Do or Die for NFP Boards – ‘Futures’ Paper

Australian charities and their boards must make radical, future-focused and corporate-minded changes, or risk facing extinction, according to a report released by wealth management group, Koda Capital.

The white paper, Preparing for the Future – Do or Die for NFP Boards, predicted that many charities risk irrelevancy if they fail to compete with new challengers in the charity space, and rising performance and delivery expectations.

“Uncompetitive Not for Profits risk extinction as charity ranks swell by 200 every month, adding to the 53,000 we already have,” Partner and Head of Philanthropy & Social Capital, David Knowles said.

“Not for Profits increasingly have to contend with stronger for-profit competitors in sectors such as health, ageing and disability – so their performance is increasingly being measured against traditional ‘business’ deliverables.

“These organisations also risk being overtaken by agile start-up charities and social enterprises using technology and savvy marketing to engage donors with greater speed and efficiency. Now, more than ever, charities must be able to show their transparency, their strategy and the impact they are having.”

Knowles said the recent questions around the operation of the Shane Warne Foundation were an example of the new governance standards expected from Australian charities.

“NFPs must be transparent and able to respond quickly and effectively to public scrutiny. As we have seen with the Shane Warne Foundation, even strong brands can be destroyed overnight when they fail to meet expectations,” he said.

The paper calls on Not for Profit leaders to be more forward-thinking and active in preparing their organisations for a future in which they will need to be highly competitive, transparent and better equipped to effectively engage would-be supporters.

“In the digital era, it is possible for NFP organisations to come out of nowhere and quickly compete for donations and supporters as they have lower costs and the latest digital engagement strategies,” Knowles said.

“These nimble start-ups can eclipse more established Not for Profits and disrupt the entire sector.

“The most important task of a Not for Profit board is to prepare its organisation for the future and today’s charity directors face a future that looks nothing like the past – one in which they must deal with changes in government policy, increased regulation and accountability, rising costs, higher funder expectations, the need to prove impact, systemic change, tougher competition and the impact of digital disruption.”

He said NFP boards often spend too much time on internal issues and operational concerns. The future simply does not support the idea that NFP board members can act as passive overseers.

“In an increasingly competitive world, with government funding in decline and philanthropy unable to fill the gap, boards must step up and lead like never before. Standing still is not an option,” he said.