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The paper examines aspects of not-for-profit leadership and in particular the importance of values in such leadership.

Drawing on the literature for leadership in charities, not-for-profits and social enterprise, the paper also uses two detailed case studies to illustrate dilemmas and challenges specific to the not-for-profit sector. These examples are the Salvation Army and Emmaus, both of which are found across many countries.

The paper identifies the importance of value sets in not-for-profits – in particular the voluntarist element that especially distinguishes these organisations from those in the private and public sectors. However, it also identifies common ground between some aspects of not-for-profit leadership and those other sectors.

The paper furnishes a composite of literature on leadership reinforced by detailed case studies as well as observations on characteristics that both link and separate leadership in the different sectors.

Heritage assets (HAs) are important goods or properties that define a country’s culture, history, and identity. Public sector entities are the primary custodians of a nation’s heritage properties; however, many local museums and historic houses are managed by private not-for-profit (NFP) organisations that essentially act to conserve these heritage places.

Through a documentary analysis, this chapter aims to investigate the points of convergence and the differences between accounting policies for governmental heritage and private NFP organisations.

The study demonstrates that even private NFP entities present the same characteristics as public sector ones in the accounting of heritage goods and that there are certain accounting standards being equally applicable; therefore, the accounting policies for governmental heritage are in accordance with the accounting policies for NFP organisations such as museums, art galleries, charities, churches, for their heritage goods.

This research explores perceptions of knowledge management processes held by managers and employees in a service industry. To date, empirical research on knowledge management in the service industry is sparse. This research seeks to examine absorptive capacity and its four capabilities of acquisition, assimilation, transformation and exploitation and their impact on effective knowledge management. All of these capabilities are strategies that enable external knowledge to be recognized, imported and integrated into, and further developed within the organization effectively. The research tests the relationships between absorptive capacity and effective knowledge management through analysis of quantitative data (n = 549) drawn from managers and employees in 35 residential aged care organizations in Western Australia. Responses were analysed using Partial Least Square-based Structural Equation Modelling. Additional analysis was conducted to assess if the job role (of manager or employee) and three industry context variables of profit motive, size of business and length of time the organization has been in business, impacted on the hypothesized relationships.

Structural model analysis examines the relationships between variables as hypothesized in the research framework. Analysis found that absorptive capacity and the four capabilities correlated significantly with effective knowledge management, with absorptive capacity explaining 56% of the total variability for effective knowledge management. Findings from this research also show that absorptive capacity and the four capabilities provide a useful framework for examining knowledge management in the service industry. Additionally, there were no significant differences in the perceptions held between managers and employees, nor between respondents in for-profit and not-for-profit organizations. Furthermore, the size of the organization and length of time the organization has been in business did not impact on absorptive capacity, the four capabilities and effective knowledge management.

The research considers implications for business in light of these findings. The role of managers in providing leadership across the knowledge management process was confirmed, as well as the importance of guiding routines and knowledge sharing throughout the organization. Further, the results indicate that within the participating organizations there are discernible differences in the way that some organizations manage their knowledge, compared to others. To achieve effective knowledge management, managers need to provide a supportive workplace culture, facilitate strong employee relationships, encourage employees to seek out new knowledge, continually engage in two-way communication with employees and provide up-to-date policies and procedures that guide employees in doing their work. The implementation of knowledge management strategies has also been shown in this research to enhance the delivery and quality of residential aged care.

Policymakers worldwide have proposed a new contract – the ‘social impact bond’ (SIB) – which they claim can allay the underperformance afflicting not-for-profits, by tying the private returns of (social) investors to the success of social programs. We investigate experimentally how SIBs perform in a first-best world, where investors are rational and able to obtain hard information on not-for-profits’ performance. Using a principal-agent multitasking framework, we compare SIBs to inputs-based contracts (IBs) and performance-based contracts (PBs). IBs are based on a piece-rate mechanism, PBs on a non-binding bonus mechanism, and SIBs on a mechanism that, due to the presence of an investor, offers full enforceability. Although SIBs can perfectly enforce good behaviour, they also require the principal (i.e., government) to relinquish control over the agent’s (i.e., not-for-profit’s) payoff to a self-regarding investor, which prevents the principal and agent from being reciprocal. In spite of these drawbacks, in our experiment SIBs outperformed IBs and PBs. We therefore conclude that, at least in our laboratory test-bed, SIBs can allay the underperformance of not-for-profits.

There is still no universal definition of the third sector in Europe, but it can be seen as including all types of non-governmental not-for-profit entities such as non-profit organizations, mutuals, cooperatives, social enterprises and foundations. This article attempts to make sense of the current shifting conceptualization of the third sector in Europe. It is based on short country summaries of the images and concepts of the third sector in 13 European countries by EMES Network’s members, first presented in 2008 (Defourny and Pestoff, 2008; nine of them were recently revised and are found in the appendix to this article.). The perception and development of the third sector in Europe is closely related to the other major social governance institutions/mechanisms, like the market, state and community and through the third sector’s interaction with them. Moreover, many third sector organizations (TSOs) overlap with these other social institutions, resulting in varying degrees of hybridity and internal tensions experienced by them. TSOs can generate resources from their activities on the market, by providing services in partnership with the state and/or by promoting the interests of a given community or group. The country overviews document a growing professionalization of TSOs in most countries and a growing dependency of public funds to provide services. This has important theoretical and practical implications for orienting the articles included in this book. Thus, it can provide a key for better understanding the discussion and analysis in the remainder of this volume.

Recently Italy has engaged in an extensive promotion of corporate social responsibility (CSR) for not-for-profit organisations (NPOs). A major reform of the sector was approved in 2016, with the aim of combating corruption. Accordingly, NPOs will be eligible to receive public funds and tax benefits only when they demonstrate that they produce social impacts through their activities. To give an account of the social impacts produced, the reform introduced mandatory reporting requirements: the formulation of a social report (SR) that has to be published on the NPO’s website along with its financial statement.

The chapter first reviews the Italian ongoing path of reform for NPOs, focusing on the mandatory reporting requirements. Second, it reviews the previous empirical research on SRs in Italian NPOs to provide a picture of the voluntarily reporting practices before the recent reform entered into force.

The chapter finds that SRs in Italian NPOs are in their infancy. They are not used to disclose social impacts or to legitimate NPOs. SR practices usually lack common frameworks, disclosure of outputs and outcomes, stakeholder engagement, dissemination and assurance by third parties.

The chapter contributes to the international debate on CSR by providing the perspective of reporting requirements and practices in Italian NPOs. It analyses the ongoing reform of NPOs and gives the stock of SR practices prior to the reform entering into force. This makes it possible for future research to assess the impact produced by the reform.

Economists and sociologists have proposed arguments for why there can exist wage penalties for work involving helping and caring for others, penalties borne disproportionately by women. Evidence on wage penalties is neither abundant nor compelling. We examine wage differentials associated with caring jobs using multiple years of Current Population Survey (CPS) earnings files matched to O*NET job descriptors that provide continuous measures of “assisting & caring” and “concern” for others across all occupations. This approach differs from prior studies that assume occupations either do or do not require a high level of caring. Cross-section and longitudinal analyses are used to examine wage differences associated with the level of caring, conditioned on worker, location, and job attributes. Wage level estimates suggest substantive caring penalties, particularly among men. Longitudinal estimates based on wage changes among job switchers indicate smaller wage penalties, our preferred estimate being a 2% wage penalty resulting from a one standard deviation increase in our caring index. We find little difference in caring wage gaps across the earnings distribution. Measuring mean levels of caring across the U.S. labor market over nearly thirty years, we find a steady upward trend, but overall changes are small and there is no evidence of convergence between women and men.

Benefit corporations are a form of incorporation that require management to pursue some specified social goal or benefit, even if this goal requires sacrificing profit maximization. Hence, benefit corporations are considered a new business model that explicitly incorporates a socially responsible component in the corporate mission. This alternative business model may offer investors and customers a more ethical corporate form due to the social responsibility motive.

Several states currently allow companies to incorporate as benefit corporations, and more states are considering such legislation. To be successful, benefit corporations will require either investment from the capital markets and/or favorable treatment from government entities. Thus, the potential success of benefit corporations is likely to rely on the general interest of private investors and citizens as well as the ability to communicate operational success.

As with the evolution of the for-profit corporate model and of free market economic systems, accounting may be critical to the success of benefit corporations. Accounting systems will need to be able to measure and report both profits and social benefits to the market. Socially conscious investors must have reliable information if they are to choose the benefit corporation model over other alternatives (e.g., maximizing their return from for-profit investments and making individual donations). Citizens must also have reliable information to bring pressure on governments to support this model if it proves viable.

It is still too early to determine benefit corporations’ long-term impact on society or even whether this business model will succeed in the marketplace. Our purpose is to offer a basic framework for evaluating benefit corporations relative to current substitutes and to consider characteristics that would contribute to benefit corporation success. Within this context, we consider accounting systems’ role in assessing the social utility of this new business model.

Individuals and corporations give generously to nonprofit organizations. However, supporters are naturally concerned about the financial strength and operational efficiency of an organization. Using publicly available nonprofit databases and websites, this case exposes students to a real-world scenario in which students analyze a 501(c)(3) organization of their choosing using GuideStar data and select Better Business Bureau Wise Giving Alliance criteria in five areas: governance and oversight, effectiveness, finances, fundraising and information materials, other financial and non-financial performance measures. The overall learning objective of this case is to enhance students’ understanding of a nonprofit’s financial and non-financial performance through research and analytical procedures. This case helps to fill a void by familiarizing students not only with standard nonprofit financial performance metrics, but also important non-financial areas related to governance, mission-driven goals, and organizational transparency. It also affords students the opportunity to develop a more thorough understanding of key accounting and non-accounting issues associated with nonprofits, which are not always explicitly or implicitly covered in textbooks.