Accounting as a Tool for Legitimization of Nonprofit Organizations

Abstract

This article introduces students and new scholars to key issues in nonprofit accounting research. Three historic vignettes illustrate the key role of accounting and internal controls in legitimizing and delegitimizing nonprofit organizations. Building on these vignettes, I explore five key topics: the use of accounting reports and controls to mitigate principal-agent problems, issues caused by problematic accounting measures, strategic reaction by nonprofit organizations to being measured, differential benefits of particular measures to different organizations, and the ability of users to understand measures.