The Australian Institute of Company Directors (AICD) and Commonwealth Bank have just released their latest Not-For-Profit Governance and Performance Study 2022-23 (read it here). It contains some interesting snapshots of what NFP Boards are grappling with. Although the survey was conducted within Australia only, I imagine the findings would resonate with other jurisdictions as well.
There were five key findings, each with some detail worth reflecting on. Following is a very brief summary of these findings, and I highly recommend you also download the report and reflect on these in the context of your own organisations.
- Measuring Organisational Effectiveness
The complexity of the issues in the NFP sector mean there may be challenges for organisations to effectively measure their progress on achieving their purpose. Most depend on the CEOs report for these measures. It raises the question for NFPs to ask themselves whether they have an appropriate evidence-based approach to measuring effectiveness. - The Changing Nature of Governance
Most directors are spending between on and five days per month on director duties, and nearly half of directors (44%) believe they are contributing more time than last year. Care organisations are slowly moving towards “care committees”, but most boards still rely on the CEO/management reports as their primary source of information. A relevant question to ask is whether directors are asking the right questions of management, and whether they understand the answers. - Financial Outlook
More organisations reported a loss in this report than previously, although most have a positive outlook and 73% believe they will be in a better financial position in three years. Now would be a good time for NFP directors to be asking what level of profitability the organisations should be aiming for. - Mergers Still on Hold
Fewer NFP mergers are occurring, despite it being anticipated that following Covid there would be rush of merger activity. Boards are less likely to be discussing potential mergers. With the difficulties being faced by smaller, and regional NFPs in particular, a question for boards to consider is at what point would you consider winding up the organisation? - Priorities, Opportunities, and Uncertainties
On the immediate horizon for NFPs are the issues of workforce planning and staff shortages. Also needing to be considered is the need for stable and diversified income sources. The top actions for boards were ‘regular review to track progress against goals or targets’, ‘improve board compositions’, ‘develop a new strategic plan’, and ‘improve the use of digital technology’. It would be timely for NFPs to reflect on these and ask what the major challenges and opportunities are on their horizon.
It is a worthy report to read, reflect on, and consider how your NFP might respond to these challenges and opportunities.