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  • Calls for greater accountability in both the for-profit and non-profit sectors has been an ongoing discussion amongst politicians, regulators, industry bodies and business leaders for some time now.

    Stakeholders are playing an increasingly active role in the day to day activities of business. We are moving from a position of “the only business of business is business” to one that places increasing importance on stakeholders and the position that “business at any cost is no longer acceptable”.

    Boards of Directors and business leaders now must be more cognisant of a broad range of their stakeholders and manage accordingly. In this month’s article, we look at the “to whom, for what and how” of accountability.

    Accountability to whom?

    Accountability relationships are complicated by the fact that non-profits are expected to be accountable to multiple stakeholders:

    • Upwards to their funding bodies, sponsors and volunteers;
    • Downwards to clients and communities; and
    • Horizontally to themselves ( staff), the board itself and their mission

    The complexity of these relationships and the degree of accountability is dependent upon a number of factors including, the industry in which the business is operating, the size of the organisation which in turn relates to revenue streams (number and size) and the corresponding number of staff and clients. There are no set formulae for how an organisation determines the level of accountability to each stakeholder; this is dependent upon individual assessment and agreement; however what is not an option is that any are ignored.

    It is recommended that the Board and management allocate specific time to:

    • Agree on a definition of a stakeholder, internal and external
    • For each stakeholder, determine what they need from you an what you need from them;
    • Develop a plan to meet those needs ( e.g. reports, meetings, social media)
    • Implement, monitor and evaluate the plan
    • Learn and improve the process each year

    Accountability for what?

    The board of a non-profit organisation is accountable for the following aspects of the business:

    • Performance: the board is accountable for the performance of the organisation and to ensure strategy implementation and operational activities align with the vision, mission, values and long term goals as articulated in the strategic plan and by the relevant stakeholders. This includes establishing outcomes that are measurable and clearly provide a snap shot of how the organisation is performing against expectations.
    • Finances: this includes disclosure, transparency and creating a business model that meets both short and long term financial and organisational obligations, whilst delivering the required outcomes.
    • Governance: the board is custodian of the organisation for ensuring its long term viability and sustainability. Board members are responsible for seeking and considering adequate information to make the best decision for the organisation it governs whilst always acting in good faith and the highest standards of ethical behaviour.

    Accountability how?

    Given the “for whom and for what” as noted, “the how” is very much going to be user driven. Examples of this include:

    • Disclosure statements, reports and acquittals based on funding agreements;
    • Evaluations and performance assessment of results achieved by the organisation and individual business units against both the strategic and operational plans;
    • Self-regulation and internal review based on agreed standards and benchmarks of performance;
    • Stakeholder engagement and feedback – formal and informal processes to assess the success of the business activities from a broader perspective than just the client;
    • Peer review – is performance consistent with the mission and values of the organisation at all levels – the board, management and staff?
    • Creating a culture committed to delivering the Vision and Mission of the organisation and ongoing learning to enhance organisational and individual performance

    The “how “of accountability can be the minimum to meet compliance requirements or the best it can be to enhance performance and create a sustained business model – the choice is yours.

    The general position is that accountability is not simply about compliance with laws or industry standards but is, more deeply, connected to your organisation’s purpose and stakeholder trust. Leaders therefore should pay greater attention to strategy- driven forms of accountability that can assist their organisations achieve their mission and long term goals. Furthermore, choices have to be made, for a non-profit cannot be accountable to everyone for everything. As such, non-profit leaders need to focus their attention on accountabilities that really matter and deliver real value for both parties, not just tick the box.