Trends in not-for-profit governance and performance...2016/11/09  · NFPs must build financial...

Trends in not-for-profit governance and performance

Lucas Ryan GAICDNFP Policy Adviser, AICD

ESSENTIAL DIRECTOR UPDATE 2016 – NFP

Key NFP governance trends

NFPs must build financial strength1

Strategy is critical to success2

Growth in collaboration in NFPs3

Performance measurement key4

Financialstrength

NFP GOVERNANCE AND PERFORMANCE STUDY

• Not just surviving, but thriving

• However, results are variable

• Attitude to ‘profit’ concerning

• Similar issue with ‘reserves’

“If we made a profit, we would have to give the

money back.”

NOPE!

NFPs must aim for financial strength

NFP GOVERNANCE AND PERFORMANCE STUDY

20% 14%64%

59% 25% 17%

▼ 5% ▲ 5% ▲ 3%

Expectations of profit

NFP GOVERNANCE AND PERFORMANCE STUDY

Expectations of profit

58

12

42

31

5

10

24

34

24

■ Last 3 years

■ Next 12 months

>-6% -0.1% to -5% Breakeven 0.1% to 5% >5%

Importanceof strategy

NFP GOVERNANCE AND PERFORMANCE STUDY

33%Strategic planning1

32%Strategic oversight2

Performance monitoring3

Service/program evaluation4

Knowledge of technology5

24%

21%

19%

Top five (desired) priorities

NFP GOVERNANCE AND PERFORMANCE STUDY

There is a disconnect between

what boards spend time on and

what they know would actually

benefit their NFP.

NFP GOVERNANCE AND PERFORMANCE STUDY

40%Changes in operational environment1

30%Diversifying income sources2

Clarifying strategic direction3

Managing costs4

Increasing own-source income5

28%

27%

26%

Top five (actual) priorities

Collaborationand mergers

NFP GOVERNANCE AND PERFORMANCE STUDY

Mergers and collaboration

Collaboration is growing among NFPs…

NFP GOVERNANCE AND PERFORMANCE STUDY

Mergers and collaboration

…but rates of merger are constant

• More and more NFPs are being moved into ‘open

markets’

• Aged care and disability services are trials

• Governance models must change to respond to

the new operational environment

Major trends: Marketisation

NFP GOVERNANCE AND PERFORMANCE STUDY

NFP GOVERNANCE AND PERFORMANCE STUDY

But rates of merger are constantIt is government policy

that there are too many

not-for-profits.

Performancemeasurement

Performance measurement is key

…essential in changing funding environment

NFP GOVERNANCE AND PERFORMANCE STUDY

• Market will reach $32 billion in the next 10 years

• First Social Impact Bonds yielding results, more in

the pipeline

• New models will emerge, and governance models

must adapt to support them

Major trends: Social impact investing

NFP GOVERNANCE AND PERFORMANCE STUDY

re-thinkThere is a need to

expectationsand perceptions

of not-for-profits

NFP GOVERNANCE AND PERFORMANCE STUDY

ThankLucas Ryan GAICDNFP Policy Adviser, AICD (Sydney)

@lucasandsuchlryan@aicd.com.au+61 2 8248 6671

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