We do not believe that nonprofit investors are owners in the for-profit sense, but drawing parallels can be useful. There are two sides to ownership in the for-profit world: rights and responsibility. Based on a company’s performance, an equity stakeholder has a right to receive a distribution of the company’s profits. They also have a responsibility to protect a company’s long-term interests, especially if they choose to invest during its fledgling years.
In the nonprofit world, an equity stakeholder—a funder, donor, or nonprofit lender—has the right to know how their contribution is furthering an organization’s mission. Their responsibility is to protect the nonprofit’s mission, long-term interests, and organizational health. In the case of growing nonprofits, it’s vital that stakeholders remain steadfast and supportive in this commitment—and do so with full knowledge and understanding of the risks inherent in any growing enterprise.
By applying the idea of the equity stakeholder to the nonprofit world, we hope to emphasize the responsibility that funders, donors, and lenders should take to support a nonprofit's long-term institutional strength. We believe that the SEGUE system could help make this happen.