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Monday, 13 February 2012

Governance - A View from the Top - Is Your Board Delivering?

This is the question that all not-for-profit organisations should currently be asking themselves. From a performance perspective, the state of not-for-profit board performance is indeed a very mixed bag.

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.

Not-for-profit board membership is seen by many aspiring professionals as stepping stones into the corporate world, in preparation for a ‘career’ as a fully remunerated board member. This approach is supported by lecturers at the Australian Institute of Company Directors, in its graduate course, who suggest that not-for-profit boards are an appropriate way in which to effectively ‘cut your teeth’ on boards as a precursor to the commercial world, where board membership as a non-executive director is financially rewarding, especially for those adopting the portfolio approach to their careers.

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, 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?

OPTIMUM NFP has worked with a number of not-for-profit organisations in evaluating board efficiency and effectiveness based on a 100 point questionnaire uniquely developed for the purpose. The questionnaire defines 4 board dimensions as:
  •       The Role of the Board
  •       The Processes of the Board
  •       The Behaviours of the Board, and
  •       The Members of the Board

Within each dimension exist 5 categories and within each category are contained 5 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.

Such governance reviews of your board are considered appropriate and widely undertaken within both the Not-for-Profit and the 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, and
  • 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.

Every board should regard this process as fundamental to ongoing refinement of their processes and structure, in order that efficiency and effectiveness remains high on the organisational agenda - at all levels

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