Friday, September 27, 2019
Carolyn Cordery (Aston University Business School) (pictured) and Dalice Sim (University of Otago) have published Regulatory Reform: Distinguishing Between Mutual-Benefit and Public-Benefit Entities in the Journal of Public Budgeting, Accounting & Financial Management. Here is the abstract:
The purpose of this paper is to analyse nonprofit regulation through comparing and contrasting mutual-benefit and public-benefit entities. It ascertains how these entities differ in size, publicness, tax benefits and whether these differences might suggest regulatory costs should be differentiated.
This mixed-methods study utilises financial data, submissions and interviews.
There are stark differences in these two types of regulated nonprofit entities. Members should be the primary monitoring agency/ies for mutual-benefit entities, but financial reports should be understandable to these members. Nevertheless, the availability of tax concessions, combined with the benefits of limited liability, suggest mutual-benefit entities should be regulated and monitored by government in a way sympathetic to their size.
As with most research, a limitation is this study’s focus on a single jurisdiction.
The differences in these entities’ characteristics are important for designing regulation.
Better regulation is likely to require a standard set of financial reporting standards. Government has the right to demand disclosures due to benefits mutual-benefit entities enjoy.
In comparison to studies utilising only public-benefit data, this study uses unique data sets to compare public-benefit and mutual-benefit entities and presents nonprofit sector participant’s perceptions of these differences in context. This enables analysis of how better regulation could be achieved.