Challenges of Not-for-Profit Sector Organisations - An Overview

In my PhD research on change management in the not-for-profit sector, I have identified a range of unique challenges faced by this sector. Organisations within this sector face ongoing sustainability problems which are directly linked to full or partial government funding which places them at risk of being responsive to ongoing political bias and the associated challenges of managing the ongoing conflict between issues of mission, and practicalities of operational and organisational sustainability, especially within religious based not-for-profits.

The ability to attract, maintain, and develop human resources, places ongoing strains and stresses on the constancy of programme and service delivery for not-for-profits. This issue specifically threatens those not-for-profits operating in the broader human service sectors of disability, mental health, and aged care. Additionally, the use and application of hybrid performance measurement criteria for those not-for-profits operating commercial and quasi commercial activities, in competition with for-profit organisations, test their management capabilities at both executive and board levels.

The demanding business environment that many in this sector have faced over extended periods of time, has jeopardised ongoing program funding, and placed heavy demands on service delivery, threatening the continuity of segments of their operations. This has been further compounded by a unique reliance on a diverse volunteer pool which challenges many in managerial and leadership functions within this sector, and places significant strain on their organisation’s abilities to achieve strategic and operational goals, within given timeframes.

In this context, the need to understand and deal with large, varied, and dispersed external and internal stakeholder groups, continues to strain not-for-profit human, financial, and capital resources, placing even further management constraints on these organisations, and potentially focusing attention away from their predominant service, and program delivery objectives. Moreover, these organisations tend to have complex revenue generation models, which reflect the varied sources of funds that need to be managed within a complex and often multi-skilled environment, where their ability to attract the full gamut of skills is already under sharp focus.

In amongst these NFP organisational issues is the multi-dimensional focus of not-for-profit management, which must have more than a unilateral view on purely bottom-line and associated shareholder value outcomes.

Many of these challenges are global characteristics of not-for-profit organisations, for example, regarding issues of revenue generation models in the United States, performance management difficulties in New Zealand, the United Kingdom & Europe, leadership and management ideological challenges in Scandinavian countries, and governance related challenges, especially within not-for-profit hospitals in the United States.

Associated with this broad range of challenges are the cultural attributes of those working within this sector. Those committed to working in this sector may do so because of a perceived connection with a broader societal good and the lack of private gain or profit at the organisational levels and their own perceptions of being human change-agents that become integral in changing the lives of those that rely on their services. Integral in this view is recognition of the pivotal role that such human service type organisations are now playing in society as part of an integrated four-pillar institutional service provision network encompassing government, not-for-profits, business and family networks. The above framework sets the cultural context within which the not-for-profit sector operates and provides insight into the challenges that lay ahead during processes of transformational change.

With a wealth of practical and research based experience, OPTIMUM NFP has developed a range of core capabilities in the servicing of Not-for-Profit sector organisations. These include:

• Change management where Action Learning is applied as a change method working across the organisation, and where organisational readiness for change is assessed at key points in the change program; 

• Strategic Risk Management where bespoke Risk Management Frameworks are developed around unique organisational characteristics

• Governance assessments where the effectiveness and efficiency of NFP boards are independently assessed, recommendations identified, and training developed to strengthen board functioning.

These core capabilities have been applied to such NFP organisations as The AIDS Council of NSW, Ausdance NSW, Australian Catholic University, The Australian Centre for Posttraumatic Mental Health, The Australian Diabetes Educators Association, Catholic Community Services, Centacare Broken Bay, Cure Cancer Australia Foundation, Eastern Respite & Recreation, Family Resource & Network Services Inc., Flintwood Disability Services, Koorana Child & Family Centre Inc., Meat & Livestock Australia, and Nepean Area Disabilities Organisation Inc.

Contact David Rosenbaum of OPTIMUM NFP to further discuss how OPTIMUM NFP can add value to your Not-for-Profit organisation.