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Call for improvement in running of not-for-profits

The top three elements selected as being essential to good running of not-for-profits are having great leadership, being crystal clear on purpose and employing and engaging effective staff.

A not-for-profit sector survey has found that fewer than 1 in 3 respondents believe the majority of Australian not-for-profit organisations are well-run. The survey, conducted by Good Foundations, aims to provide insights into what makes a not-for-profit organisation well-run and what not-for-profits need to do to increase their effectiveness.

A key area of concern is that only 14 per cent of respondents believe the not-for-profit sector adequately invests in internal capacity building. Stephen Penny, from Good Foundations, believes that this is not a surprise and it is delving beneath the surface that will lead to change.

“We all know not-for-profit organisations are reluctant to spend money on themselves,” Penny said. “We must change this mindset though, as if you have poor systems, ineffective staff, poor leadership and a lack of decent use of technology, the chances are that your programs are not delivering as much impact as they could. Not-for-profits need to start thinking about prioritising smart internal investment options.”

Investing in people is a common theme throughout the survey findings. The top three elements selected as being essential to good running of not-for-profits are having great leadership, being crystal clear on purpose and employing and engaging effective staff.

“We need to upskill Boards and management to be able to make the important internal investment business decisions. Having the right tools and frameworks available to help make good investment choices is critical. The sector also needs to start having conversations with supporters and the public to re-orientate their thinking to delivering results, impact and outcomes rather than just focusing on administration cost ratios,” Penny said.

Rosalie Wilkie, Social Impact Partner at PwC agrees. “The key question an organisation should consider is the impact they’re having. Understanding the drivers of this impact is critical to whether an organisation is well-run,” Wilkie said.

The survey also addresses the issue of “so what?” if you are well-run – it found that the sector believes there is a strong correlation between being well-run and impact, with only two per cent of respondents saying that being well-run does not correlate to delivering more impact.

Other key findings from the survey include:

  • The leadership attribute considered most important for a CEO is creating the right culture.
  • 79 per cent of respondents say the relationship between the board and their CEO is strong or very strong.
  • Paying not-for-profit board members is supported by 41 per cent of respondents.
  • Having a strong board and good governance framework is becoming increasingly important.

Good Foundations said that they hope the results of this survey help to start the right conversations within not-for-profit organisations, and for those organisations to starting thinking about whether they are “well-run” and where can they do better.

“Given how much great work is performed across the sector already, imagine the impact if there was an uplift in not-for-profit organisations being better run,” Penny concluded.

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