling is that organizations whose routines are not consistent with external pressures adopt public displays that let them appear legitimate—that is, in compliance with a legitimate model of organization (Meyer & Rowan, 1977). A common response to external reform pressures is to symbolically adopt a policy without altering day-to-day practice. Thus, organizations’ formal policies may align with audience expectations but not internal routines. That many organizations overemphasize their compliance with external pressures is well established and documented by a plethora of studies ranging from equal opportunity employment (Dobbin, 2009; Edelman, 1992) through executive incentive programs (Westphal & Zajac, 1998) and education (Hallett, 2010) to corporate social responsibility (Christensen et al., 2013).

Decoupling is also common in the nonprofit sector: An organization may publish a lengthy impact report on its website to please its funders but judge success based on different criteria. Indeed, many organizations publicly present embellished discourse that does not hold up to further inspection. In an analysis of the enactment and rationale of strategic plans among a diverse set of nonprofits, Bromley et al. (2012) find that in about one third of the surveyed organizations, a plan exists but does not change daily routines. Nonprofit leaders described the plans as “lame documents” or “not a document that anyone brought much life to.” Åberg (2013) shows that some Swedish Study Associations claim a deep embeddedness in local communities while simultaneously reducing bottom-up deliberations, engaging in market activities, and shutting down local branches. Furthermore, charities in the United Kingdom are often at unease with externally mandated social impact evaluations. They thus provide for “space for discretion” that allows them to “resist the power and control exercised by outsiders” (Arvidson and Lyon, 2013, p. 884) while claiming to embrace the idea of social impact to outsiders.

Barriers to Decoupling and the Threat of Hypocrisy

Although nonprofits frequently embellish their accounts, recent research has revealed multiple barriers to decoupling. For one, structures and actions can be decoupled initially but become “recoupled” over time (Espeland & Sauder, 2016; Hallett, 2010). Ethnographies also show that decoupling is more difficult in practice than in theory. Turco (2014) demonstrates that decoupling between the profit orientation of a counseling business for mothers and the euphemistic discourse that sugarcoats it prevented a firm from commercializing its products. Discrepancies can therefore be “seen as sources of hypocrisy and potential threats to organizational credibility and legitimacy” (Christensen et al., 2013, p. 374). Hypocrisy threat can reduce organizational legitimacy and lower the chances of the organization’s long-term survival.

Decoupling thus does not always manifest as exaggeration (or overemphasis). The same dynamics that explain classic forms of decoupling can lead to an underemphasis on external demands. In this case, an organization might tone down its professionalism in public communications. Snellman’s (2011) analysis of shareholder value in Finland offers an example of a practice that is adopted but not communicated. The author finds that firms use modern American corporate governance internally, but do not adopt the corresponding rhetoric of shareholder value to avoid backlash from trade unions. As Snellman argues (2011, p. 58), “actions without words—that is, organizations changing their routines while preaching stability to external actors—is also consistent with the concept [of decoupling].” Similarly, Carlos and Lewis (2018) conclude from a study of the Dow Jones Sustainability Index that firms may choose to “strategically withhold their certifications status” regarding social performance under threats of being exposed as hypocritical (Carlos and Lewis, 2018). Dick and Coule (2017) point out that, in the nonprofit sector, not confirming with external expectations is a strategy for coping with the fact that compliance with myths can reduce efficiency. Depending on such barriers, policy-practice decoupling may manifest in multiple ways.

Accountability as a Barrier to Decoupling

One critical barrier to decoupling that affects how nonprofits express their compliance with external pressures is accountability. Public disclosure of inconsistencies in the accounts of an organization can create impressions of dishonesty and inauthenticity. Accountability is therefore often seen an antidote against decoupling. For example, nonprofits are often in the business of policing conformance. Bartley and Egels-Zandén (2016) find that unions in Indonesian apparel and footwear industries try to “leverage” corporate social responsibility to counteract selective or shallow adoption of labor standards. They blow the whistle on noncompliant firms or negotiate in the light of unfulfilled symbolic commitments. More generally, in a nonprofit sector characterized by accountability initiatives, performance evaluation, and audits, the boundaries between internal and external elements of organizational behavior are more porous than when Meyer and Rowan (1977) first introduced the concept of decoupling.

In the classic view, decoupling is an internal response to institutionalized rules in an organization’s external environment (Meyer & Scott, 1983). Critical reviews of organizational theory suggest that the strict distinction between “talk” and “walk” has become untenable in light of external monitoring. Bromley and Powell (2012) argue that the inability to shield structures and routines from external monitoring has made practice-policy decoupling difficult. The authors suggest that researchers should shift their attention to new forms of decoupling. For example, means are frequently unfit to reach an organization’s desired ends (Wijen, 2014). Here, I emphasize the possibility that features of accountability affect how organizations express commitments to reform, rather than removing the ability to do so entirely.

Managerial Practices and Discourse in the U.S. Nonprofit Sector

I analyze nonprofit accountability and decoupling in the empirical context of managerialism in the United States. The “managerial turn” of the U.S. nonprofit sector in the early 2000s has promoted formal roles and rules as the basis of decision-making (Maier et al., 2014; McCarthy & Zald, 1977; Meyer & Scott, 1983). Managerial nonprofits increasingly use “business-like” rhetoric and resort to tools native to the private sector (Dart, 2004; Guo, 2006). Hwang and Powell (2009) associate nonprofit managerialism with such tools as strategic planning, outside experts who help to improve efficiency, and the use of metrics and data to evaluate programs. But managerialism does not manifest only through practices. Other studies have highlighted the linguistic manifestation of the trend as using more managerial language, typically assuming that such commitments are congruent (e.g., Maier & Meyer, 2011; Morley, 2016).

In the nonprofit sector, the congruence of language and practice is particularly consequential because it reflects how nonprofits navigate conflicting pressures related to managerialism. The pursuit of efficiency can be inconsistent with what many insiders perceive as the sector’s culture (Kreutzer & Jäger, 2011). For instance, Eikenberrry (2009) calls for a democratic “counterdiscourse” to marketization that enables nonprofit and voluntary organizations to “refuse the market.” Besides being an effective instrument for solving social problems that the market and the state overlook (Hansmann, 2006), nonprofits have a characteristic expressive orientation. As Frumkin (2005) argues, people are often involved with nonprofit organizations not because they seek a steady income but because they want to voice their opinion and values. For many organizational members, civil society’s legitimacy derives from a promise of social change or, more generally, from practices and symbols associated with responsibility and morality rather than efficiency (Pope et al., 2018). Inconsistencies between talk and action can therefore undermine the legitimacy of nonprofits and threaten their survival.

Conditions of Decoupling of Managerial Practices and Discourse

Do features of accountability reduce decoupling? To understand the consistency of nonprofits’ accounts of managerialism, decoupling is understood as the discrepancy between practices and discourse. I first discuss the expected associations between features of nonprofit accountability and both practice and discourse. I then derive expectations about the composite effects on various expressions of decoupling between practice and discourse.

Professionalism

An important aspect of nonprofit accountability is the professional training of staff (Suárez, 2010; Young, 2002). Compared to the for-profit sector, where most studies of decoupling have taken place, executive remuneration is lower and part-time work is more frequent in the nonprofit sector. Nonprofits are frequently staffed with intrinsically motivated volunteers and enthusiastic amateurs rather than paid and credentialed administrators (McCarthy & Zald, 1977; Suárez, 2010). The shift from expressive to instrumental orientation in the nonprofit sector is thus not uniform; some organizations are more susceptible to managerial influences than others (Frank et al., 2000; Meyer & Scott, 1983). Staff identities, goals, and capacities vary widely, even within one industry. Consequently, the importance of organizational structures, displays, and practices reflecting values, emotions, and morality to mobilize members and supporters varies.

Professionals can act as carriers of such managerial tools and language (DiMaggio & Powell, 1983). Professional staff is more likely than volunteer workers to welcome philanthropic accountability initiatives, tools publicized in professional magazines, and other advances to become managerial (MacIndoe & Barman, 2013). A study of a random sample of nonprofit organizations in the San Francisco Bay Area showed that trained management professionals are carriers of business practices (Hwang & Powell, 2009). Others have argued that professional training also “helps provide nonprofit leaders with the moral compass they need to navigate the complex waters of accountability in their relationship with business” (Young, 2002, p. 16). Since staff is responsible for the production of multiple accounts within the organization (e.g., web pages, annual reports, strategic plans), managerial discourse is expected to be aligned with managerial structures (Powell et al., 2016a).

Hypothesis 1a (H1a): Professionalism increases managerial practices.

Hypothesis 1b (H1b): Professionalism increases managerial discourse.

External Rating

One increasingly common feature of nonprofit accountability in the United States is ratings. Rating agencies “seek to regulate relatively opaque fields to reduce the uncertainty and ambiguity inherent in such fields” and have “mushroomed over the past few decades” (Bromley & Powell, 2012; Wijen, 2014, p. 315). Most nonprofit rating agencies are established or funded by private foundations, which have pioneered the development of sophisticated tools for monitoring nonprofits and called for accountability and transparency (Barman, 2016; Powell et al., 2016b). These evaluators fulfill a dual role: on one hand, they reinforce the demand for performance metrics and formal structures such as financial audits. Ratings in the nonprofit sector communicate a distinctive model of when nonprofit management is done well, for instance, by promoting low overhead, clearly articulated theories of change, or financial transparency (Saxton & Guo, 2011; Sloan, 2009). In education, as Espeland and Sauder document (2016), US News and World Report rankings shape the behavior of law schools by clarifying the criteria of success and thus reducing uncertainty. Such clarification can lead to reactivity from the evaluated and put pressure on organizations by tying grant money to certain practices (Brandtner, 2017; Espeland & Sauder, 2016; Espeland & Lom, 2015).

On the other hand, the effect of ratings on discourse is ambivalent because ratings make it harder for organizations to shield themselves from external scrutiny. As Meyer and Rowan (1977, p. 359) posit, organizations “seek to minimize inspection and evaluation by both internal managers and external constituents” to avoid being called out for inconsistencies. This premise is challenged by a world where it is increasingly difficult to dodge accountability demands. Bromley and Powell (2012, p. 1) argue that in the presence of transparency initiatives and accountability there is “growing pressure on organizations to align their policies and practices, and to conform to pressures in an expanding array of domains, from protecting the natural world to promoting employee morale.” By making information about organizational performance transparent, external evaluators—such as rating services in the nonprofit sector—enable expert audiences to peek inside the organization, laying bare inconsistencies between what is said and done (Bernstein, 2017; Brandtner, 2017). External evaluators are also in the business of improving the audience’s knowledge of proper management, which further increases the threat of revealed hypocrisy for organizations that are rated (Carlos & Lewis, 2018). The expected lack of a consistent relationship between ratings and managerial discourse has implications for the overall level of decoupling.

Hypothesis 2a (H2a): External rating increases managerial practices.

Hypothesis 2b (H2b): External rating neither increases nor decreases managerial discourse.

Goal Tangibility

Another feature of accountability is the idea of tractable and measurable theories of change reflected in missions (Carman, 2010; Ebrahim, 2019; Minkoff & Powell, 2006). In a conventional understanding, tangible missions should be more compatible with managerial language and practices than abstract, harder-to-measure missions. But theory suggests no simple relationship between goal tangibility and managerialism; the effects on language and practice likely differ. Goal tangibility makes it easier to provide symbolic statements about managerialism, hence increasing managerial discourse. Alignment between organizational goals and statements of compliance are a source of legitimacy. Decoupling is a result of institutional pressures being “distinguished sharply from prevailing social behaviors” (Meyer & Rowan, 1977, p. 340), which is the case if an organization’s means are incompatible with its ends. To be sure, the degree to which the logics of means and ends are compatible varies from organization to organization (Greenwood et al., 2011, p. 334). What supporters and customers expect from an organization depends heavily on its mission. Tangible goals are arguably more compatible with the premises of managerial organizing than abstract goals.

However, despite evidence for a clear link between tangible missions and managerial language, evidence of effects on actual performance is mixed (Benjamin, 2008; Lecy et al., 2019). Kirk and Nolan (2010, p. 486), for instance, find “very limited evidence to support a relationship between mission statement focus and organizational performance.” This relationship may be weak because talk is “cheaper” than the adoption of material practices, as symbolic commitments are often not enacted or causally linked to the goals in question (Bromely et al., 2012). Tangible goals can even actively hinder the adoption of practices such as those related to managerialism. As Meyer and Rowan (1977, p. 354) claim, “organizations with clearly defined technologies find themselves unable to adapt to environmental turbulence.” Mimicry of organizational practices is amplified by ambiguous—that is, less tangible—goals and uncertainty about how outputs are appraised (DiMaggio & Powell, 1983). The overall effect of tangible missions on managerial practices is therefore neither positive nor negative. Whereas tangible goals are expected to be systematically associated with more managerial discourse, prior literature does not support such an association with managerial practices.

Hypothesis 3a (H3a): Goal tangibility neither increases nor decreases managerial practices.

Hypothesis 3b (H3b): Goal tangibility increases managerial practices.

Implications for Decoupling Between Practice and Discourse

How features of accountability affect the consistency of accounts is the consequence of how these features influence (1) discourse and (2) practices. Table 1 summarizes the hypothesized composite effect of features of accountability on the consistency of practices and discourse. If the above hypotheses hold true, then professionalism leads to consistent accounts (practices congruent with discourse), whereas external monitoring and goal tangibility predict incongruent accounts. That is, monitoring leads an organization to underemphasize managerial discourse (practices more managerial than discourse), and the compatibility of the organizational mission and managerial pressures leads to overemphasis (discourse more managerial than practices).

Table 1.

Expected Relationship Between Features of Nonprofit Accountability and Consistency Between Managerial Practices and Discourse.

Feature of nonprofit accountability	Proposed mechanism	Proposed effect on managerial accounts	Composite effect on consistency
Professionalism	Susceptibility to managerial tools through training and ethos	H1a: Increases practices	Consistent levels of managerialism: Practices aligned with discourse
Professionalism	Internal alignment and professional production of discourse	H1b: Increases managerial discourse
External rating	Reactivity to legitimate management model purported by ratings	H2a: Increases managerial practices	Underemphasis: Practices more managerial than discourse
External rating	Threat of revealing hypocrisy through hyperbolic discourse	H2b: Neither increases nor decreases managerial discourse^a	Underemphasis: Practices more managerial than discourse
Mission tangibility	Loose relation of symbolic commitments to actual performance	H3a: Neither increases nor decreases managerial practices^a	Overemphasis: Discourse more managerial than practices
Mission tangibility	Increased facility to talk about performance in instrumental terms	H3b: Increases managerial discourse	Overemphasis: Discourse more managerial than practices

Hypotheses express average effects across the entire sample rather than associations in individual cases. The average treatment effect of external rating on discourse and the effect of tangible mission on practice are not expected to be statistically significantly different from 0. The expectation of null findings is made explicit because it has implications for the composite effect on the consistency between practices and discourse.

Data, Measures, and Methods

Data

Organizational practices

The first source of data for this study is a pooled cross-sectional data set of randomly sampled 501(c)(3) organizations in the San Francisco Bay Area (Hwang & Powell, 2009; Suárez, 2010; Brandtner et al., 2021). The sample was drawn randomly from the National Center for Charitable Statistics (NCCS), which compiles information from the Internal Revenue Service (IRS) form 990 filed by 501(c) organizations with $25,000 or more in annual gross receipts. Organizations in the sample range from small activist groups, soccer clubs, and soup kitchens to large social service organizations and universities, housing authorities, and museums; they exclude congregations, private foundations, and intermediaries. The largest subsectors in the present sample are human services (43%), arts, culture, and humanities (17%), education (13%), and health (9%).

Organizational data are based on two surveys conducted in 2004-5 and 2014-5. Executive directors were asked about organizational structures, practices, staffing, and executive training. The response rate of the second survey was 65%, which is superior to most organizational surveys; a meta-analysis of Baruch and Holtom (2008) estimates an average response rate of 36% (S.D. 19%). Logistic regression of the sample of 200 revealed no statistically significant predictors of being included in the final models reported below (e.g., size, age, professionalism, leadership, funding diversity, or sector).¹ Administrative financial and organizational data from the NCCS helped create a comprehensive picture of the internal practices of the sampled organizations.

Organizational discourse

The second major source of data was the web page of organizations in the data set. Websites provide a dynamic image of how the organization chooses to present itself to what it considers its audiences (Powell et al., 2016a). To collect the text data, I identified the URLs of all the organizations’ websites; 160 out of the 176 organizations have a website, and 127 of these websites contain more than 150 words. A research assistant and I then scraped the text of all websites in July and August 2014 using the Python-library scrapy.² To analyze the text, I devised three dictionaries with keywords indicative of different notions of managerialism: assessment (e.g., measure, assess, impact), bureaucracy (e.g., contract, committee, report), and management (e.g., strategy, efficiency, profit). One benefit of using a dictionary-based content analysis approach, compared to machine-learning algorithms, is that dictionaries “[provide] an explicit rationale not only for what is retained, but also for what is excluded from the analysis” (Weber, 1990, p. 24). A methodological appendix includes an in-depth discussion of the construction, weighting, and validation of the dictionary measures.

Measures

Dependent variables

I compare two measures of managerialism—public discourse and organizational practices—and then analyze whether and how one account of managerialism deviates from the other. Consistency of two accounts is measured as the degree to which managerial practices (according to the executive director) deviate from managerial discourse (reflected by the organization’s website).

The measure of managerial practices is identical to Hwang and Powell’s (2009) analysis of nonprofit managerialism to facilitate comparisons with prior literature. Managerial practices are indicated by a principal component based on four organizational practices identified as indicators of managerialism: having a strategic plan, undergoing a financial audit, using quantitative performance evaluation, and working with management consultants. A Cronbach’s alpha greater than .7 indicates that the principal component is a credible proxy for having adopted business-like practices.

An organization’s managerial discourse, in contrast, denotes the degree to which the organization broadcasts its management orientation to its environment. Managerialism in the nonprofit sector manifests in language (Dart, 2004; Maier & Meyer, 2011; Nicholls, 2009). Weighted measures of managerial discourse were estimated based on a supervised dictionary approach (Grimmer & Stewart, 2013; Jurafsky & Martin, 2009). For each organization’s web page i, I calculated the rate of managerial term j. Each word is weighted with TF-IDF weight θ, which decreases the influence of words that are common throughout the corpus.

f (θ, X_{i}) = \frac{\sum_{j = 1}^{N} θ_{j} X_{i j}}{\sum_{j = 1}^{N} X_{i j}}

The outcome of interest is consistency between managerial practices (P) and managerial discourse (D). To operationalize decoupling as a categorical outcome, I standardized both variables (with a mean of 0 and a standard deviation of 1) and created dummy variables for above- and below-mean levels of managerial practices and discourse. The four categories are consistently little managerial accounts (low P, low D), overemphasis on managerialism (high P, low D), underemphasis on managerialism (low P, high D), and consistent managerial accounts (high P, high D). Figure 1 illustrates the conceptual interpretation of the decoupling scores.

Figure 1.

Outcomes of decoupling between managerial discourse and practices.

Indicators of nonprofit accountability

Professionalism is measured as an index that reflects whether an organization is run by volunteers (low score) or credentialed staff (high score). The index is a 5-point composite of five dummy variables (staffed by paid personnel, use only paid personnel for service delivery, managed by an executive director, executive director is a paid position, and executive director works full-time for the organization).

External rating is measured as whether an organization is evaluated by one of three independent nonprofit rating agencies with a notable presence in the region: GuideStar (now Candid), Charity Navigator, and GreatNonprofits. I coded whether an organization is reviewed on each rating website and created an index of the dummy variables ranging from 0 (no availability of external ratings) to 3 (extensive availability). The results are robust to the inclusion of a dummy for negative reviews. This composite measure relies on multiple aspects of online-based external scrutiny to avoid possible bias from focusing on a single rating platform.

Mission tangibility is manually coded based on each organization’s mission statement at the time of the second survey wave. As a data source, mission statements are widely adopted among nonprofit organizations, relatively uniform (about 50–150 words, applicable to the entire organization), and usually describe the organization’s constituencies and core activities (Fyall et al., 2018; Koch et al., 2015; Lecy et al., 2019). Mission statements were manually copied from web pages or published documents. These mission statements are significantly longer and more detailed than those reported on IRS form 990 (e.g., Paxton et al., 2020).

To measure the tangibility of the organization’s mission, two collaborators familiar with nonprofit scholarship and I coded each organization’s mission statement by hand on a scale from 1 (tangible) to 5 (abstract). We first independently coded 10% of the mission statements to get a sense of the variation in the data and then settled on three indicators of tangibility: whether the statement contains a concrete activity, a quantifiable outcome, and a specific constituency. We distinguished the concept of tangibility from the field of activity (Fyall et al., 2018; Lecy et al., 2019), the degree to which the mission is instrumental rather than expressive (Frumkin, 2005), and its geographic scope (Benjamin, 2008).³ Interrater reliability was high with a Cronbach’s alpha of .87.⁴

Control variables

To consider the possibility that managerial accounts reflect funder requirements, I control for resource dependence based on annual financial information reported to the IRS (DiMaggio & Powell, 1983). I use the ratio of contributions and grants (as opposed to program service or investment revenues) as a measure of the influence of those interested in the efficacy of the organization’s mission, such as private foundations, government agencies, and individual donors. Because the IRS combines institutional and individual donors, I also include a dummy for whether an organization received a grant from foundations—key proponents of managerialism in the sector. A Herfindahl–Hirschman Index (HHI) of funding sources captures dependence on a single funder. With i being the number of income sources, and s_i being the proportion of income from the i^th source, the HHI is constructed as follows:

F D = Σ_{i = 1}^{n} s_{i}^{2}, F D \in [0, 1]

I also control for the educational background of the executive director and board chairs (Hwang & Powell, 2009). I distinguish between managerial and substantive professionalism: The former indicates whether either of the most senior executives has a PhD or master’s degree in management (e.g., MBA), and the latter indicates credentials from a substantive discipline related to the organization’s mission (e.g., MD). To control for competition as a source of compliance, I count the number of all public charities registered with the IRS with the same National Taxonomy of Exempt Entities (NTEE) code and in the same income quartile in the Bay Area (Vermeulen et al., 2016). I include NTEE fixed effects (“subsector dummies”) to account for variation across nonprofit industries, as the domain of service provision may be linked to institutional expectations for managerial accounts as well as features of accountability. Organization size is coded as the organization’s total annual expenses, which is more stable and reliable than employees or financial assets and reflects an organization’s visibility vis-à-vis evaluators and proponents of the accountability movement (Carman, 2010). Age is based on the ruling date the organization received 501(c)(3) status from the IRS and included because more recently founded organizations may be imprinted by the accountability expectations at the time of their founding (Stinchcombe, 1965). Website complexity is measured as the number of unique words on a website, as more complex websites are likely to see a higher degree of managerial or bureaucratic jargon (Powell et al., 2016b).

Methods

First, I use ordinary least squares (OLS) regression to predict the correlates of managerial practices and discourse. The cross-sectional model predicts how each covariate is associated with the dependent variable:

Y_{i} = β_{0} + β_{k} X + Z_{m} δ_{m}^{’} + ε_{i}

where Y_i is either the practice- or discourse-based account of managerialism of each organization i, X is a vector of k independent variables including organizational professionalism, external scrutiny, and goal tangibility with $β$ coefficients, and $δ$ is a set of m controls with Z coefficients.

Second, to analyze deviations in different accounts of managerialism, I use a multinomial logistic regression model to predict the different possible categories of decoupling to understand the coefficients better (Long & Freese, 2006). The probability of falling into a particular category relative to the base outcome is expressed in log odds and is linked to the same set of independent variables X as follows:

\log [P (Y = m) / P (Y = n)] = β X .

A significant Brant test confirms that the categories are not ordinal and that the multinomial logistic regression is preferred (χ² = 43, DF = 20, p < .001). The Hausman test statistic for whether estimated probabilities are independent from irrelevant alternatives is negative (Long & Freese, 2006).

Results

The goal of the following analyses is (a) to understand how the managerial practices of nonprofits relate to managerial discourse presented on these organizations’ web pages and (b) to test the association between three features of nonprofit accountability—professionalism, external rating, and mission tangibility—and inconsistencies between these two accounts.

Predictors of Managerial Practices and Discourse

Do levels of accountability reflected by a nonprofits’ staff, goals, and rating relate to how these organizations present their managerial orientation to their audiences? To understand inconsistencies between practices and discourse that communicate managerialism, I begin by analyzing the covariates of managerial practices and language. Table 2 describes the variables and Table 3 reports coefficients from the OLS regression. All coefficients are x-standardized so that their magnitude can be interpreted as the association between a one-standard-deviation change in the independent variable and the outcome.

Table 2.

Summary Statistics of Dependent and Independent Variables.

Variable	M	SD	Measurement	Source
Managerial practices (P)	0.16	0.91	Principal component Range −1.7 to 1.1	Survey^a
Strategic planning	0.55	0.50	Dummy	Survey^a
Consultant	0.73	0.44	Dummy	Survey^a
Financial audit	0.56	0.50	Dummy	Survey^a
Quant. evaluation	0.67	0.47	Dummy	Survey^a
Managerial discourse (D)	0.53	0.33	∑ M, A, B Range 0 to 1.54	Website text
Management (M)	0.17	0.20	Range 0 to 1.23	Website text
Assessment (A)	0.15	0.16	Range 0 to 1.08	Website text
Bureaucracy (B)	0.21	0.19	Range 0 to 1.29	Website text
Professionalism	3.10	1.55	0 (volunteer) to 5 (professional staff)	Survey^a
External rating	0.42	0.67	Score for external ratings Range 0 to 3	Nonprofit rating services online
Goal tangibility	2.22	0.68	Range 1 (abstract) to 5 (tangible)	Mission statement
Managerially prof. leader	0.13	0.34	Dummy	Survey^a
Substantively prof. leader	0.28	0.45	Dummy	Survey^a
Size	1.76	0.85	Quartile Range 1 to 4	IRS form 990
Age	19.07	14.59	Years after IRS ruling Range 0 to 58	IRS form 990
Funding diversity	0.43	0.30	HH Index Range 0 to 1	IRS form 990
Contribution ratio	1.18	0.53	Category based on income Range 0 to 2	IRS form 990
Website complexity	2.44	3.48	Unique words in thousand Range .05 to 30	Website text

Note. IRS = internal revenue service; HH = Herfindahl-Hirschman.

44 data points on organizational characteristics imputed from 2004-5 survey, remaining data from 2014-5 survey.

Table 3.

Standardized Coefficients of OLS Models Predicting Managerial Practices and Discourse.

	3.1	3.2
Variable	Managerial practices	Managerial discourse
Professionalism	0.31*** (0.09)	0.30* (0.13)
External rating	0.16** (0.06)	−0.04 (0.09)
Goal tangibility	0.03 (0.06)	0.19* (0.09)
Managerially professional leader	0.12+ (0.07)	0.00 (0.10)
Substantively professional leader	0.00 (0.07)	0.07 (0.10)
Size	0.19* (0.09)	0.01 (0.13)
Age	−0.07 (0.07)	−0.02 (0.10)
Niche width	0.07 (0.08)	−0.00 (0.11)
Funding diversity	0.06 (0.08)	−0.05 (0.12)
Foundation grant	0.14+ (0.08)	−0.09 (0.12)
Contribution ratio	−0.00 (0.06)	0.21* (0.08)
Website complexity	0.10 (0.07)	0.01 (0.10)
Sub-sector dummies	Yes	Yes
Constant	0.03 (0.16)	0.16 (0.24)
N	127	127
R ²	.54	.20
AIC	273.9	375.8
DF	21	21

Note. OLS = ordinary least squares, DF = Degrees of freedom, AIC = Akaike Information Criterion.

Standard errors in parentheses.

p < .1. *p < .05. **p < .01. ***p < .001.

Managerial practices

Model 3.1 shows that the use of strategic planning, management consultants, and financial and performance reporting is strongly associated with the professionalism and training of the workforce (β = .31, p < .001). The coefficient means that an organization that is more professional by one unit—for instance, because its staff is paid rather than voluntary, or its executive director works full-time rather than part-time—ranks a fifth of a standard deviation higher on the distribution of managerial practices. Professionally trained leaders are also associated with managerial practices, but the effect is not statistically significant (β = .12, p < .1). These coefficients are consistent with the argument that professional staff bring a managerial toolkit into their organizations, supporting Hypothesis 1a.

Another strong indicator of high levels of managerial practices is whether the organization is rated externally (β = .16, p < .01), supporting Hypothesis 2a. Tangible organization missions—in contrast to other aspects related to what the organization actually does—are not associated with more managerial practices. This finding supports Hypothesis 3a, which argued that mission statements are only loosely associated with differences in performance. In sum, these findings support the assumption that accountability features can boost managerial practices.

Managerial discourse

As model 3.2 shows, professionally staffed organizations are also significantly more likely to use managerial language on their website (β = .30, p < .05). A 1-unit change on the professionalism scale increases managerial discourse by a fifth of a standard deviation, in line with Hypothesis 1b. Consistent with Hypothesis 2b, an external rating neither systematically increases nor decreases managerial language. Organizations with more tangible missions are more likely to present managerial discourse (β = .19, p < .05), which is consistent with the idea that organizations providing a concrete service are expected to highlight effective delivery. This confirms Hypothesis 3b.

Features of accountability are of course not the only determinants of managerial language, as a series of control variables shows. Organizations whose income stems from grants and donations also use more managerial language than those that depend on program revenues or investment income (β = .21, p < .05). This may be because these organization care more about communicating their managerial orientation to lay audiences, including private donors, than expert audiences, including institutional grant-makers. The effect of receiving a foundation grant, a secondary indicator of institutional sources of income, is statistically insignificant, however.

Inconsistencies Between Managerial Practices and Discourse

As these results show, professionalism, goal tangibility, and the level of external scrutiny affect organizational accounts of nonprofit managerialism. What are the consequent effects for the divergence between practices and discourse of managerial nonprofits? To answer this question, I examine what predicts different forms of the decoupling introduced in Figure 1. In the following, I refer to the coefficients predicting the log odds of each quadrant in Figure 1 relative to having neither managerial discourse nor managerial practices. This allows for distinguishing between the types of inconsistencies between practices and discourse. The measure portrays decoupling not in absolute terms (i.e., whether the discourse is corroborated by practice), but as over- or underemphasis of discourse relative to practices. Figure 2 illustrates the main results as predictive margins and Table 4 displays the underlying models in detail.

Figure 2.

Predicted probabilities of decoupling between managerial practices and managerial discourse by key explanatory variables.

Table 4.

Log Odds Estimates of Multinomial Logistic Regression Models Predicting Category of Decoupling.

	4.1	4.2	4.3
Variable	Consistently managerial accounts	Underemphasis (discourse < practice)	Overemphasis (discourse > practice)
Professionalism	1.65** (0.63)	0.18 (0.47)	−0.00 (0.53)
External rating	0.79+ (0.47)	1.16* (0.46)	0.20 (0.65)
Goal tangibility	0.05 (0.35)	0.54 (0.34)	1.24** (0.47)
Managerially professional leader	0.76 (0.47)	0.64 (0.48)	0.25 (0.62)
Substantively professional leader	0.13 (0.37)	−0.14 (0.36)	−0.42 (0.47)
Size	0.65 (0.48)	0.98* (0.49)	0.51 (0.58)
Age	−0.14 (0.40)	−0.35 (0.38)	−0.68 (0.51)
Niche width	−0.02 (0.46)	0.12 (0.45)	−0.11 (0.61)
Funding diversity	−0.46 (0.48)	−0.08 (0.47)	−1.22+ (0.66)
Foundation grant	0.27 (0.42)	0.69 (0.43)	0.50 (0.52)
Contribution ratio	1.25 (0.95)	0.68 (0.99)	1.16 (0.96)
Website complexity	0.22 (0.32)	−0.23 (0.47)	−2.14* (1.01)
Subsector dummies	Yes	Yes	Yes
Constant	0.92 (0.86)	0.46 (0.84)	−1.07 (1.18)
N (category)	40	41	15
N (total)	127
Pseudo R ²	.35
AIC	350.8
DF	63

Note. Standard errors in parentheses.

p < .1. *p < .05. **p < .01; reference category is “consistently little managerial accounts,” N = 31.

Professionalism

Hypotheses 1a and 1b suggest that organizational professionalism is associated with both managerial practices and discourse. The reported predictors of consistently managerial accounts in column 4.1 show that this is the case. Compared to the “consistently little managerial accounts” category, a one-standard-deviation increase in professionalism is associated with a 1.65 increase in the multinomial log odds of being in the “consistently managerial accounts” category (p < .01). This means that the likelihood of falling into the high-managerialism category (the so-called relative risk ratio) is about 5.2 times higher than the likelihood of falling into the low-managerialism category. As proposed, net of controls, professionalism is associated with consistency rather than decoupling.

External scrutiny

According to Hypotheses 2a and 2b, whether an organization’s practices are more managerial than its discourse suggests depends on whether the organization was vetted by one of the major nonprofit rating websites. Column 4.2 shows that the relationship between underemphasis and external scrutiny is positive (β = 1.16, p < .05). The coefficient corresponds to a relative risk ratio of 4, meaning that an externally evaluated organization is 4 times more likely to underemphasize its managerialism publicly than a consistently low rationalized organization. Secondary analyses show that, with each additional standard deviation of external rating, underemphasis is also about 3.2 times more likely than overemphasis (and 7.7 times more likely if the organization is evaluated compared to not being evaluated). This evidence supports the claim that classic policy-practice decoupling is complicated or unappealing for organizations facing external scrutiny.

Goal tangibility

Hypotheses 3a and 3b imply that inconsistent accounts—in terms of both exaggerating and downplaying managerialism—may be due to missions that are more or less tangible. This feature becomes salient in open-ended survey responses: Passionate and professional employees are seen as assets, but organizational austerity and pressures to become business-like are not. Goal tangibility is indeed related to classic notions of decoupling. As column 4.3 shows, organizations with more tangible goals are significantly more likely to fall on the higher ends of managerial discourse, even when practices are not managerial (β = 1.24, p < .01). This coefficient implies that the practice- and discourse-based accounts of organizations with more tangible goals, where pressures to become managerial are compatible with the charitable mission, are likely to deviate from each other. A one-standard-deviation increase in goal tangibility corresponds with a more than threefold increase in the likelihood of overemphasis compared to communicating a low level of managerial practices.

Limitations

The cross-sectional nature of these data makes reverse causation possible. Managerial organizations could solicit publicly accessible ratings in addition to being encouraged by them to showcase managerial practices. It is also possible that certain hires are a result of cultural fit with organizational practices, although previous work has provided strong evidence that professionals carry managerial ideas (Hwang & Powell, 2009). Second, the construct validity of measures of complex ideas such as managerialism is a perennial challenge. The use of expert-vetted dictionaries draws and improves on previous studies of discourse related to nonprofit managerialism (Maier & Meyer, 2011; Powell et al., 2016b). Although a comparative study cannot offer the depth of a content analysis, the quantitative measures of managerial discourse appear valid, as demonstrated in the appendix (Krippendorff, 2012; Weber, 1990). Finally, not all organizations are equally exposed to managerial pressures. Controls for the major NTEE sectors indicate no differences in the trends of decoupling in industries that tend to behave differently from the population, such as health or human services, however (Hwang & Powell, 2009; Scott et al., 2000).

Discussion and Conclusion

These findings illuminate the effects of heightened accountability on nonprofit organizations. Accountability standards have become a new reality for nonprofits in recent decades (Ebrahim, 2019; Williams & Taylor, 2013). Bureaucratic reporting requirements, managerial reforms encouraged by private foundations, and a global trend toward measuring social impact all shape the institutional environment of nonprofits (Hwang & Powell, 2009; Maier et al., 2014; McCarthy & Zald, 1977; Saxton & Guo, 2011). Accountability promises to reduce inconsistencies in how nonprofits present themselves to constituents, which can harm the legitimacy of nonprofits’ actions and constituents’ trust in nonprofits (Deephouse et al., 2017; MacLean et al., 2015).

How accountability actually shapes such inconsistencies between talk and action is particularly relevant in the context of nonprofit managerialism. Many people in nonprofit organizations do not find their work to be measurable or commensurable (Barman, 2016; MacIndoe & Barman, 2013; Morley, 2016). As a result, managerialism can be orthogonal to the constitutive principles of the sector and the intrinsically motivated workforce. Some observers are concerned that the confluence of nonprofit managerialism and the explosion of audits and performance measures in the sector leads to “myopic” views of performance (Ebrahim, 2019; cf. Power, 1997). The immediate importance of values—from the passion of volunteers to compassion for clients—in the nonprofit sector suggest that some organizations may downplay their instrumental orientation while others exaggerate how managerial they are (Frumkin, 2005). This observation offers an ideal opportunity to inspect the nature and feasibility of decoupling under scrutiny from the accountability movement (Carman, 2010).

A classic reading of decoupling is that actual practices are buffered from outward-facing policies and “euphemistic discourse” that puts these structures into the right light for observers (Meyer & Rowan, 1977; Turco, 2014). Bromley and Powell (2012) point out that decoupling has become intractable due to increasing external scrutiny of organizational practices. This article demonstrates that some aspects of accountability indeed have the intended consequence of reducing inconsistencies. In particular, this is true for the presence of professional staff, who are associated with both managerial discourse and practices and whose ethos ensures that these accounts are aligned. However, the findings do not confirm the intuition that accountability universally reduces decoupling. Tangible missions are associated with a general tendency to state activities in more managerial terms, but without the managerial practices—consistent with the diagnosis of decoupling theory. Ratings, in contrast, are associated with managerial practices, but not managerial discourse; the reputational threat of external monitoring reduces overstating managerial orientations, but it also creates new inconsistencies. Exposure to external scrutiny explains why many nonprofits plan strategically, evaluate their own performance, and hire consultants without presenting managerial rhetoric. Accountability in the nonprofit sector does not make classic policy-practice decoupling go away, but it is associated with forms of decoupling that are different from how institutional scholars traditionally understand decoupling.

This insight relies on a rare comparison between two separate measures of managerialism. One contribution of this article is to operationalize instrumental management in the context of organizational behavior in both language and practice (Dart, 2004; Guo, 2006). Just as funding streams are sometimes decoupled from business-like rhetoric, talk and action related to managerialism are not always aligned (Maier et al., 2014). Future research can further investigate how to assess the degree to which organizations are subject to different varieties of managerialism, along the lines of different types of rational thinking (Kalberg, 1980). Ideally, a study of varieties of managerialism will complement survey and text data with ethnographic observations of decision-making processes.

The article also has methodological implications for studies investigating organizational discourse such as those presented on leaflets, press releases, annual reports, or websites (Maier & Meyer, 2011; Powell et al., 2016). Comparing the computer-aided quantitative content analysis to publicly available organizational data shows that public text data must be used with care for prediction exercises such as inferring an organization’s activities from the language it uses on its website via machine-learning algorithms (Fyall et al., 2018; Grimmer & Stewart, 2013; Paxton et al., 2020). At the same time, websites are the primary venue for organizations to account for their actions to present the organization from its best side, to explain deviant behavior, and to broadcast the organization’s identity (Benjamin, 2008; Powell et al., 2016a; Scott & Lyman, 1968a). Big data clearly promise new insights into nonprofit behavior. This article shows that such analyses need to be grounded in observational data and a theory of how practices are linked to more superficial statements of activity.

Supplemental Material

sj-pdf-1-nvs-10.1177_0899764021995240 – Supplemental material for Decoupling Under Scrutiny: Consistency of Managerial Talk and Action in the Age of Nonprofit Accountability

Supplemental material, sj-pdf-1-nvs-10.1177_0899764021995240 for Decoupling Under Scrutiny: Consistency of Managerial Talk and Action in the Age of Nonprofit Accountability by Christof Brandtner in Nonprofit and Voluntary Sector Quarterly

Footnotes

Acknowledgements

The author thanks Catherine Gray and Jacob Waggoner for phenomenal research assistance. The author is further indebted to the researchers of the Stanford Project on the Evolution of the Nonprofits Sector (SPEN) for pioneering data collection and to Woody Powell and Aaron Horvath for their collaboration on the second wave of the project. Patricia Bromley, Patrick Haack, Yan Long, Florentine Maier, John W. Meyer, Michael Meyer, Renate Meyer, Glenn Morgan, Carrie Oelberger, Sebastian Schuster, Sarah Soule, Xueguang Zhou, and the late Buzz Zelditch provided valuable comments, as did participants of the SASE Early Career Workshop and workshops at Stanford University. The author takes full responsibility for all errors.

Declaration of Conflicting Interests

The author(s) declared no potential conflicts of interest with respect to the research, authorship, and/or publication of this article.

Funding

The author(s) disclosed receipt of the following financial support for the research, authorship, and/or publication of this article: The author acknowledges financial support from the Stanford Center on Philanthropy and Civil Society (PACS), the Mansueto Institute for Urban Innovation at the University of Chicago, and National Science Foundation Soc-DDRI award #1801677.

ORCID iD

Christof Brandtner

Supplemental Material

Supplemental material for this article is available online.

Notes

Author Biography

Christof Brandtner is an assistant professor at emlyon Business School, a senior research fellow at the Civic Life of Cities Lab at Stanford PACS, and a fellow at the Mansueto Institute for Urban Innovation at UChicago. An organizational and economic sociologist (PhD, Stanford 2019), Christof studies how institutions, organizations, and urban environments shape the emergence and diffusion of social innovations. He’s completing a book about cities’ efforts to mitigate and adapt to climate change and conducts research on organizational change and resilience.

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