Reflections: NFP governance in 2016

Loading...

Perpetual

For the past five years, Perpetual has been surveying NFP board members about the governance trends affecting their organisations. This year one of the big issues is matching board skills with the needs of the organisation.  

The Perpetual Foundation has supported the Australian Institute of Company Directors (AICD) to further develop governance capability in the NFP sector. More than 1700 non-profit board members and chairs have gone through that governance training. 

On the basis that those board members are in touch with what’s going on in the sector, we’ve regularly surveyed a cohort of those board members and chairs to reflect on the governance trends they are seeing in the non-profit sector.

What skills are NFP boards missing?

Fundraising

The survey suggests that nearly one third of board members were worried that their fundraising skills are limited or lacking (only 5% said they were strong). We consider that the capacity to raise funds is, for many NFPs, a critical skillset. In our view, the results indicate that fund-raising expertise is a capacity many boards should be adding to their skills matrix.

Marketing

More than one third of respondents felt their board lacked marketing skills. Traditionally, skills in areas such as finance are more highly sought by boards but given the link to reputation, community awareness and fundraising, marketing is another skillset boards need to be searching for.

Interestingly, the survey found that despite limited fundraising and marketing skills, some 50% of respondents expected to see funds from philanthropy and general fundraising increase in 2016 (nearly one third expected to see a rise in bequests).

Self-reflection on board performance

When it comes to assessing their own performance, over 40% of respondents had no formal process for examining their own board performance – and only 13% of respondents were totally confident the data they were using was really measuring the performance of their organisation.


Measurement of board performance over time

Measurement of board performance


“It’s an ‘interesting’ number,” says Caitriona Fay, Perpetual’s National Manager Philanthropy & Non Profit Services. “In the five years we’ve been doing this survey, the number of directors using external reviewers or annual KPIs to measure board performance is at its lowest. I’ve talked to people across the sector and they agree that this number needs to be better.” Indeed, 83% of respondents indicated that the effectiveness of NFP boards should be formally measured.

Investing for the future

Given current market volatility it may not be surprising that there’s some conservativism in the investment approach of non-profits. That may explain why nearly a quarter of respondents had cash reserves but were not investing them – and had no active investment strategy.

Scott Hawker, National Manager, Not-for-Profit Endowments considers that “Holding reserves in cash can be the right approach for some non-profits. But it’s critical a board reaches that decision via a proper investment policy. Good governance means you must document and articulate why that’s the best approach, given your overall operating strategy.” 

Improving people, process, outcomes

Perpetual has long been a supporter of capability-building in the NFP sector – our work with the AICD and this survey is further evidence of that. “We strongly believe that you find quality organisations and invest in them if you want to have real impact on the communities they are working with,” says Caitriona Fay. “That’s why we continue to invest in the capability of those individuals who play critical leadership roles within our non-profit sector.”

You can find out more about Perpetual’s work with NFPs here.