Nonprofit Resources
Mission-Centered Governance: Managing Critical Relationships
In the dynamic world of ministry and nonprofit leadership, relationships are foundational to mission success. Whether you are guiding local outreach or leading a global mission, the ability to build and sustain trust with stakeholders directly influences the effectiveness and sustainability of your organization’s work.
This article, the third in our series on Mission-Centered Governance, explores how ministries can strategically manage key relationships. Three of these are particularly important in successful governance:
- Internal and external stakeholder relationships – With a few exceptions, boards typically delegate the nurturing and maintenance of stakeholder relationships to the organization’s management. However, wise boards remain aware of the most important stakeholders and set clear expectations for how those relationships should be developed and sustained. When boards put this responsibility on autopilot or ignore it altogether, it can lead to adverse outcomes.
- Board/management relationship – The board’s relationship with the organization’s senior leader is vital. It should be built on accountability, transparency, and mutual respect.
- Board member relationships – Effective boards cultivate and maintain the collegiality needed to foster a collective intelligence that supports wise decision-making.
In this article, we focus on stakeholder and board member relationships. For insights into the dynamic between boards and senior leaders, including key elements of a healthy relationship, see this CapinCrouse article.
A Strategic View of Ministry Stakeholders
Ministries and other nonprofits come in many forms, with diverse missions and geographic reach. Yet, for the most part, they all share a commitment to serving others and understand the importance of engaging people across multiple spheres of influence.
Nonprofits must plan for and manage outcomes that may be more nuanced than in the for-profit sector, where mission is typically tied to profits and shareholder value. Those metrics are often easier to understand and measure than nonprofit missions such as church planting, education, evangelism, discipleship, and relief and development.
Further, while businesses often have a clear line of sight to their customers and shareholders, ministries and other nonprofit organizations serve a multitude of stakeholders—all the various individuals and organizations with a vested interest in the nonprofit’s mission and outcomes. These stakeholders often have differing or even conflicting priorities and interests.
At the highest level, ministries must balance the expectations and participation of internal and external stakeholders, including management and board members. Each group engages with the organization in different ways and for different reasons.
While God is ultimately the primary stakeholder in a ministry, the earth-bound stakeholders generally fall into two broad categories:
- Internal – Employees, management, board members, global partners
- External – Government, society, volunteers, local churches, constituents, accrediting associations, donors, media, global partnerships, other ministries
As a ministry or nonprofit leader, it’s essential to assess the current state of each relationship, define stakeholders’ needs and expectations, and identify steps to close any gaps. Key questions to consider include:
- Is our organization meeting stakeholders’ expectations at a reasonable level?
- Are there any unmet expectations that are affecting trust or relationships between stakeholders and the organization?
- Do we have strategies in place to close critical gaps?
Understanding who your stakeholders are, what they expect, and how they interact with your ministry is the first step. Once these relationships are identified and assessed, the next critical task is to cultivate and sustain them. This begins with trust.
Building and Maintaining Stakeholder Trust
Internal stakeholders often begin with a foundational trust due to their alignment with the ministry’s mission. External stakeholders, however, may be more cautious. They want confidence that your ministry will act lawfully, stay within the boundaries of its charter, conduct its mission effectively, and deal honestly and efficiently with the resources placed in its stewardship.
External stakeholders often come from diverse backgrounds and are shaped by different experiences, expectations, and priorities. Their trust is neither automatic nor permanent—it must be continually earned and maintained. Much like a bank account, trust is built through consistent “deposits” and can be diminished through “withdrawals.” The table below, which is adapted from a model introduced by Steven Covey,1 shows how trust is gained or lost through three factors:
- Character – Do we do what we say we will do?
- Competence – Do we deliver with excellence?
- Concern – Do we act with the best interests of our stakeholders in mind?
The Relational Trust Account
| Category | Character | Competence | Concern |
|---|---|---|---|
| Deposits | Honor their commitments | Perform with excellence | Have stakeholders' best interests in mind |
| Withdrawals | Don’t deliver on their promises | Lack of quality/excellence | Have their own best interests in mind |
In this metaphor, when an organization demonstrates strength in one of these three areas, it makes a deposit into a relational trust account. Failing to deliver in one of these areas results in a withdrawal of trust. If too many withdrawals occur, the trust account can become overdrawn, and stakeholders may become hesitant to engage with the organization. If this trend continues, the account will be closed, and trust will be lost.
The following factors can be applied across multiple areas of accountability within a ministry:
- Mission – Alignment with and action toward mission goals
- Legal/government – Compliance with regulations and guidelines
- Financial – Accurate, timely financial reporting and accounting methods and responsible stewardship of funds
- Program – Efficient, effective execution and transparent communication about activities designed to meet the needs of those the organization serves
- Process – Ethical, streamlined operations
- Spiritual – Integration of biblical principles into planning, decision-making, and relationships
Depending on the ministry’s performance in these areas of accountability, trust can either be strengthened or weakened. Effective ministry boards monitor this dynamic between the organization and its most important stakeholders. Boards should delegate this vital task to management, with clear expectations for regular reporting on the health of stakeholder relationships.
Building Boardroom Relationships
Of all your ministry’s stakeholders, your board members are the most crucial to your long-term stability and growth. Their alignment with the ministry’s mission and objectives, the quality of their deliberations and decision-making, and their ability to bring diverse experience and wisdom to the organization’s most significant and complex issues are critical to organizational success.
High-trust, collegial relationships are critical to the governance process. It is only through such relationships that any group, particularly boards, can effectively discuss the issues at hand and make wise strategic decisions. Most board decisions are made by consensus. This means they do not have to be unanimous or even voted for by a majority of the members; it requires only that all members are willing to accept the decision. Consensus is reached when everyone has had an opportunity to share their views, engage in meaningful discussion, believe the process is fair and objective, and feel heard.
Boards think together much more than they work together, so it’s paramount that they share a common understanding of the purpose of board discussions. You can view this as the board having a bright “collective IQ” consisting of these elements:
- Cognitive diversity – Welcoming all ideas and thought processes
- Constructive straight talk – Being direct but respectful
- A psychologically safe environment – Providing a platform that encourages candor and open discussion
- A culture of collegiality – Prioritizing trust, respect, acceptance, and a shared purpose
- A priority of prayer – Recognizing that true wisdom comes from above
At the heart of every thriving ministry is a network of trusted relationships. By understanding your stakeholders’ roles and expectations, building trust through integrity and competence, and cultivating unity within your board, you can lay a strong foundation for lasting impact.
Please contact us with any questions or to discuss how we can assist your ministry with board coaching, training, or other governance considerations or concerns.
Authors:
Stan Reiff, Professional Practice Leader – Consulting | Partner, CRI Advisors, LLC† | Partner, CRI Capin Crouse Advisors, LLC†
Pat MacMillan, Founder and CEO, Triaxia Partners
Additional Resources:
This article draws on concepts from Mission-Centered Governance, an in-depth, biblically based governance curriculum provided free of charge by the Maclellan Foundation at mcgovernance.org.2 The following sessions relate to this article:
- Session 6 – A Strategic View of Stakeholders
- Session 7 – Building and Keeping Stakeholder Trust
- Session 8 – The Board/Management Partnership
- Session 9 – Building Collegiality in the Boardroom
The following articles also provide insight into board governance:
Mission-Centered Governance: Recruiting and Selecting Ideal Board Members
Mission-Centered Governance: Orienting and Evaluating Board Members
Nonprofit Board Governance: Goals and Responsibilities
Nonprofit Board Governance: Warning Signs to Watch For
Nonprofit Board Governance: Senior Leader Warning Signs to Watch For
1Stephen R. Covey, The 7 Habits of Highly Effective People: Powerful Lessons in Personal Change (New York: Simon & Schuster 1989).
2Mission-Centered Governance is built on a solid biblical foundation while applying the technical expectations for effective governance. Primary copyright © The Maclellan Foundation Inc., 2020, 2024, MISSION CENTERED GOVERNANCETM All Rights Reserved – Used with Permission.