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Stakeholder

A stakeholder is a person who holds money or other property while its owner is being determined. The situation often arises when two persons bet on the outcome of a future event and have a third person act as the stakeholder, holding the money (or "stake[s]") they have both wagered (or "staked") until the event occurs. Courts sometimes act as stakeholders, holding property while litigation between the possible owners resolves the issue of which one is entitled to the property, and trustees often act as stakeholders, holding property until beneficiaries come of age, for example. An "escrow agent" is one kind of trustee who is a stakeholder, usually in a situation where part of the purchase price of property is being held until some condition is satisfied. It is a very old concept in the law.

In the last decades of the 20th century, the word "stakeholder" has evolved into a term of art in the field of business management: In discussing the decision-making process for institutions -- including large business corporations but especially non-profit organizations -- the concept has been broadened to include everyone with an interest (or "stake") in what the entity does. That includes not only its vendors, employees, and customers, but even members of a community where its offices or factory may affect the local economy or environment. In that context, "stakeholder" includes not only the directors or trustees on its governing board (who are stakeholders in the traditional sense of the word) but also all persons who "paid in" the figurative stake and the persons to whom it may be "paid out" (in the sense of a "payoff" in game theory, meaning the outcome of the transaction). The holders of each separate kind of interest in the entity's affairs are called a "constituency," so there may be a constituency of stockholders, a constituency of adjoining property owners, a constituency of banks the entity owes money to, and so on. In that usage, "constituent" is a synonym for "stakeholder."



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