Changing Your Organisation – The Australian Charities Not-for-profits Commission

The upcoming ‘launch’ of the CNC will present a substantive challenge to many organizations within this sector. These challenges will directly impact on how such organisations adapt their existing internal and external reporting frameworks, which, in many circumstances, impacts not only the management of these organizations but also their boards.

The reasons publicly given for the major reforms are well known. The economic impact of the sector alone, dictates that change must occur. The relative size of the sector in the context of the Australian economy is, as I have written in the past, somewhat out of kilter with comparative Western economies in the context of the sheer number of NFPs on a per capita basis. The long term sustainability of many within this sector continues to challenge their ability to match values and mission with operational capacity. Not to mention of course the contextual problems associated with ongoing donor fatigue and the well publicized, poor, philanthropic leanings of the Australian population, again, when compared to other wealthy Western economies.

When considered in this light, the changes coming down the pipeline are both potentially complex but needed. The question of whether the CNC in its current proposed form and in the political context of an unpopular minority government facing an election in the near term, and a political environment that appears to deny the application of real social ‘vision’, on a range of fronts, can deliver, is not the issue that requires the attention of those trying to implement a tough course of action that may have far reaching consequences. At the end of the day, this sector needs to address these challenges and start looking at itself with some effective navel gazing and consider how they, individually, can achieve what they need to achieve in order to serve those that they serve in the broader community.

So the questions that each NFP, its executive, its board, needs to consider, is what can we do to ensure that our organisations can adapt to this changing landscape over the course of the next few years.

The impetus for change, in this context is clear. Given that one of the key reasons that change efforts in many organisations, irrespective of whether they are in the NFP or the for-profit sector, fail, is due to the lack of an appropriate cause-and-effect relationship. In essence, there must be a sound reason for wanting to change. As has been well recognized in much of the change literature, the simpler and clearer the basic goal of the change management process is, the more likely it will be to take hold within the organisation, largely related to the ability for change communication to be far more easily applied and understood. This also opens up the ability for a larger representation of involvement from within the organisation, thereby encouraging involvement, participation and potentially acceptance.

As many in the NFP sector attest, the range of changes that may be proposed over the course of the next few years will challenge many organisations. To what extent is your organisation ready to not only adapt to the myriad of changes in a reactive manner, but also to what extent is your organisation ready to embrace change in a proactive manner, seeking to bring change to your organisation with the aim of ensuring your ongoing provision of services to the communities that you seek to currently serve as well as those that you wish to serve in the future?

OPTIMUM NFP works within the field of change management and has been doing so within the NFP sector successfully over a number of years developing change processes and frameworks that enable such organisations to bring their strengths into the management of change.

Strategic Alliances - How Does Your Organisation Proceed?

Strategic Alliances  - How Does Your Organisation Proceed?

As highlighted in the 2010 Productivity Commission report, Australia is home to approximately 600,000 not-for-profit organisations. Based on the 2010 census, this represents 1 not-for-profit organisation for every 37 Australians.  Comparative figures for the United States in 2005, identifies 1,400,000 not-for-profits covering a total population of 294,000,000 which represents 1 not-for-profit organisation for every 210 Americans.

Australia seems overly endowed with not-for-profit organisations. The question must be asked – to what extent is the current structural attributes of the Australian not-for-profit sector sustainable in the medium to long-term, and if lingering doubts remain regarding this question, then what could the future look like for this sector that in 2007 employed 8% of the Australian workforce, contributed $43 billion to Australia’s GDP and attracted 4.6 million volunteers? 

Whilst I don’t have the answer to the bigger question, I do suggest that some degree of rationalization may be on the cards at some time in the future. Perhaps the creation of The Australian Charities and Not-for-Profit Commission may be the precursor to such rationalisation – but then again that may just be the pessimist in me!

Whatever the outcome and whatever the process, I think it fair and reasonable to suggest that a range of market related factors may put pressure on a number of players within this sector, to address the ever growing challenges that lay ahead. These include:

• Organizational identity where numerous NFPs represent common causes that confuse the market place in terms of who is delivering what;

• Donor fatigue where a constant stream of NFPs chase a limited number of available and willing donors;

• Competitive employment environment, where an expanded skills framework is needed to cement NFPs activities, especially so in the current changing environment of the NSW Disability Services Sector. This is a direct result of the changes to the sector resulting from the introduction of Person Centered Planning, and the funding, marketing and competitive issues that ensue.

So where to from here?

In response to these market-related environmental challenges, it would be considered prudent for not-for-profit organisations to realistically consider the pros and cons of developing appropriate strategic alliances that are predominantly aimed at improving their service levels, as measured by the outcomes being achieved in the supply of these services to their target customer groups. This includes their ability to source donor and other funding for existing and future programs.

To plan and execute effective strategic relationships, consideration must be given to the following processes in order to maximise the benefit of such relationships:

1. Be careful who you align your organisation with. At the end of the day your prime consideration should be the people that you serve; 
2. Make sure you really appreciate and fully understand your own strengths and weaknesses – you need to be brutally honest about these; 
3. Your organisation has values by which you gauge yourself – make sure that your intended counterparty shares these values, as a minimum; 
4. Executives and management from both organisations must be mindful and respectful of the relationship being entered into; 
5. Ensure that any such strategic arrangements are routinely monitored and assessed to ensure that they continue to add value to BOTH organisations; 
6. Remain flexible enough to recognise when terminating the relationship is in the interest of both organisations; 
7. Plan to involve and include a wide cross section of staff from across both organisations; 
8. Develop formal communication and structural frameworks to accommodate the relationship – don’t leave things to chance and definitely don’t rely on serendipity to  see you through the relationship, and finally, 
9. See this as a cultural change to both organisations and deal with it accordingly.

David Rosenbaum of OPTIMUM NFP has sourced and developed many strategic partnerships across many organisations and sectors over the past 30 years or so and as an active organisational change enabler can assist not-for-profit sector organisations in developing the appropriate frameworks to get the most out of such relationships.

Post your comments on this Blog if you would like to further discuss how such strategic relationships may benefit your organsiation.

Culture of Change Readiness - Best way to overcome resistance to change

Making Changes within your Organisation? – Maybe you need to assess the extent to which your organization is ready.

Organisational sustainability and change go hand-in-hand. Many organisations introduce change, or initiate and plan for change, in response to a wide range of internal and external triggers. For some it could be the result of key staff departures providing the opportunity to review and potentially refresh the organizational structure. For others it could be the result of difficulties with the external environment necessitating changes to long standing business models that have not been previously challenged.

Such changes can be viewed in many different ways by the staff within the organisation. Some will view these potential changes as opportunities by virtue of embracing the unknown whilst improving whatever the shortcomings of the existing position may have been.  Others will view them as threats by virtue of being uncomfortable with the unknown and the sense of possible loss of position, control, influence or power.

Research in this field of change management and specifically in the area of “organizational readiness for change” has been extensive over the years. Some have contested that the lack of change readiness may be a key reason for organisations failing in their attempts to manage the changes that are introduced. Others have suggested that organisations that display high levels of internal flexibility and a change ready culture are far better able to adapt and absorb changes as they come up.

A further approach has been to suggest that the management of change may in fact be more successful if continuous change is the norm within the organisation, rather than focusing on specific changes at particular moments in time. This implies a more fluid approach to change rather than an ‘episodic’ approach characterised by piecemeal changes as and when they are perceived as being needed.

Alongside this recognition regarding the readiness for change, is the associated research regarding change resistance, which in many ways represents the two sides of the one coin, in that the more ready the organisation is to actively and positively work with change, the less change resistance and therefore the more likelihood of successful change outcomes.

Currently, my own PhD research being undertaken in the Not-for-Profit hospital sector reinforces this duality of change readiness and change resistance and highlights a broad range of characteristics which shape change readiness. Whilst skill and care may be applied to change management via effective project management, this latter activity does not recognize the emotional aspects of change as felt by those that are experiencing the change.  As such, good project management does not equate to good change outcomes. Understanding your staff responses to change must represent the other side of the ‘mechanistic’ aspects of change.

In response to this research, OPTIMUM NFP has developed the ‘CARC Program (Cultural Assessment for Readiness for Change)’, a process for evaluating change readiness within your organisation, using a range of qualitative research techniques to assess your organisations readiness to work with, and absorb, proposed changes. Information gleaned from this process can then be incorporated into the change program to effectively reinforce the process and achieve better change outcomes.

Happy to hear from organisational managers wishing to further discuss the process by which this research at your organisation can deliver positive outcomes witih regard future change management outcomes. Contact David Rosenbaum at OPTIMUM NFP for a no obligation discussion on how the CARC Program can be economically applied to your organisation – before the next change!

Risk Management Frameworks – How Does Your NFP Compare?

Standards Australia has been quite active in its delivery of resources to the Not-for-profit sector, regarding the management and communication of risk. 2010 saw the release of HB 266:2010 entitled “Guide for managing risk in not-for-profit organizations”. This was supported by HB 327:2010 entitled “Communicating and consulting about risk”. Both publications came off the back of AS/NZS ISO 3100:2009 entitled “Risk management - Principles and guidelines”.

Together, these publications focused on the core application areas of risk management, namely the principles for managing risks, the framework within which these operated, and the process that underpinned them. Communication was recognised as the key to successfully implementing a risk aware culture within the organisation, as part of the delivery of an effective risk management framework.

The message in these pronouncements is quite clear. There are a broad range of risk principles that your organisation needs to consider in order for risk to be understood in the broadest possible way. These principles need to be contextualised within a consolidated framework that must be well considered, well developed, and well understood. In order for such a framework to be effective, it must be supported by a process that caters for the identification, assessment, and treatment of risk. Finally, this process must be supported by an effective and consistent communication methodology.

This integrated approach to risk management should be the focus for your not-for-profit when considering and assessing risk.

In the context of not-for-profit organisations, a wide range of risk categories combine to form an overall picture of the risk environment within which not-for-profits operate. These can best be summarised in the following manner:

• Asset risk – which relates to the ongoing management and maintenance of the organisation’s physical assets including buildings and equipment used by employees, volunteers, contractors, and clients;

• Compliance risk – which relates to the external regulatory framework that the organisation operates within as well as the internal policies and procedures that are in place to govern behaviours of its internal stakeholders;

•  Environment risk – which relates to the management and sustainability of the built and natural environment that the organisation works within, and, from which services are delivered;

•  Financial risk – which relates to the operation, management and development of the financial frameworks within which the organisation operates in, and supported by its internal financial policies and procedures;

•  Liability risk – which relates to the organisation’s services, products, information or behaviours that results in legal action against the organisation or its officers;

•  Personnel risk – which relates to the safety, occupational health or well being of the organisation’s staff;

• Service delivery risk – which relates to failures in the provision of its services and how these may impact the organisation, and finally

• Technology risk – which relates to the security, safety, function and management of the organisation’s technology systems and processes.

OPTIMUM NFP has worked with numerous Not-for-Profits in designing and successfully implementing risk management frameworks. As a member of the  Risk Management Institution of Australasia, and an experienced Not-for-Profit consultant, David Rosenbaum of OPTIMUM NFP is well placed to respond to the risk requirements of Australian Not-for-Profits.

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

The World's Financial Woes - Perhaps Philanthropy Is The Next Best Thing!

The current financial crisis affecting the western world appears to have potentially spiralled out of control. The extent to which a fix can be applied to the problem is doubtful, given that much of what is stated in the public press appears to have overlooked some root cause issues that no-one, especially not regulators or their agencies, wish to address.

It would appear that financially, the Greek economy has been on the nose for some period of time. Financial commentators readily admit to knowing that the Greek economy has been a basket case for decades, if not beyond. Their ability to address their own internal issues has been questioned in many quarters and yet, here we are in 2011, with banks and government monetary authorities concerned about the possibility of default by Greece triggering potential financial losses amongst a wide group of private and public investors.

The question that goes begging is why were loans made to Greece in the first place to the extent that they had been? Why was Greece even invited into the Eurozone? Which of the Global Investment Banks earned incredibly outlandish commissions or fees for structuring and brokering Greek debt?

The reality is that until these questions are addressed and the global investment banks brought to account for their careless and reckless behaviour, long term real solutions to the current financial woes of the western world will never be addressed.

This brings into focus the whole value proposition of when is enough enough? At what point in time does financial gain become purely the end point rather than the means to an end in itself?

This underlying question is perhaps at the heart of the latest publication by Dr. Diane Coyle PhD whose orthodox economic views are in fact quite refreshing when seen in the context of her latest expose regarding the explosion of executive remuneration levels in the western world.


What expectations are we building into a society that in Australia, despite general public opinion, is experiencing an ever widening gap between those that have it and those that don't. Our society is fracturing and the historic egalitarianism upon which Australia was built, is gradually slipping away.


Sad to say, but greed is taking over and corporate greed in the finance sector is partly to blame.


The Greek crisis and all that will follow can never be resolved until, as a society, we decide when enough is enough, when the accumulation of wealth without purpose and without recognition that there is a growing list of an Australian underclass, without bringing to heel the investment banking falseness of creating artificial reality, is brought to finality.


With so many worthwhile human causes in Australia and abroad, the accumulation of wealth through such artificial means that leave nothing of substance in their wake, seems pointless.


Maybe Greece and others defaulting will provide the reality hit that is so desperately needed in the western world.

Managing Change in Not-for-Profits with the Introduction of Strategic Partnerships

The development, design, implementation and monitoring of change management programs is generally an organisational challenge irrespective of it being in a commercial or a not-for-profit environment. 

NFP environments however provide some additional characteristics, with one of the key ones being the extent to which pressure for change derives from external environmental considerations to possibly a greater extent than commercial organisations, where change programs find themselves being initiated equally from within the organisation, albeit still being driven hierarchically. 

Current external pressures being applied to NFPs relate directly from the perceived impacts of the Federal Government reforms to this sector, which, in some cases, may go to the heart of survival for some of Australia's smallest NFP participants. 

One of the outcomes may be rationalisation within this sector. In many cases this rationalisation may result in the development and expansion of strategic partnerships amongst these smaller service providers.  

The development of partnerships, strategic or otherwise, may be a challenge to many in this sector. In New South Wales, the Disability Services Sector is currently undergoing, or about to undergo, such a challenge, as the current method of financing the sector becomes redundant in July 2014 with moves by the State Government to direct payment for services through the person obtaining the service, as distinct to the current and long standing model of financing the service provider directly based on the number of programs and the number of people undertaking these. The Person Centred Approach now becomes the central plank for the large number of service providers in this sector.


Will this prove successful, either from the Person's perspective or indeed form the sector's perspective? This is an unknown quantity at the moment. What is also in question is the extent to which the State Government is actually ready for this change itself, let alone the myriad of service providers currently in existence.


A number of these smaller NFPs operating in this sector will be challenged in terms of their marketing and 'business development' activities, their ability to effectively 'cost' the services they provide and finally, their ability to maintain their focus.


Whilst some will consider that they may in fact lose business as a result of their customers looking further afield for such services, some in the industry, quite rightly, believe that there is also opportunity to pick up additional clients as those people do in fact look further afield.


This is where strategic partnerships may be a solution to this dilemma. However, before looking to involve themselves in such partnerships, they need to effectively change their existing business model and internal organisational mindset to cope with the new forms of doing and seeking business.