EVOLVING CHAIR: Community Foundation Board Aims to Be 'Brave'

Collaboration and syndicated grant making are two topics front of mind for the chair of the Lord Mayor’s Charitable Foundation Daniel Leighton, as he explains in this month’s Evolving Chair.

What is your organisation and what is the board structure?

The Lord Mayor’s Charitable Foundation. We’re Australia’s largest community foundation, with over $200 million in our corpus and we grant over $9 million to hundreds of charities each year across Australia. Our board structure is set by an Act of Victorian parliament, and so by that measure we are unique.

The Act establishes directors appointed by donors, the community sector and prescribed positions for representatives from the Law Institute and the Institute of Chartered Accountants – a hybrid model established a generation ago in order to create a skills-based board before the term was well understood.

What attracts you to a Not for Profit or for-profit board?

Once involved in the community sector you become exposed to some of the greatest thinkers in our community, and the best of human traits and attributes – egos get left at the door. I have long believed it is better to give than to receive and greatly enjoy the time I spend working to solve problems in our community.

I joined my first board while I was still at university and have served continuously with various organisations for the past two decades. When my time is up on the LMCF board – I’m a firm believer in term limits to drive people to focus their energy on ensuring the organisation is left in a better shape than they found it – I’ll be looking for my next challenge.

What is the biggest challenge your board has had to overcome? And how did you overcome it?

We have an outdated model of governance, which requires an Act of Parliament to change. Starting a number of years ago, we began the methodical process of reviewing our governance with expert advisors. After receiving the report we established a governance committee to address all of the issues.

As with any thorny issue, seek out the best advice you can find, and take all the time you need to reach your conclusions – any significant change you make, buildings, constitution, operating model, likely won’t be revisited for at least a decade, so ensure you consider the future needs of the organisation and the people you serve before acting.

What are your board’s current priorities/goals?

Key projects for us at present include overseeing the successful implementation of a new IT platform, greater measurement of the impact of our work, and reviewing our investment practices and strategic asset allocation.

Is gender balance an issue for your board? Do you prioritise it?

I’m very proud to say that gender balance isn’t an issue for us. It’s always a live topic and we work hard to seek equal gender representation. I am a strong believer in a 40/20/40 rule, where at least 40 per cent of every board is female, 40 per cent male and 20 per cent flexible. We achieved this target a number of years ago.

Further, I had the board participate in a genderwise philanthropy workshop two years ago and we now specifically ask grantees questions regarding gender. I’m very passionate about inclusion and human rights, and I can foresee a time – not too far away – where we won’t grant funds to any organisation which doesn’t have at least one-third female directors.

What is your board’s ultimate goal?

To be brave, open and honest, and to establish effective governance and risk parameters that allows the organisation to succeed in difficult times.

What has been the highlight of your work with this board?

The opportunity to work with some truly inspirational people.

What are the key sector issues that are being discussed at board level?

The changing state of the community sector, the steady rise of for-profit philanthropic advisors, and the impact of government actions including funding cuts, NFP independence, and the ACNC – which we hope is here to stay.

Does your board believe collaboration between organisations within your area is important? Why?

Collaboration is extremely important and becoming ever more so. A cursory scan of the intergenerational reports shows Australia’s difficult fiscal position due to an ageing population.

So as governments look to trim expenditure,there will be greater pressure on philanthropy to try to plug the gap. Just like institutional underwriting, no one foundation will be able to go it alone so syndicating grants enables us to extend our resources and better manage our risk profile to ensure innovative approaches continue to be are funded.

Do you have any advice around governance?

These are just a few points I’ve picked up along the way:

· I’m a strong believer that the chair is a conductor, not the captain

· Independent thought is paramount

· Diversity on boards leads to better performance

· Experts also need to be all-rounders

Do you have any advice around recruitment?

Don’t settle for people you know. While networks are handy, reach out further or utilise a service like pro-bono Australia to advertise. Independence of thought comes from people not well known to existing directors.

Do you have any advice around risk management?

Setting the parameters and risk tolerances for an organisation is crucial. Too little risk and the organisation isn’t being as brave as it could be; too much and you’re in trouble. Actively monitor existing risks, as well as scan for emerging risks on a regular basis.

Do you have any advice around mergers?

Mergers offer a path to achieve higher goals – but they can also be an expressway to diluting mission and damaging the brand. Mergers are at one end of a continuum regarding partnerships. If it makes sense for your end user or cause, proceed. But if your only reason for merging is that you think it’s a good idea, then it probably isn’t.

Do you have any advice on board members raising money?

In the same way that better practice regarding director remuneration for listed companies requires long term share ownership in order to align the directors to the business, I feel strongly that NFP directors should donate funds at a level that is meaningful for them, in order to be invested in the organisation. It’s impossible to look any potential donor in the eye and ask them to contribute if your board isn’t willing to make the same commitment.

Do you have any advice around the Board’s relationship with the Chief Executive Officer?

The Chief Executive Officer’s relationship with the board, and especially chair, is crucial. It must be built on respect and trust in one-another. The Chief Executive Officer is the conduit to action the strategy set by the board.

As such I consider the performance of the Chief Executive Officer to be tied to that of the chair – if one fails, they both fail, and board members should use that as one measure of the chair’s performance.

Do you have any advice on sustainable business/organisation models?

In time I think we’ll come to view this period as a golden era in the emergence of sustainable enterprise. We have so many social enterprises being established by talented young Australian social entrepreneurs who are rapidly changing the landscape and blurring the lines between for-profit and Not for Profit. Recently I’ve been privileged and thrilled to spend time with people like Dean Cohen, Jordan O'Reilly and Shishir Pandit.

Dean hasn’t even graduated uni yet but he managed to set up an organisation, obtain PBI status and raise over $50,000 last year to run camps for teenagers with a disability staffed by year 12 students after their final exams. He’s already doubled his funds this year to expand the organisation.

Jordan, having already been the Foundation for Young Australians Change Maker of the Year in 2013 is now a 2015 Myer Innovation Fellow who is working with investment bankers to raise $2 million to achieve scale for HireUp – his latest project that creates employment for people with a disability.

Shishir recently resigned from a management consulting firm to oversee the growth of Global Consulting Group, a young NFP leveraging management consultants to work alongside students at Melbourne Business School and other universities to undertake complex analysis and planning to support NFP growth.

At the Lord Mayor’s Charitable Foundation we have also funded one of many wonderful social enterprises including 2&5 Inc, a Not for Profit social enterprise founded by Katharine Drummond-Gillette based in Norlane, Geelong. 2&5 Inc work within the local community to increase the consumption of fruit and vegetables, increase access to affordable quality fresh food and provide opportunities to increase work skills through volunteering.

Another wonderful example is the Property Initiative Real Estate agency at Women’s Property Initiative led by CEO Jeannette Large. It’s a full service real estate agency whereby all profits generated are used to support and create affordable housing for women in need.

Best of all, I see breadth and depth in our emerging social entrepreneurs, with a growing list of professional advisers offering support.