A key feature of having so many forces shaping the non-profit sector is that non-profits face expectations and accountability from many different directions. These expectations have both positive and negative impacts on non-profits at the micro and macro levels.

At the micro level, these forces can help to ensure that non-profits are financially healthy. For example, by providing financial oversight, non-profit boards can help ensure the long-term stability and sustainability of non-profit organizations.

Also at the micro level, horizontal stakeholders, such as the public, the media and donors, can shape non-profit activities and decisions. While these stakeholders have little to no formal authority, they can sometimes serve as a check on boards and management. A good example of this is the case of the Susan G. Komen Foundation from a few years ago (here’s a piece from The Atlantic that provides some background). The short version of the story is that the organization’s board voted to pull its funding from Planned Parenthood (the funding supported breast cancer screening exams) ostensibly due to the fact that Planned Parenthood provided abortion services. As a result of this decision, the foundation faced backlash from the public, the media and its own donors, which caused the board to reverse its decision. The backlash also hurt Susan G. Komen’s fundraising efforts. In this case, horizontal stakeholder influence had mixed effects. On one hand, these stakeholders punished a board that had prioritized its personal political preferences over the mission of the foundation. On the other, their influence resulted in fewer dollars going toward breast cancer research via the foundation.

The forces that shape non-profits can also have positive and negative macro level impacts on the sector. Last week, I shared Dan Pallotta’s TED Talk, in which he addresses some of the negative aspects around norms that limit the amount of money non-profits spend on overhead. He argues that these norms hold the sector back from achieving a scale that is proportionate to the massive scale of our social problems. Part of the reason these norms have so much staying power is because they are reinforced by such a board range of stakeholders/forces. Boards, the media, the public, watchdog groups, the government, funders and donors all expect that non-profits minimize overhead and spend as much of their funds as possible on program work. The lesson here is that when the many forces that shape non-profits are all pushing in the same direction, they can sometimes stifle necessary opportunities for reform. And, as Pallotta argues, at the macro level, these forces can made it harder for the sector to achieve scale. On the other hand, some might argue that norms related to spending on overhead are in place for a reason and help ensure the integrity of the sector.