Good Governance makes for the Strongest Ship

An interesting aspect to governance is not just what it is and how it is applied, but also the terminology that is applied to it, not just in describing it, but also in interpreting it in the context of developing governance frameworks.

Many words are used in defining governance, or aspects thereof. These include rules, relationships, systems, processes, authority, ethical, responsible, integrity, disclosure, respect, risk, manage, enhance, performance, interests, and on they go.

Furthering the challenges of the Australian nonprofit sector with regard to governance is the demand for substantive strategic partnerships, along with formal collaborative mechanisms and structures that respond to shrinking finances, however expanding service demand.

In this context, governance, especially in the nonprofit sector, cannot be viewed simply in terms of one-dimensional processes, systems, and ‘checklists’ that respond to a predetermined or restructured series of response issues, which are created to reflect predominantly the responsibilities of boards.

Effective governance, whilst accounting for elements of these one-dimensional processes, especially in the context of organisational performance, must also focus on the more esoteric aspects of organisational purpose and organisational reform in order to effectively address these broader challenges that face the Australian nonprofit sector. The organisational purpose challenge, seeks to add an additional element to board performance, and really gets to the heart of a very challenging issue – are board arrangements within nonprofits, as they are currently constructed, able to adequately respond to the new governance challenges that face the sector? In a recent survey of 150 nonprofit CEO’s and senior managers in Australia, 21% of respondents indicated that they were not getting value out of their current boards.

With regards to the organisational reform issues, another challenge is the extent to which current board activities and job descriptions, and the demarcations between boards and management being in the best interest of the nonprofit organisation. In light of the new governance challenges, this may not necessarily be the best outcome, as there has been too much of an emphasis on creating governance structures that reflect the corporate world in isolation.

Perhaps governance, especially in the nonprofit world, needs to extricate itself from the compliance arena and be viewed in a far broader context, and more into the realm of value creation to the organisation. Perhaps viewed in this light, it may provide better outcomes for both the organisation and more importantly, for the community that it serves.

Contrary to popular opinion, board effectiveness and efficiency is not entirely the product of the professionalism, or otherwise of individual board members. Having worked with numerous such boards, I have seen individual professionals make themselves available for such voluntary positions, only to falter at the steps of performance as a collective group, to the detriment of the executive management team of the organisation.

Voluntary board membership within a not-for-profit organisation is a challenging engagement, even more so depending on the size of the organisation. Directors see themselves in a non executive capacity and yet, in many instances, are expected to involve themselves in far more activity than would otherwise be the case in equivalent private sector concerns.  I would also contend that board members of not-for-profits have extremely complex challenges, given the more diverse nature of the external stakeholder group and the involvement of substantial numbers of volunteers at the operational levels.

In the current, and expanding, regulatory environment, and the potentially challenging financial environment, Australian not-for-profit organisations need confidence in the boards that guide them. How confident is your organisation with its current board, and what room is there for improvement?

In response to the challenges raised earlier, and the value-add outcomes that non-for-profit organisations must expect from their boards, OPTIMUM NFP has worked with a number of these organisations in evaluating board efficiency and effectiveness based on a 100-point questionnaire uniquely developed for this purpose. The questionnaire defines 4 board dimensions as: 

Within each dimension exist five categories, and within each category are five questions. The result of the survey is a detailed report followed by an exhaustive list of recommendations, all undertaken in the context of a formal board presentation, where issues can be discussed and findings, as well as recommendations, analysed. Where the scope of the review is broadened, the questionnaire is supported by in-depth interviews that can further inform the questionnaire responses.

Such governance reviews of your board are considered appropriate, and widely undertaken within both the Australian Not-for-Profit and commercial sectors in the context of three contextual issues:

  • Broader legislative frameworks surrounding incorporated entities which places an ever increasing demand on board members;
  • Challenging and uncertain economic environment which places ongoing pressures on not-for-profit organisations to refine their service delivery programs, an
  • Increasing demands on not-for-profits to provide expanded services in a social environment that heightens competition for government funding at the local, state and federal levels.

Clients:

  • Access Health & Community Services
  • Australian Diabetes Educators Association
  • Australian institute of Architects
  • Avenues Lifestyle Support Association
  • Canterbury City Community Centre
  • Catholic Community Services
  • Cure Cancer Australia Foundation
  • Family Resources and Network Support
  • First Nations Australia Writers Network
  • Flintwood Disability Services
  • Gadigal Information Service Aboriginal Corporation
  • Good Shepherd ANZ
  • Innari Housing Incorporated
  • Jack Walker Centre
  • Koorana Child and Family Centre Pty. Ltd.
  • Metros Assist Inc.
  • North Sydeny Council
  • Settlement Services International Limited
  • The Footpath Library
  • Vincent Industries Inc.
  • Western Sydeny Migrant Resource Centre
  • Workways Australia Limited

At OPTIMUM NFP we have, over the last 10 years, been actively involved in assessing board performance, developing wide-ranging training and development programs for Australian not-for-profit boards to support their work as a collective, as well as creating organisation-wide governance structures to support performance. Contact us today to find out more on how we can support your board.

 

 

to PO Box 966
DRUMMOYNE
1470 NSW

Phone: (02) 9181 1014

Mobile. 0411 744 911 . Email: drosenbaum@optimumnfp.com.au