This chapter addresses the regulatory aspects of governance at the state and nonprofit sector levels that form the legal-institutional frameworks and provide the environmental constraints and opportunities under which organizational governance takes place. It considers the formal aspects of regulation through nonprofit laws in a transaction cost-based conceptual framework as well as voluntary self-regulation and implications for nonprofit accountability. Understood as governance through regulation, regulatory governance through formal law can encourage, nurture, foster and even protect nonprofits from abuse, making continuous reform extremely important for the nonprofit sector’s health and well-being. However, existing legal systems are largely outmoded and reform efforts typically only focus on partial remedies rather than adapting the regulatory system more fully to the realities of the twenty-first century.
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