Managing stakeholder relationships and nonprofit organization effectiveness

This research examined how nonprofit organizations manage their relationships with stakeholders and how these practices relate to perceived organization effectiveness. We conducted semistructured, open-ended interviews with executive directors of nonprofit organizations (NPOs) to discover whom they see as their stakeholders, the types of expectations they encounter from stakeholders, and the practices they use in managing stakeholder relationships. The two nonprofits that were evaluated as most effective used a consistent, thematic rationale in dealing with stakeholder issues: one organization discussed its actions in terms of its mission and core values, the other based its actions in terms of building relationships and networks. Our study suggests that organizations that ground their external relations in issues that are recognized as good nonprofit management, and do so consistently across stakeholder groups, will tend to be rated as more effective by multiple, external evaluators.