The coming of age of NFP governance
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While disruption in the fundraising and business models of not-for-profits (NFPs) has been evolving for some time, it is the implementation of the National Disability Insurance Scheme (NDIS) that is generating large-scale generational change transforming traditional welfare style models to customer centric models. For the first time people living with a disability have purchasing power to go to the market and decide for themselves which service or product best suits their needs.
At the same time, access to funding streams and competing for customers means NFPs must now have a clear value proposition to take to the market, which can be daunting for many. In addition, the sector is fighting for funding in an increasingly smaller funding pool with an ever-increasing number of NFPs — even as the need for community and social service is growing exponentially.
There is a demand for diverse services and an urgent need to innovate in areas such as:
- how these services are delivered
- how the scope and scale is planned and managed
- how the impact for the money, time and other resources is maximised
- how the core value proposition is reframed and redefined in a changing world.
Not surprisingly, to widen funding and investment access, NFPs must now also seek partnerships outside traditional sources. These partners demand a clear value proposition and a business plan that often requires a return — whether in terms of the impact of investment in service delivery or a small level of financial return.
This perfect storm of large-scale generational change, diminished funding coupled with stakeholder demand for greater transparency, accountability and innovation is not only transforming the sector, it has enormous implications for good governance and its NFP governing bodies.
NFP boards now need new ways to attract donors and clients, harness ideas, and open new markets ethically and responsibly. Those charged with this responsibility must embed a strong culture from the top down, ask the right questions, and recognise that innovation starts in the boardroom.
Real transformation requires leadership and increasingly there is a desire for NFP directors to be governance qualified. In fact, many NFP boards have developed a skills matrix to determine what skills they need now — and in the future — to drive and sustain generational change in an increasingly commercialised and competitive environment. A beautifully blended NFP board will make culture the centrepiece of its transformation strategy and look beyond the classic financial metrics for those that will best serve their constituency. They will recognise that culture and values are not soft targets because they are linked to behaviours that can be measured, managed and defined.
It is an exciting and challenging time for directors charged with oversight of the successful implementation of ‘once in a lifetime’ generational change. I believe that emerging trends including the desire for different, more concise levels of engagement, communication and events, strong donor engagement and increasing client purchasing power will create unprecedented opportunities. However, NFP boards must have the necessary skills, expertise and commitment to drive ground breaking social change where transparency, effective and real-time communication and positive experiences will be the hallmarks of success.
Kate Thiele will be addressing these topics at Governance Institute’s National Conference in Melbourne on 4 & 5 December. Find out more at governanceconference.com.au
Principal, Klarity and Non-Executive Director and speaker at Governance Institute’s National Conference in Melbourne on 4 & 5 December.
Third Sector provides high-level content and services for professional development and organisational growth to leaders and senior executives from Australia’s NFP sector and its supporting industries.
