The Australian Institute of Company Directors has recently released the Not-for-Profit Governance & Performance Study 2022-23, highlighting key findings from the #NFP sector in Australia.
One of the findings is that organisations in the sector may face challenges in measuring their progress towards achieving their purpose. The complexity of the issues they deal with can make it challenging to implement appropriate measures. Despite this challenge, 68% of respondents reported that they believe their organisation is mostly or highly effective in achieving its purpose. Only 17% thought their organisation was ineffective to some extent. It is interesting to note that #CEO reports are the most commonly used method to measure effectiveness, as opposed to other available reporting methods.
Another important finding in the report is the changing nature of governance. The Aged Care Royal Commission recommended the use of care governance committees, which are designed to assist the board in understanding the level and appropriateness of care provided to clients. However, relatively few organisations were using “care committees” as their primary source of information regarding care. The majority of aged care and disability service providers reported relying on other sources such as CEO/management reports as their primary source of information.
The report also reflects on the extra time required in the role of NFP directors. The percentage of directors receiving remuneration is the highest it has been since the survey began more than a decade ago. Three-quarters of respondents reported that their time spent on work is about the same or somewhat more compared to last year. More than half of the organisations that provide care or support services reported that they rely on CEO and management reports to ensure that this is provided.
The study found that financial outlook is a significant concern in the sector, with an increase in the number of organisations reporting a loss. Despite this, most NFPs had a positive outlook, with the majority forecasting a slightly or much stronger financial position in three years.
Finally, the report found that merger activity in the NFP sector remains low. Only a very small proportion of organisations reported winding up or discussing winding up within the next 12 months. A fifth of NFP organisations are discussing a merger, while only 5% are currently undertaking a merger.
Organisations recognise the importance of their board’s composition and view improving board skills, diversity, and succession planning as a priority. While climate change governance is being considered by some, the majority of organisations are focusing on improving their board’s skills, diversity, and succession planning.
In conclusion, the Not-for-Profit Governance & Performance Study 2022-23 highlights several challenges that the NFP sector in Australia may face in measuring their progress towards achieving their purpose. The report also emphasises the importance of governance and financial outlook in the sector. As the sector faces increasingly complex issues, it is essential to implement appropriate measures to ensure that organisations can achieve their purpose effectively.
The Not-for-Profit Governance & Performance Study 2022-23 highlights several challenges in the NFP sector in Australia and I would like to invite you to read the complete report to get a greater understanding of the insights.
Report Link