Nonprofits are beholden to mission and purpose in the context of stakeholders

To whom are nonprofits responsible? What are the primary implications of these responsibilities for the governance role and activities of nonprofit boards of directors?




"But as I walked down the steps I saw that the evening was not quite over. Fifty feet from the door a dozen headlights illuminated a bizarre and tumultous scene. In the ditch beside the road, right side up, but violently shorn of one wheel, rested a new coupe which had left Gatsby's drive not two minutes before....
"But how did it happen? Did you run into the wall?" "Don't ask me," said Owl Eyes, washing his hands of the whole matter. "I know very little about driving - next to nothing. It happened, and that's all I know" - F Scott Fitzgerald The Great Gatsby

I include this passage from the Great Gatsby because I think it pertains directly to the question at hand. Whether we are discussing organizations or people, mission and purpose, a sense of focus, is what keeps the life of either tethered, it allows us to drive the car of life down the road. For-profit organizations have the will of shareholders and the dollar, government has the median voter (Minkoff/Powell 2006 p 591), and the philanthropic sector as a whole has this idea of stakeholder accountability, mission and purpose.

Dependent upon IRS tax code identification under section 501c, a nonprofit might be beholden to a stakeholder group that is inclusive of the public at large (c3), donors (c4), or members (associations such as c8). To answer the question of internal constituencies to which the organization is beholden the organization must look to the context of these stakeholders in relation to their power or influence internal to the organization and their interest in the organization (Eden and Ackerman 1998). However, these identities are in flux with the culture within a community wherein the organization exists, governmental mandates related to current grant contracts and through regulation of the sector in whatever form (ethics of transparency in financial matters for instance).

Minkoff and Powell refer to mission as the clarion call of nonprofits, and I find this sentiment valid. In trying to reconcile the loyalties an organization has to mission verses stakeholders, perhaps it is easiest to think of the organization as a body. A body with a heart that is its mission, life goals or purpose (ie a means of accomplishing what is in its heart), but existing in a culture wherein demands from outside the body impact one's course in life.

Under this analogy it is the role of the board to act on fiduciary responsibilities as the "head" of the the body, to lead with the heart while balancing all of these internal/external factors, and doing so in a way that is ethical, demonstrates clarity to stakeholders, and enables the body to move forward with the least resistance towards goals.

As a practical example, recently a gay couple in Dallas that was married in California have opted for divorce. In order for both men in the relationship to go forward cleanly in regard to separation proceedings that disentangle years of relationship such as car insurance, joint property, survivorship, etc a legal divorce is now needed. The Texas Attorney General has denied hearing the case or allowing it to be tried because to do so would seem to acknowledge a gay relationship in texas as married - which flies in the face of now Texas Constitutional edict. At my first board meeting of this year, this event came up for discussion. I will not divulge what was discussed, but I will use this to illustrate some things that had to be considered. As a gay. lesbian, bisexual, and transgender civil rights organization, we had to consider our community that are GLBT Texans and how they would look to us for voice and authority in this crises. At the same time, this had to be looked at strategically in regard to balancing the concern for a statement to our level of knowledge on the legalities in the case (for which other organizations are more endowed), the political climate we currently find ourselves in as we look to accomplish our strategic goals over the next five years, and governmental identities that we work with in the course of our organizational work. Our duty as a board was to argue all sides of the issue, to keep a mind on our mission and purpose but to do so in this strategic way. How could we best drive the organization forward while jumping this hurdle along the way.

Long story short, the nonprofit board of directors must act as the head of the body of the organization, balancing external and internal forces while trying to lead with a priority to the heart that is our mission and purpose. Unlike Owl Eyes, we must be the mechanics of the car and the driver in the fancy suit.

The implications for this are profound. They speak to wherein ethics are rooted in an organization and how those ethics flow from the collage of forces at work within and upon the organization. At the same time, the implications provide for an accountability system within the nonprofit sector that holds the nonprofit board binding for proper ficudiary fullfillment in line with what has been expressed through mission and purpose for which IRS tax code has written benefits thereto.