In a for-profit corporation, the owners are obviously shareholders. In not-for-profit organizations, there are no shareholders as such, so Policy Governance®
uses the term “owners” or “moral owners” to mean the equivalent of shareholders. The owners are the people on whose behalf the board determines what benefits should be produced by the organization, who the beneficiaries are, and what it is worth to produce those benefits (this is called the “Ends” in Policy Governance®
terminology). This is the group to whom the board owes moral accountability.
The moral owners may or may not always be the legal owners of an organization. And stakeholders are not necessarily owners. Stakeholders include all individuals and groups who have an interest in the organization, including employees, customers or clients, vendors, donors and funders, and other organizations. Certainly the board has some responsibilities to each of these groups – for instance, to be sure that employees are treated fairly, that clients receive high quality service or products, that vendors are paid on time, and so on. However, there is one major difference: boards are not accountable to the stakeholders for deciding what benefits the organization is to produce
. For that most important decision boards are accountable only to the “owners” as a whole. While the board may well wish to obtain the perspectives of various stakeholders as part of its overall knowledge before making Ends decisions, in the final analysis, the decisions must be made on behalf of the owners. So, all owners are stakeholders, but not all stakeholders are owners.
Each board needs to carefully consider who its moral owners are. Sometimes the owners are also clients or customers, such as in some membership organizations. That means the board will need to carefully sort out when it is hearing “owner” information, and when it is hearing “customer” information, which should be given to the CEO who is accountable to the board for operational matters such as customer or client service.
Additional details about Ownership Linkage are available in our interactive Online Learning Modules
. Module 1 addresses Ownership Linkage. Additional references available on this subject: Connect! A Guide to Ownership Linkage toolkit