The aim of this paper is to investigate among a group of non-profit organizations: a) the effect of ethical leadership on volunteers’ satisfaction, affective organizational commitment and intention to stay in the same organization; b) the role played by job satisfaction as a mediator in the relationship between ethical leadership and volunteers’ intentions to stay in the same organization, as well as between ethical leadership and affective commitment. An anonymous questionnaire was individually administered to 198 Italian volunteers of different non-profit (...) organizations. The questionnaire contained the Ethical Leadership Scale, the Volunteers Satisfaction Index, the Affective organization Scale, as well as questions regarding the participants’ age, sex, type of work, level of education, length of their volunteer works, intention to volunteer in the following months in the same organization. The construct as well the effects of EL on volunteers is approached in light of the Social Exchange Theory and the Social Learning Theory. Structural equation models were used to test hypothesized relationships. The results confirm the role of mediation of volunteer satisfaction in the relationships between the variables studied. In particular, ethical leadership was found to be positively associated both with volunteers’ intention of staying and with their affective commitment. In the first case this relationship is fully explained by the mediation of the volunteers’ satisfaction, while the latter is explained by both direct and indirect factors. To the authors’ knowledge, this the first attempt to understand the role played by ethical leadership on volunteers’ behavior and, more in general, in the management of non-profit organizations. Findings are relevant both for practitioners and managers of non-profit organization, since they suggest the relevance of the perception of ethical leadership by volunteers, as well as for scholars, since they further deepen the knowledge on EL and its effects on the followers. Limits of the study: the questionnaire was administered only among a group of non-statistical sample of volunteers. Furthermore, the study reached only volunteers from Italian non-profit organization. (shrink)

This study examines the impact of Sarbanes–Oxley on the nonprofit sector. Focusing on three key SOX policies applicable to charities—conflict-of-interest policies, records retention policies, and whistleblower policies—this study tests the relationship between the existence and addition of these policies on subsequent ethical and governance lapses as reflected in the issuance of “donor advisories” by the large third-party ratings agency Charity Navigator. The findings suggest that, controlling for other relevant organizational factors, the three SOX-inspired written policies are related to a reduced (...) likelihood of donor advisories in the organizations rated by Charity Navigator. (shrink)

Nonprofits are a major part of the U.S. economy and they are not immune from corporate malfeasance controversies. Even Congress has expressed concern about the crisis in nonprofit governance. The nonprofit response to Congress has been a historic initiative recognizing critical challenges to nonprofit governance. In contrast to their for‐profit counterparts, nonprofits are committed to missions serving the public benefit and not to shareholder profits. Accordingly, their missions and financial resources are intrinsic to their very existence, which is built upon (...) the public trust. That trust is rooted in fiduciary responsibility and reflected in best practices. This article traces the history of the nonprofit public trust and fiduciary standards and examines principles of Sarbanes–Oxley and other best practices as they apply to nonprofits. The authors sampled 80 health‐care nonprofit corporation web sites from eight asset classes to determine compliance with Sarbanes–Oxley and identification of fiduciary duty, ethical values, and other best practices. Among the very largest health‐care nonprofits, many comply with Sarbanes–Oxley and identify fiduciary duty, ethical values, and other best practices. However, there are substantial deficiencies in such compliance and identification among all remaining seven asset classes ranging from 99.9 million to less than 100,000. The results appear to corroborate the urgent necessity for reform articulated by the Congress and the nonprofit sector. Nonprofit governance has entered a new era where best practices must be implemented to sustain the public trust. (shrink)

In the United States, the IRS now requires charities to publicly disclose any significant asset diversion, which is the theft or unauthorized use of assets, that the charity identifies during the year. We use this new disclosure to investigate whether strong governance reduces the likelihood of a charitable asset diversion. Specifically, for a sample of 1528 charities from 2008 to 2012, we simultaneously examine eleven measures of governance that capture four broad governance constructs: board monitoring, independence of key individuals, tone (...) at the top, and capital provider oversight. We find consistent evidence that good governance across all four constructs is negatively associated with the probability of an asset diversion. Of the eleven governance measures, our results indicate that monitoring by debt holders and government grantors, audits, and keeping managerial duties in-house are most strongly associated with lower incidence of fraud. Our results also indicate that the likelihood of a fraud is negatively associated with a board review of the Form 990, the existence of a conflict of interest policy, and the presence of restricted donations. In addition, we document that the likelihood of an asset diversion is negatively associated with program efficiency and positively associated with growth and organizational complexity. (shrink)