Nonprofit stakeholders: Who they are and why they matter

Stakeholders are the glue that firmly holds a nonprofit organization together because they represent both the people who influence and are impacted by your organization’s actions. As such, your stakeholders are a vital part of mission fulfillment and major players in your overall success.

What’s important to understand is that the choices you make have a powerful ripple effect—good or bad— across everyone who is close to your cause. This can include board members, the people or communities you serve, donors (individual and corporate), foundations, and others who have a stake in your efforts. Properly managing stakeholders’ involvement in the organization can make a huge difference in the causes you undertake, the effectiveness of those programs, and fundraising efforts.

Key to success is proper and equitable management of stakeholders. Effectiveness, accountability and ethics are all core areas of concern within any nonprofit, and stakeholders help to balance each. That’s why it’s critically important to know who your stakeholders are and identify ways to work with them to improve overall decision making and fuel long-term success and sustainability.

Common nonprofit stakeholders

The first step in better managing stakeholders is to know who they are. Take some time to conduct an inventory of everyone involved with your nonprofit. To get you started, here is list of typical stakeholders:

• Employees: The most obvious of stakeholders, your employees can be a powerful force in driving the success of your organization. Ensure that employees feel empowered to bring ideas to the table, nurture relationships, and make critical decisions when needed.
• Members: Some nonprofits support memberships—both paid and honorary. This group has a major stake in program results and outcomes.
• Volunteers: These folks can include board members and groups and individuals who are generous enough to offer their time to your cause at no cost.
• Beneficiaries: This group is made up of those you serve (your “customers”). Beneficiaries can include the parents and children of educational programs you operate or members (subscribers) of a given program who participate in regularly scheduled activities.
• Donors and grant givers: These stakeholders can include individual donors, corporate charitable givers, foundations, and state or federal agencies that provide funding. Keeping these stakeholders engaged ensures a consistent inflow of funding.
• Local community: Every nonprofit is part of a broader community and should strive to participate in community-based activities—while also helping to cultivate community leaders.
• Other nonprofits. It’s difficult to operate a successful nonprofit when you exist on an island. It takes a village, and that includes the support of other charitable organizations. As such, more and more nonprofits are partnering with other organizations rather than competing with them.

The main goal of every nonprofit is to raise funds that support their causes. By working with stakeholders and creating meaningful relationships, it becomes much easier to accomplish this. There is strength in community, and when the community works as a team, nonprofits are able to:

• Keep donors engaged and giving.
• Connect with one-time and lapsed donors and move them to give again.
• Attract new donors.
• Partner with corporate donors for funding and volunteer hours.
• Ensure the long-term, sustainable success of the organization.

Stakeholder management: getting the best results

Because stakeholders are an essential component of your nonprofit, it’s important to maintain equity of power. Involving all parties, at some level, can improve the overall health of your organization, including:

1. Effectiveness
2. Accountability
3. Ethics

Let’s dig into each in more detail…

Effectiveness

Traditionally, nonprofit organizations have spent the bulk of time developing relationships with those they serve and donors. While this makes sense, today, many organizations have realized that it requires far more human resource power to make a substantial impact and keep funding rolling in. It requires a holistic approach.

The complex issues that nonprofits deal with cut across sectors and geographic boundaries. For example, while a dedicated team may operate a local nonprofit chapter of Boys & Girls Club of America, the organization still has to pay attention to broader issues such as national club policies, procedures and fundraising efforts. The multiple tentacles of a nonprofit create complexities that require the work and input of numerous stakeholders to create solutions.

There are many variables at play in running a successful nonprofit, which is why promoting advocacy across departments, roles and functions is critical. When you clearly understand who all has a stake in your organization’s performance, you are better equipped to develop a holistic approach and leverage the power of your people to meet program and fundraising goals.

Accountability

Accountability relates to maintaining a healthy balance of power within a nonprofit organization. The main goal is to create a structure where numerous stakeholders have input into and oversee essential functions and duties. This helps mitigate risk of power imbalance (or abuses of power) and isolated decision-making while creating a multidimensional structure for broad operations.

When you consider the two core dimensions within nonprofits, a focus on accountability makes even more sense:

• Vertical accountability: This focuses on compliance. That is, living up to formal obligations such as organizational bylaws, state and federal laws, contracts, procedures, and regulations. Staying compliant and current in this area requires involvement from stakeholders from across the organization—typically board members, employees, and qualified volunteers.
• Horizontal accountability: This is also known as relational accountability and involves maintaining consistency and equality across relationships. This includes relationships with donors (individual and corporate); foundations; local, state and federal agencies; and the communities and individuals served. Overall, stakeholders are intertwined at some level and all equally important to the nonprofit’s success, so maintaining parity among all is mission-critical.

Ethics

Because relational accountability permeates all areas of a nonprofit, promoting sound ethical behavior via equitable power dynamics is foundational. Maintaining equity across stakeholder categories fosters trust throughout the nonprofit organization and across donors and communities served because the balance of power is transparent.

When control is restricted to a small group, you lose transparency. And when visibility into initiatives and actions is limited, trust dissipates. The pressure of duties within a smaller group can also cause a nonprofit to lose sight of key objectives and goals, which may negatively affect essential programs and promote deterioration of key stakeholder relationships.

Including stakeholders from all areas of the organization is the best way to counter these potential issues. It also ensures that everyone has a meaningful voice and opportunity to advance the nonprofit’s cause and interest.

Your stakeholders matter

Stakeholders pervade every area of a nonprofit—from the individuals and communities your programs serve to donors, board members, staff and volunteers. Combined, stakeholders represent a powerful force to move the needle and get things done. Building relationships across stakeholders serves to strengthen your nonprofit overall via dedicated advocacy that fuels mission fulfilment.

Your stakeholders matter greatly to your mission. They help drive initiative effectiveness. They ensure accountability for the choices made and actions taken. And they help to foster widespread trust that fortifies your nonprofit’s viability. So, take the time to identify all of your stakeholders and put a plan in place to leverage all that human power!

How can QuickBooks help?

When you have the right small business accounting software in place, it provides you with deeper insights into your financial data. It also makes easier work of financial forecasting and managing budgets. With the accounting in check, you’ll have more time to focus on your true passion—running your nonprofit and fulfilling your mission. For more information on what QuickBooks can do for your nonprofit, visit us today.