How to be a World Class NFP

Those of us involved in the Nor-for-Profit (NFP) sector in Australia can be proud that on so many levels we are operating at world class standard. This is evidenced in the November 2021 McKinsey & Company report ‘’Building from Purpose: Unlocking the Power of Australia’s Not-for-Profit Sector” (download it here). The research involved surveying 4500 people in Australian NFPs, interviewing 100 senior leaders in the sector and comparing the results to international benchmarks composed from 800 organisations.

To put the NFP sector in Australia into context, it employs over 1.38 million people (11% of jobs) and contributes $129 billion to Australia’s economy, not to mention all the volunteer time and efforts as well. The report notes that the demand for services in the NFP sector rises in times of crisis and generally tackles those society tasks no one else wants to be involved with.

The last two years has seen the demand for services growing, but this growth has not been matched by similar growth in supply, and is required to meet increasing complexity surrounding reporting, compliance and governance, all within a Covid-19 context.

At the same time, the report notes a generally surge in ‘social ambition and entrepreneurship’ in Australia, creating an opportunity for the NFP sector to harness this.

The factors identified in the report where Australian NFPs are particularly world class are:

• Acquiring talent
• Creating a shared vision
• Having inspirational leaders
• Being beneficiary focussed

Expanding on this, the report then notes that the healthiest NFPs in the study have the following three essential capabilities:

1. Talent Growth – recognizing, challenging, and extending those with natural talent withing the organisation
2. Execution Excellence – measuring outcomes effectively, then taking corrective actions, and finally following up on those outcomes.
3. System Shaping – capitalizing on connections and partnerships for collaboration and innovation.

Finally, the authors propose 10 ‘bold, cross-sectional ideas’ for enhancing the sector. The report is worth downloading, and the ideas are applicable not just to Australian NFPs, but those in any jurisdiction.

Consider how your NFP compares to these characteristics, and that strategies you might implement to take your organisation to the next level.