Published: May 12, 2023
In the realm of governance, accountability is a foundational concept all board members or directors need to grasp.
In the boardroom context accountability specifically refers to the obligation of the board of directors to be able to clearly explain and take responsibility for their decisions, actions, and the overall performance of the organisation they govern. In short, it’s about providing a transparent account of actions taken and decisions made, with an expectation of answerability.
Accountability is the cornerstone of trust between a board, an organisation and its stakeholders. Stakeholder may include members, employees, clients, government, regulators, funders, donors and most critically in the area of not-for-profits and charities the general public and wider community in which the organisation operates.
It ensures that every action taken and every decision made, aligns with the organisation’s mission, ethics, and the interests of its stakeholders. Accountability in not-for-profit governance also implies that there are consequences for not meeting these standards, including loss of trust, reputation damage, legal implications, and in extreme cases, financial penalties.
It is a board’s responsibility to set clear expectations, enforce standards, and lead by example in all matters of accountability.
What is example of accountability?
If a charity's water project in a developing country faces significant unexpected costs, the board would likely need to show they are accountable for this. To exercise accountability the board should communicate the budget overrun and its causes to donors and other stakeholders, showing transparency. They should take responsibility for these excess costs by assessing the planning process and making necessary adjustments such as seeking additional funds, renegotiating contracts, and revising the project scope. The board must demonstrate they are committed to learning from this situation by revising their project planning and budgeting processes, enhancing staff training, and considering external expert help Then communicating this learning by clearly reporting back to donors and other stakeholders about these changes. This will underscore a commitment to transparency, effective governance, and the responsible use of donor funds.
What is accountability vs responsibility?
Responsibility pertains to tasks and duties assigned to individuals or teams, and the obligations tied to their roles. It focuses on task completion and expected outcomes. Conversely, accountability extends beyond tasks and hinges on the ownership of results, positive or negative. It entails justifying actions and decisions and accepting the consequences if things go awry. While responsibility can be shared or delegated, accountability cannot. For example, a board of directors, despite delegating some roles and responsibilities to the Chief Executive Officer, remains accountable for the overall organisational performance and must ultimately answer for any organisational failures The most simple way of explaining accountability is: The buck stops with the board.
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Better Boards connects the leaders of Australasian non-profit organisations to the knowledge and networks necessary to grow and develop their leadership skills and build a strong governance framework for their organisation.
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