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Friday, 16 September 2016

Board Practices - How Does Your NFP Stack Up?

Much is being written regarding the state of NFP Board practices across the western economies. It makes for some interesting reading and provides some good comparisons and benchmarks for your own NFP board. The latest "Leading with Intent" survey from the united States, which commenced annual collection in 1994, reflects board responsibilities across 10 leading indicators. Whilst it covers the board, the chair and the CEO, it is the board evaluation which I think provides the greatest challenges if considered in the light of the substantial strategic and operational issues that Australian NFPs face over the next 10 years or so. Despite  a number of social, economic and legal differences between Australia and the United States, there remain many similarities, and so it is worthwhile considering the output in this context.

Overall US NFP boards were generally better at technical tasks, such as financial oversight and compliance but less so at adaptive work related to strategy and community outreach. This measure was undertaken against a backdrop of great similarities between the two countries, namely economic challenges, declining government funding and continued growth in service demand.

As a moving indicator that has been measured over the last 22 years, it provides a good analysis of both improvement and decline over that period, meaning trending becomes important. In the case of financial performance of medium organisations, being those with turnover greater than $1 million but less than $10 million, 53% of those surveyed improved their results, 38% remained the same whilst 9% had in fact deteriorated. Those with operating budgets greater than $10 million reflected a similar profile excepting 36% were about the same whilst 11% reflected deterioration.

In the work that I do with boards reviewing their overall governance, I use a custom designed 100-point on-line survey covering board roles, board processes, board behaviours and board membership. The most challenging aspects of performance that I have tracked since the first use of the tool in 2010 across a number of varying sized NFPs, has been strategic planning capabilities, board accountabilities, board membership issues associated with the appropriateness of relevant skills, effectiveness of relationships with the CEO and mission alignment in terms of the board decision-making processes.

The overlap between US characteristics in this sector and the Australian experience appears to be at the strategy level. In the context of the current and future challenges for Australian NFPs, this is potentially concerning as the market and funding challenges require, in many instances, a rethink of the strategic future direction of many of these organisations. So a key question therefore must be, to what extent are Australian NFP boards ready to address the strategic direction of their organisations?

OPTIMUM NFP has developed a strategic planning process and board governance review mechanism that responds to conditions that many have described as volatile, uncertain, complex, ambiguous and diverse. Conditions that demand your board operating at levels that inform a potentially new strategic direction.

Contact David Rosenbaum at or on 0411-744-911 to arrange a no-obligations meeting to discuss how OPTIMUM NFP can add value to your NFP by ensuring your Board has the skills and capabilities to adequately steer your NFP through these challenging market conditions. The experience of OPTIMUM NFP could be exactly what you need at this point in time.

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