Social Contribution of Company Directors - Study

Directors are making a significant contribution to Australian society and the economy through their deep involvement in charities, community service organisations and other Not for Profit (NFP) boards, a new study by the Australian Institute of Company Directors has found.

The Directors Social Impact Study involving almost 1,200 members in NSW and Victoria, for the first time quantifies that contribution.

The study showed that three in five directors serve on a NFP board, often in addition to very demanding for-profit board roles, and almost a third have more than one NFP directorship.

The typical NFP non-executive director has two NFP board appointments, involving between six and 20 hours of work a month. This is equivalent to around six weeks work a year – almost double the contribution of the average volunteer in Australia.

The survey also found that nearly three quarters of NFP directors – 73 per cent – do all of this work on an entirely voluntary basis and only 10 per cent receive fees for all their board appointments.

The organisations these directors work for are often large and have a major influence on Australian society. The average director’s main NFP has a turnover of between $5 million and $20 million, a staff of 21 to 100 people and manages 50 volunteers, the study shows.

Recent Government figures show that there are currently 600,000 NFPs in Australia contributing over $43 billion to the nation’s GDP, employing almost 900,000 Australians and involving 4.6 million volunteers.

The Chief Executive Officer of the Australian Institute of Company Directors, John Colvin says that with individual directors on average devoting between six and 20 hours a month, usually for free, to their work for NFPs, they are making an immense contribution.

Colvin says the results of this study, and the real life case studies it contains, highlight just how much directors are ‘giving back’ to the Australian community through the diverse roles they hold on the boards of charities and welfare organisations, schools, arts and sporting bodies and myriad other not-for-profit organisations.

He says it shows that directors are making a real difference to our society and community by devoting such a large amount time and specialist skills to NFPs, on top of their other board roles.

He says this substantial contribution, and its value to our whole community, is often overlooked when negative stereotypes about directors are portrayed in the media.

The Chief Executive Officer of Mission Australia, Toby Hall, says volunteer directors played a vital role for his organisation describing it as incalculable.

The study found that non-executive directors bring a range of specialist skills to the NFP boards on which they serve, including strategic and commercial advice, governance and oversight of management, financial expertise, advocacy, communications and marketing skills.

They also play a major role in fundraising, with three quarters of respondents taking on responsibility for fundraising, through personally donating (36 per cent), encouraging donations at official events (38 per cent) or donations from other sources (34 per cent).

The study shows directors are involved in a wide range of organisations, with the biggest involvement in the community services (31 per cent), health (28 per cent) and education sectors (25 per cent). They are also strongly represented on boards of sporting, arts and environmental organisations.

The research, while conducted in NSW and Victoria, suggests that directors are making this sort of contribution right across the country.

The Commonwealth Bank partnered the Australian Institute of Company Directors in the Directors Social Impact Study.

The report can be downloaded www.companydirectors.com.au/default.htm