Why Do Foundations Follow the Law? Evidence from Adoption of the Uniform Prudent Management of Institutional Funds Act

Employing a large panel of over one million firm‐years, I find evidence consistent with widespread compliance with law among U.S. private foundations despite the absence of many formal deterrence mechanisms. The research design exploits rolling state adoption of the Uniform Prudent Management of Institutional Funds Act, which lifted some existing limits on firm spending for a fraction of firms within each state. This allows the use of triple‐difference estimates that control for changes in local norms and economic conditions. UPMIFA increases firm spending, on average, implying that firms were complying with the pre‐UPMIFA regime. Interacting the triple‐difference factors with other predictors of compliance reveals no correlation between compliance and enforcement intensity, but some evidence that compliance is correlated with firm culture and reliance on accountants. These findings have potentially important implications for the governance of charitable organizations, and may speak more generally to drivers of compliance among other organizational forms.     

International NGOs and the challenge of modernity

The forces associated with economic globalisation and the apparent supremacy of market forces have unleashed a range of political and social processes that have served, and were indeed designed, to enrich and empower the few at the expense of the majority. These include phenomena such as the rise in armed conflict, threats to food security, the loss of livelihoods and traditional ways of life of millions of people worldwide, the commodification of social provision, assaults on national sovereignty, and the privatisation of citizenship. However, the author argues, the most significant impact of globalisation is the 'localisation' of social and political struggle, and the emergence of new forms of international solidarity. Many NGOs have too readily succumbed to the view that globalisation in its present form is inevitable and irreversible, and have accommodated to it by trading their essential values for technical professionalism, often imported from the private sector. However, if NGOs are to assume their place as part of a transformational movement for social justice, they must rediscover and foster the values of citizen participation and develop a genuine respect for diversity.     

Financial Health in Australian Local Government: The Application of a Funding Assessment Model to Brisbane and Sydney City Councils

Local government financial viability measurement in an accrual budgeting environment poses complex challenges. Financial measures frequently generate conflicting results. A rating scale to assess financial management, constructed originally for South African municipalities (Dollery & Graves, 2009), represents a useful tool to analyze financial health trends. Applying a “Likert-like” scale to financial performance measures to assess “funding compliance”, the model in this article assists municipalities to avoid financial difficulties. To demonstrate the applicability of this model, we apply the model to the Brisbane City Council and the Sydney City Councils. Results show that the model represents a valuable aid to financial management decision-making.