How can we make not-for-profit boards work better?

Effective governance is vital for not-for-profit organisations

Effective governance is vital for not-for-profit organisations as they jostle for position in an increasingly crowded marketplace. Three experienced board members talk about the unique challenges – and solutions – for directors.

Helen Wiseman

Chair of SHINE for Kids; the War Widows’ Guild of Australia (NSW); Choice finance, risk and audit committee

Helen WisemanI see three critical ways we can make NFP [not-for-profit] boards work better:
  1. The most common complaint I hear in my NFP mentoring work is that the board “does not understand what we do”, which can create tension between the board and management. It is important to provide regular opportunities for board members to be involved in some way in the work of the NFP, to deepen their understanding of how the organisation’s purpose is carried out – the successes and the practical challenges. Just as important is for NFP board directors to embrace these opportunities – simply turning up to meetings is not enough.
  2. It is easy for boards to get caught up on operational matters at the expense of strategic discussions. Aim to spend at least two-thirds of board time on strategic matters that will advance the purpose of the organisation. [Also] look for ways to embed and simplify governance processes appropriate to the size of the organisation.
  3. NFP organisations are typically inventive, finding ever-creative ways to carry on their work against a backdrop of uncertain funding, changing priorities, escalating demand and red tape. NFP boards need to foster this spirit of “entrepreneurialism” without losing accountability to their funders and stakeholders. I have heard it said, in a monetary sense, that NFP directors should “give, get or get off” an NFP board. In my view, this principle also applies to a director’s time, energy and ideas. 

Ruth Medd FCPA

Executive chair of Women on Boards; chair of Australian Ethical Superannuation

Ruth Medd FCPACurrent and incoming directors need to address the growing number of calls for the not-for-profit sector – which turns over A$103 billion in Australia each year – to consider mergers or collaborating in order to strengthen services and prevent duplication.

The excellent Australian Charities Report 2014, released in December 2015 by the Australian Charities and Not-for-profits Commission (ACNC), reveals the facts in stark detail:

  • 37,242 entities registered with and reporting to the ACNC formed the dataset for the report. Not all charities are required to provide financial information. 
  • Large charities:
    – 80 per cent of revenues is attributed to 5 per cent of charities.
    – 130 charities (0.3 per cent) reported income of more than A$100 million; 44 per cent of their revenue came from government.
  • Small charities:
    – 58 per cent of charities (21,591 entities) have revenues of less than A$250,000; 12 per cent of their revenue came from government.
  • 44.3 per cent of charities don’t use paid staff.

Organisations with better boards are actively considering the future of their entity. But more directors need to ask: Is the entity viable beyond the enthusiastic founders? Can the entity attract sufficient resources from a cluttered marketplace? Should a merger or a shared services model be considered and, if so, what is the process for this to occur?

Gina Anderson

Advisory board member of the Australian Charities and Not-for-profits Commission

Gina AndersonMission, mission, mission! Your charity’s mission, and how it informs your decision-making, is critical. Evolving models, such as social investment, pay-for-performance, the National Disability Insurance Scheme (NDIS) and indeed funders more generally, are increasingly demanding evidence of impact. 

If you can’t articulate your mission, provide evidence for the need for your mission and demonstrate impact in meeting your mission, you won’t receive funding.

Don’t try to solve world peace on your own! Making a difference is a team sport. See other NFPs as potential collaborators and partners – not competitors. Focus on your mission and look for like-minded partners. Utilise your collaboration to leverage your combined skills and funding to help you all make a real difference for the community.

So, how do you find other like-minded partners? The Australian Charities and Not-for-profits Commission (ACNC) has a free online register of some 54,000 registered charities. Now, for the first time, charities are able to benchmark their organisations.

The recent release of the ACNC Australian Charities Report 2014 reveals previously unknown facts about the financial status of Australia’s registered charities. Managing the inevitable challenge of balancing your charity’s mission with financial sustainability and the demonstration of impact will test even the very best company directors.

The experts

Helen Wiseman

Helen Wiseman is a non-executive director and professional mentor. She chairs the not-for-profit boards of SHINE for Kids and the War Widows’ Guild of Australia (NSW), and she is a director of Choice, where she chairs the finance, risk and audit committee. She also chairs the advisory council of the Sydney Women’s Fund and is a director of Bidvest Foodservice International. Wiseman is a graduate of the 2012 Sydney Leadership Program and one of the 2014 Westpac and Australian Financial Review 100 Women of Influence.

"Aim to spend at least two-thirds of board time on strategic matters that will advance the purpose of the organisation." Helen Wiseman

Ruth Medd FCPA

Ruth Medd is executive chair of Women on Boards, chair of Australian Ethical Superannuation and a director of the National Foundation for Australian Women. She is a former director of The Infants’ Home and the NSW Casino Control Authority. Prior executive roles include exe\cutive director of the Australian Association of National Advertisers and senior positions with Telstra, the Australian Broadcasting Tribunal and the Australian Government.

"More directors need to ask: Is the entity viable beyond the enthusiastic founders?" Ruth Medd

Gina Anderson

Gina Anderson is an advisory board member of the Australian Charities and Not-for-profits Commission (ACNC), chair of Women’s Community Shelters, a director of The George Institute for Global Health, philanthropy fellow at the Centre for Social Impact and a director of ASX-listed GDI Property Group. She spent five years as executive director and CEO of Philanthropy Australia.

"Your charity's mission is critical. Focus on your mission and look for like-minded partners." Gina Anderson

This article is from the March issue of INTHEBLACK.

Read next: NFPs: The buck stops with the board


March 2016
March 2016

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