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Transparency and Resource Allocation of Grassroots Nonprofits in China

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Abstract

Organizational transparency has become a prominent concern for the nonprofit sector as it expands globally. Transparency is important to organizational accountability, which may be indicated by how nonprofits allocate their resources. In this study, we examine the relationship between nonprofits’ transparency and their resource allocation to programs, administration, and fundraising. Our study focuses on China, where a nascent nonprofit sector is playing increasingly significant roles in social development while facing public trust challenges. Based on Agency Theory and Resource Dependence Theory, we propose two hypothesized frameworks that link transparency to resource allocation, and use the 2013–2015 China Grassroots Organizations’ Transparency Survey data (n = 370) to test this relationship. Our results suggest that nonprofits with higher transparency allocate more resources to programs rather than administration, a possible result of the current public scrutiny of nonprofit accountability in China. Our findings provide implications for nonprofit practitioners and future research about the significance of organizational transparency, particularly in emerging nonprofit sectors.

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Authors and Affiliations

  1. Department of Social Work and Social Administration, University of Hong Kong, Pok Fu Lam, Hong Kong

    Shuang Lu & Ke Lu

  2. School of Social Work, Rutgers University, New Brunswick, USA

    Chien-Chung Huang

  3. School of Public Policy and Management, Tsinghua University, 1 Tsinghua Garden, Haidian District, Beijing, 100084, China

    Guosheng Deng

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  1. Shuang Lu
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  2. Chien-Chung Huang
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  3. Guosheng Deng
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  4. Ke Lu
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Correspondence to Guosheng Deng.

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Appendix: Composition of the Grassroots Organizations’ Transparency Index (GTI)

Appendix: Composition of the Grassroots Organizations’ Transparency Index (GTI)

Dimension

Item

Basic information transparency

Purpose, mission, and vision

Scope of activities

Date of establishment

Registration type

Legal representative and manager

Place of registration and headquarter

Founder

Phone number

E-mail address

Mail address

Employee information

Independent information platforms

Governance transparency

Organization’s regulations

Names of board members

Number of trustees, or number of other administrative board members

Name of the president of the trustees

Board meeting minutes

Board of trustee’s procedural rules

Department and position of the trustee members

Wages of trustee members

Related party transactions of the trustee members

Names of organizational supervisors

Names of executive managers

Background of the executive director

Executive Director’s compensation package

Departments

Family relations among trustee members and managers

Related party transactions

Strategic plan

Annual work report

Annual financial statement

Financial management system

Financial transparency

Total assets

Net assets

Total income

Value of donations

Value of government subsidies

Value of operational income

Value of other income

Total expenditure

Project costs

Fundraising costs

Management costs

Other costs

Balance sheet

Activity list

Cash-flow statement

Details of donations

Activity transparency

Name of major projects or activities

Aim of activities

Activity-related fields

Project location

Project duration

Activity-related income

Activity-related expenditure

Project implementation

Immediate beneficiaries

Activity progress

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Lu, S., Huang, CC., Deng, G. et al. Transparency and Resource Allocation of Grassroots Nonprofits in China. Voluntas 31, 1188–1200 (2020). https://doi.org/10.1007/s11266-020-00230-9

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