If you polled your board members about the best way to improve accountability in nonprofit organizations, would their answers focus more heavily on the donor relationship or the beneficiary relationship?
You might find the vote would favor the donor relationship because money enables you to do your work. While donors may be inclined to support your nonprofit if they believe your organization is transparent and accountable, it’s fair to ask if that’s a strategy that truly helps you improve accountability with all other stakeholders as well.
As your board strives to improve accountability, it’s also important to ask two more questions:
- Are you accountable for your mission?
- Is your organization making a difference for the population it serves?
We’re taking a deeper dive into the different types of accountabilities your board needs to focus on and how to improve accountability within your nonprofit organization.
Centering Accountability Around Your Mission
Regardless of what type of nonprofit you’re leading or what type of services it provides, your organization’s overarching goal is to make a difference. You are accountable to the federal government and a host of other stakeholders for improving the lives of those in your community.
From the legal and compliance perspectives, your nonprofit has accountability to the IRS. The federal government designed the 501(c)(3) regulations to hold your nonprofit accountable for furthering your mission by way of providing services to the community. The law is clear about your nonprofit’s legal accountability, and the IRS will promptly revoke your tax-exempt status if you abuse your privilege. Beyond ensuring that your nonprofit follows the nonprofit rules and regulations, the IRS isn’t remotely interested in the types of relationships you have with your stakeholders.
On the other hand, relationships are an extremely high priority for your stakeholders, including your donors, beneficiaries, staff and volunteers. It is your mission that draws your stakeholders to support your cause, and they should rightly hold you accountable for it.
Accountability in action resembles several things, including:
- Serving the demographics of people stated in your mission
- Actively working toward your stated goals
- Communicating data transparently that supports mission-related achievements
- Giving your beneficiaries input and a voice
- Listening to feedback from your staff and paying them a market wage
- Demonstrating your nonprofit’s commitment to diversity, equity, and inclusion by recruiting board members and leadership staff that are diverse
When your activities align with your mission, your core values and vision will be reflected in them. What’s more, your goals will also reflect the future direction of your nonprofit, which reveals to your stakeholders what your nonprofit hopes to achieve moving forward. Essentially, stakeholders are looking for whether your nonprofit walks the walk and does what it says it’s going to do.
While high amounts of donor funds provide the means for you to carry out your programs, services, and activities, being accountable also means not putting your donors on a pedestal above your beneficiaries. Donor relationships are relational, but they’re also transactional. The more they give, the more you may be inclined to give them special attention. The reverse is also true. If donors feel the relationship isn’t strong enough, they tend to stop giving as much and may stop giving at all. Donors want assurance that the money they give is making a positive impact. It’s common for them to be on their guard and mistrustful, especially at the beginning of the relationship. The key to overcoming that mistrust is being transparent and demonstrating in word and deed that your board is wholly accountable to your mission.
Suppose your nonprofit goes overboard to be accountable with donors and grant-makers and doesn’t demonstrate the same veracity with their other stakeholders, staff, volunteers and beneficiaries, who may begin to feel substandard to your funders. Non-donor stakeholders will start to feel that you are less accountable to them. The risk is that the lack of accountability leads to a breakdown in trust. A breakdown in trust negatively impacts your nonprofit’s reputation. It’s easy to see how it all creates a negative trickle-down effect that harms all stakeholder relationships.
9 Steps to Take to Improve Accountability in Nonprofit Organizations
With all eyes on your nonprofit’s accountability standards, your board may want to start discussing some practical ways to improve your nonprofit’s accountability to all stakeholders.
We’re providing some actionable tips for robust board discussions on the topic of accountability:
- Delegate tasks clearly to your internal teams so they can be laser-focused on their tasks and be accountable for them.
- Schedule board meetings regularly and be diligent about reviewing your budget, key financial transactions, and IRS Form 990.
- Set standards for monitoring and evaluating programs and activities. Make the standards a priority and incorporate this philosophy into your nonprofit’s culture. One way to do this is by identifying and tracking KPIs (key performance indicators).
- Create job descriptions for your board, staff, and volunteers and make sure they understand their roles and responsibilities.
- Communicate updates to staff and volunteers so they feel their work contributes to the overall goal of making a difference.
- Incorporate input and feedback from community members and beneficiaries in your decision-making.
- Recruit and develop a diverse board to ensure your stakeholders can see themselves reflected in your leadership.
- Involve your beneficiaries in your work. They’re often the most motivated individuals, and they have great ideas too.
- Create meaningful benchmarks. Take the time to discuss and assess which benchmarks directly correlate to your mission and goals.
To wrap things up, if your nonprofit has a robust and accountable relationship with donors and the funds are rolling in as expected, it’s a wonderful thing. That said, it’s important not to overshadow your accountability efforts with your other stakeholders because it diminishes your accountability overall. When you shift your accountability efforts and redirect them toward your community, it puts all stakeholders on more equal terms. All parties will benefit in the long run.
The media has recently produced reports of nonprofits that weren’t as accountable as they should be. As a result, the race is on to improve accountability in nonprofit organizations overall. It will take work on your nonprofit’s part to turn the tables to ensure accountability for all stakeholders. A BoardEffect board management system provides a secure platform for you to get the job done.