| Author's Name: Mark Schultz
Date: Thu 22 Oct 2015
Every non-profit organisation (NGO) has a range of stakeholders that, whether it likes it or not, have either a direct or indirect relationship and impact on both the strategic and operational management of the business.
A stakeholder can be defined as an individual (e.g. a client, a supplier), a group of individuals (e.g. an industry association, an organisation’s members) or an organisation (e.g. the media, funding bodies the government), all of which have an interest in the daily activities of the business. In the non-profit sector, especially where government or third party funds are involved in contributing to service delivery, the board and management must decide how it will engage and manage this group to mutually satisfy individual needs.
Why is stakeholder engagement important in the non profit sector?
It is generally accepted that in today’s political and economic environment, the demand for NGO services is ever increasing and the funds available do not seem to be able to meet that demand – this means that funding bodies have to make choices and funding receivers have to be accountable and demonstrate that the service provided by their organisation generates change, not just an output or outcome. In the decision making process, funding bodies generally consider stakeholder engagement as one of their criteria in the selection process of who gets what and when. Stakeholders represent the community and government is spending community funds, so how an organisation engages with and is perceived by its stakeholders is a key success factor in the allocation of funds.
Furthermore, stakeholder engagement is important because it is the right thing to do, not just because it should be done to satisfy a third party need. If a board engages with stakeholders from a performance rather than compliance perspective, then a better result is guaranteed for all parties in the relationship.
How does an NGO create a stakeholder engagement plan?
To achieve the best result, a cross section of the organisation (from the board to service delivery and administration) should participate in all stages of creating the plan. These stages include:
Other steps that can be taken to assist in the stakeholder engagement and management process include:
In summary, stakeholder engagement should not be considered as simply a compliance requirement. Stakeholders have varying degrees of importance to an organisation and the engagement strategy should correlate to that importance level. It is a far better approach to take the initiative and keep all stakeholders informed relative to their relationship with the business than to wait until a crisis develops and then deal with that at that time. The board must take a leadership role in the development, implementation and review of the strategy and thereby demonstrate that stakeholder engagement is critical to long term success and sustainability.