Reality is far from the perceptions of many when it comes to the governance of NFP Boards, the latest Directors Social Impact Study (DSIS) has found. (Click here to access the full report) The DSIS, the largest study of its kind in Australia, is conducted by Curtain University on behalf of Australian Institute of Company Directors, and has been run for a number of years.
The 2013 DSIS has a number of key findings, four of which are:
1. NFP Directors are skilled, experienced, and improving:
- On average, in 2013, an NFP director spent 20 hours per month on a single NFP directorship, which is the equivalent of two and a half days. In 2012, it was 16 hours per month.
- And all this is while 80% of NFP directors are unpaid for their work. However this too is changing, as it was 89% in 2012. Interestingly for NFP’s with a turnover in excess of $20m, 40% of directors are paid.
2. NFP governance is effective and appropriate:
- There is no evidence to suggest that the governance of NFP’s are inferior to that of For-profit entities, despite what seems to be a perception to the contrary. The study consistently found that directors who sat on boards of both types of entities confirmed that the NFP’s were as well governed as For Profits.
- A significant factor in this would be that 76% of NFP boards had undertaken some form of board professional development in the last 12 months, whether it was an internal evaluation, or external director training.
3. Financial strength and income diversity are top priorities for NFP boards:
- Overwhelming, the focus in 2014 for NFP’s will be to reduce reliance on government funding and diversify their income base. The mood of directors indicates that government funding is considered volatile and should not be relied upon.
4. Directors are calling on Governments to reduce red tape:
- A very strong message in the DSIS2013 is the call from directors for all forms of government to reduce the administrative burden on NFP’s, including the harmonisation of legislation across jurisdictions.
As you consider your board, and the directors on it, use the DSIS2013 as a benchmark to ask yourself some hard questions:
- Are our directors investing time in the process, or just turning up to ‘have a say’?
- Are we rewarding our directors for their investment of time by providing opportunities for meaningful contributions in significant issues?
- Do we have a plan for intentional and targeted board professional development in the next year?
- What initiatives do we have in place to minimise the risks to our entity if our major income source dried up?
- Can you add your voice to the calls for government to reduce the red tape for NFP’s?, or will we coast on the efforts of others?
And remember, the Avondale Business School can assist your board to become a high performing board – find out how by contacting Warrick Long at the Avondale Business School.
P: 02 4980 2168