ISSUE 08 JUNE 2013SOCIAL SECTORBANKING

CAUSE & EFFECT

westpac.com.au/socialsectorbanking

Special Edition: Westpac Community Confidence Index 2013 Summary Report

& Managing your organisation in Australia’s Low Carbon Economy

helping you help others

Westpac Community Confidence Index 2013: An overviewThe Westpac Community Confidence Index was launched in October 2011 and painted a picture of a sector that was broadly confident about the future, the ability to secure funding and deliver against key objectives. The 2013 Community Confidence Index report provides an update and commentary on how the Social Sector is faring and managing change.Since 2011, there has been a marginal drop in the overall confidence across the Social Sector with an ongoing challenge to build a stable and diversified revenue base. There are clear signs that Not for Profit organisations feel they are operating in a tougher environment, however there is also sense of dynamism and optimism and the vast majority are confident they will continue to achieve their objectives.

Many Not for Profit organisations are responding to these challenges by getting smarter in their revenue raising strategies and strengthening their commercial and marketing skills. We see evidence of this in the increased use of social media and the development of plans and strategies to manage change and prepare for the future. There is also

significant untapped potential in online and mobile channels as avenues for future funding.

The majority of Not for Profit organisations are fundamentally people and community based, relying heavily on retaining staff and attracting volunteers. The evidence suggests that issues relating to staff and volunteers to achieve their community objectives are less of a concern than they were in 2011 although there are ongoing challenges in attracting skilled staff.

Finally, while there is a growing awareness of the Government’s plans for reform across larger organisations (up 7% from 2011), however many of the small to medium Not for Profit organisations are not conscious of these reforms. Despite this, the Social Sector broadly appears ready to embrace a culture of greater transparency and accountability.

Welcome to Cause & EffectIn this special edition of Cause & Effect, Westpac is proud to share four key updates to help build capability for our Not for Profit customers. Firstly, we provide an overview of the second edition of the Westpac Community Confidence Index, which we recently released. Secondly, we include information to help your organisation be positioned for the future in Australia’s Low Carbon Economy. Thirdly, we highlight how a SWOT analysis can help improve your operations. Lastly, we’d like to share information about a new Carbon series offered by the Davidson Institute in June and July, to provide you with a helping hand to understand the impact of rising energy costs on your Not for Profit organisation.

The Social Sector is constantly changing - to keep abreast of important news in the sector, and what Westpac is doing about it, follow us on social media:

www.facebook.com/westpac

www.twitter.com/westpac

www.linked.com/company/westpac

Also you can follow the Westpac Group’s official Sustainability & Community Facebook page:

www.facebook.com/TheWestpacGroupRally

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To access the full version of the Westpac Community Confidence Index 2013 Report visit www.westpac.com.au/socialsectorbanking

ISSUE 08 JUNE 2013SOCIAL SECTORBANKING

The Westpac Community Confidence Index is made up of six key elements which impact the Social Sector.

Each of these elements is measured through a question or combination of questions in the survey:

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Key insights

1. Recognition “How well do you feel your organisation is recognised by the Media, Community, Government, and Corporate Business?”

2. Staff “Does your organisation have adequate staff (including volunteers) and confidence in your ability to retain your staff?”

3. Sector Saturation “Do you think there are too many organisations doing what you do?”

4. Confidence in achieving goals “Is your organisation confident that you will be successful in achieving your goals in the next 12 months?”

5. Income expectations “Will your income increase or decrease in the next 12 months?”

6. Income trends “Has your organisation’s income increased or decreased compared with 6 months ago?”

1. The Community Confidence Index which measures confidence among Not for Profit organisations has declined by 6 points since 2011.

This is due to more cautious assumptions about future income streams, fewer organisations experiencing an income increase in the last 6 months and a drop in those saying they feel valued by Government and corporate businesses.

4. Not for Profit organisations are becoming more marketing savvy and have embraced social media as a marketing tool.

Use of social media to promote Not for Profit organisations has increased significantly since 2011 (from 36% to 50% usage). 3 in 10 (31%) say they take every opportunity to use social media. But a third who use social media would like to know, more, indicating support needs.

2. 88% of Not for Profit organisations are confident that they can achieve their objectives in the next 12 months, compared with 85% in 2011.

Despite concerns about future revenue streams, there is a general sense of optimism that future objectives can be achieved. This appears to be based upon having sound strategic plans and good quality staff.

5. There is growing awareness of the Government’s reform plans but there are many Not for Profit organisations who have not heard about these proposals.

57% are aware of the Government’s plans to reform the Social Sector (up 7% on 2011). There is also a more positive perception that these reforms will have a positive impact on Not for Profit organisations (38% saying positive impact up 7% from 2011).

3. Compared with 2011, there is less concern about the ability to retain staff over the next 12 months.

25% of Not for Profit organisations experienced an increase in volunteers compared with only 16% in 2011. The proportion who have concerns about the number of skilled staff to meet needs has fallen since 2011 (from 31% to 22%). Marketing skills are becoming more sought after.

6. There is widespread acceptance of the need for transparency in accounting for where income gets spent and the impacts generated by Not for Profit organisations.

75% agree that there should be mandatory publication of clear and simple metrics to show the proportion of donations spent on administration costs. 73% also agree with the publication of clear and simple impact statements.

About the Index

Three in four Not for Profit organisations have a website and more than half use traditional methods such as events and fundraisers to promote their organisation.

However, the most significant trend is the rise in use of social media. 50% of Not for Profit organisations now use social media to promote their organisation, up 14% from 2011.

Social media is one of the hottest topics in the Social

Sector. It is a means for Not for Profit organisations to raise awareness about their mission and activities, raise funds, and engage with supporters and the community.

Around three in ten use social media at every opportunity. Many more are looking for help and support in how to maximise their use of social media or are looking to use social media in the future.

Overall, Social Sector confidence is six points lower than in 2011. This is driven by a decrease in income expectations (down 8%) and income trends (down 5%) and a decrease in the value and recognition of Not for Profit organisations (down 3%).

Looking ahead over the next 12 months, confidence in retaining staff and achieving objectives remains high (both measures up 3% from 2011). Opinion about sector saturation has remained stable.

Organisation website

Events/Fundraisers

Social media

Media engagement (PR)

Print advertising

E-newsletter

75%

75% 57% 36% 55% 43% 41%

53% 50% 49% 42% 42%

2011

2013

Top six marketing activities Use of social media

We utilise social media where we can, but would like to know more

We take every opportunity to use social media tools

We are not currently utilising social media but would like to in the future

We have considered using social media but it is not for us

We are not utilising any social media because we don't know much about it

Don't know

33%

31%

20%

8%

5%

3% 2013 – Q1

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METRIC 2011 2013

Income Expectation (% Increase) 61 53

Income Trends (% Increase) 47 42

Recognition (% Valued) 94 91

Staff (% Confident in retaining staff) 73 76

Sector Saturation (% Too Many) 17 16

Achieving Goals (% Confident) 85 88

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Community Confidence Index dashboard

Marketing activities

25%

75%

Overall sentiment from Not for Profit respondents on their future is positive:

“ We are in a very strong growth phase and are about to benefit from employing additional staff. It is going to be an exciting 12 months!”

“ We have been going through a major re-positioning of the organisation with new advertising and have just acquired a business venture with high turnover to support the organisation.”

The future of the sector is likely to be one where Not for Profit organisations will be required to be more transparent in how they account for the funding they receive, their cost base and the impacts they generate. It is also a future which is likely to see a continuation of the trend towards consolidation and partnership. In the long run, greater transparency can only benefit the sector. Donors and beneficiaries of services provided should feel more confident that their investment is making a real and lasting difference.There is widespread acceptance of the need for transparency in accounting for where income gets spent.75% agree that there should be mandatory publication of clear and simple metrics to show the proportion of donations spent on administration costs.

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Key insight:

One in five Not for Profits are considering partnering for growth. The main reasons are to share resources and improve operational efficiencies.

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The future

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Australia’s Low Carbon Economy ~ What is it and how is your organisation positioned for the futureAustralia’s move to a Low Carbon EconomyA Low Carbon Economy is an economy that has a minimal output of greenhouse gas (GHG) emissions into the environment biosphere, but specifically refers to the greenhouse gas carbon dioxide.

As part of the Cancun Agreement, the Australia Government made the commitment to reduce its GHG emissions by 5% of it’s 2000 levels by 2020.

So how will this impact your organisation and how is it positioned for the future?The answer will be quite different for many organisations depending on your purpose and operations.

Across the Social Sector there are many organisations that actively promote and encourage Australia’s transition to a low carbon economy. This will enable their cause and assist their aim of protecting wildlife, the environment or research into new technologies and sustainable energy sources. For other organisations it may result in changes in price to some of their key input costs that may impede their ability to fulfil their role.

Our special feature on the SWOT analysis is a great way for all organisations to take stock and plan for future changes.

While the opinion of both people and political parties may differ on the science and the best way to manage this change, the management of your own cost base is a core responsibility of all leaders in the community sector.

Australia’s breakdown of current emissions indicates the main areas of focus. Increasing electricity prices have certainly been in the media spotlight with prices rising by well above 10% due to both infrastructure “poles & wires” and the carbon price. As good administrators there are a number of resources and actions to help reduce your costs and help make a change to your carbon footprint at the same time.

We’ve listed a number of key resource to assist you:

Resourceswww.livinggreener.gov.au/guides

The Living Greener website is full of handy resources and guides including a “greener” guide for home-based business and sustainability at work

www.lowcarbonaustralia.com.au

The Low Carbon Australia website is designed help businesses become carbon neutral and position their products as carbon neutral.

www.innovation.gov.au/SmallBusiness

The Department of Industry, Innovation, Science, Research and Tertiary Education’s Small Business section many resources for business.

www.ausindustry.gov.au

Provides an array of information for businesses including grants and programs.

www.energyrating.gov.au

A site where you can compare appliance energy ratings and usage.

The Small Business Support Line 1800 777 275 provides referral services to improve business sustainability.

Grants and financial assistancewww.climatechange.gov.au/energyefficiencyinformationgrants

The Energy Efficiency Information Grants program provides funding to industry associations and Not for Profit organisations that work with small and medium businesses and community organisations to provide information on the smartest ways to use energy.

Source: 2012 Commonwealth of Australia, Department of Climate Change and Energy Efficiency Quarterly Update of Australia’s National Greenhouse Gas inventory.

All other sources 21%

Agriculture 15%

Transport 15%

Electricity 33%

Direct Fuel Combustion

16%

Sources of Australia’s Emissions

Using SWOT analysis to help improve your organisation’s operations

“The only thing that is constant is change” Heraclitus (Greek philosopher, 535-475BC)

The work done by the many Not for Profit organisations across our country can create significant social change, and lead to improved conditions for future generations in the Australian community. Being a part of that and working or volunteering for a Not for Profit organisation can be incredibly rewarding.

However, there is an ever-present shadow that accompanies any Not for Profit organisation can be achieved at all. The ongoing challenge of managing the budget is made even tougher when the economic environment itself is constantly changing. Whether its changes to taxes or superannuation, the introduction of new guidelines for dealing with volunteers, or simply prices increasing due to inflation the operating environment continues to change.

Most people tend to react to change from a defensive mindset. That is, we view any change as a threat, and look for ways to shore up our current position, and minimise the impact. However with any change also comes new opportunities, and we can take a very positive view when dealing with any change.

A SWOT analysis is a common technique for analysing and exploring an organisation’s current situation. The simplicity and ease of using this model make it particularly useful for an organisation when dealing with any change in its environment.

There are many different circumstances when completing a SWOT analysis can be useful so before you start a SWOT analysis, you should have a clear purpose of why you are doing so. It may be that there is a specific change to the operating environment or simply a regular “check-up” for the organisation. Identifying the purpose upfront will keep you focused on addressing the issues at hand, and ensure a much more thorough and beneficial outcome.

Once you start the SWOT analysis, it is important to list and evaluate the core elements of your organisation in a completely unbiased manner. This is important, because you cannot make effective decisions if the information contains blind-spots or is not one hundred percent factually correct. With this in mind it may be useful to have the analysis completed by more than one person then combine the findings.

A SWOT analysis focuses on the ‘Strengths’, ‘Weaknesses’, ‘Opportunities’, and ‘Threats’ of an organisation. Things that you should consider include:

Strengths:A strength is any factor that makes your organisation more effective in the marketplace. This can include skills and capabilities that you have, either through your staff, technology or processes, and how effectively resources are used to achieve your purpose and goals.

Weaknesses:A weakness is a limitation or fault that exists within your organisation. It prevents you from achieving your purpose and goals. Examples include inefficient resources or poorly defined and executed processes.

Opportunities:An opportunity is any favourable situation, trend or change that can help you to convert a weakness into a strength, increase your operational strength, improve your market reputation, or protect your resources.

Threats:A threat is any unfavourable situation, trend or change that impedes your ability to meet your strategic objectives, and potentially damages or threatens your capabilities.

Once you have listed these key elements of the SWOT analysis, you will have a clearer idea of how any change might impact your organisation. However, the process does not end there. It is important to interpret this information by ranking how important it is, and exploring your capacity to effect any strategic change as a result of it.

For example, consider the introduction of the Carbon Price into the Australian economy on 1 July 2012. There is no immediate impact to not-for-profit organisations, but there is a definite flow-through effect that needs to be dealt with. The most immediate issue that many organisations are faced with is potential increases in energy costs. This could have a significant impact for organisations already managing tight budgets.

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A SWOT in this instance might look like this:

Strengths

•Efficient operating processes

•Skilled operatives

Weaknesses

•Small budget•High electricity usage

Opportunities

•Grants available to upgrade to energy efficient lighting

•Reduce energy costs through more efficient energy use

Threats

•Rising costs which will limit our capacity to deliver service

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Operating in a Low Carbon EconomyThe Davidson Institute is pleased to provide Not for Profit organisations a helping hand to understand the impact of rising energy costs on their business. As Australia moves to a lower carbon economy there are many factors that Not for Profit organisations will need to take into account, both in the future planning and daily management of their organisation.

Our FREE seminars will cover a range of information that will aim to help you:

1. Understand what is a low carbon economy

2. Measure the impact of energy costs for your organisation

3. Plan for change, what opportunities and threats face

your organisation

4. Identify ways to manage any financial impact to your

organisation

5. Construct a scorecard to track your performance

6. Provide resources and information on grants and

energy efficiency

By doing the SWOT analysis this organisation has identified that it can take advantage of grants to purchase more energy efficient assets. This will help to minimise the threat of increasing costs and actually turn it into an opportunity to become more energy efficient and reduce costs. The analysis has immediately identified an effective course of action to take advantage of a change instead of simply accepting the threat to its operation.

As you can see, in our constantly changing environment the SWOT analysis is a very useful tool to have. For more information on SWOT analysis, and other strategic tools and tips for planning, visit www.davidsoninstitute.edu.au where you will find a number of useful articles or you may even consider attending a short course.

The important work done by our Not for Profit organisations needn’t be compromised as environments change. Let’s change our mindset and look for the opportunity to improve operations and achievement of our goals or objectives.

SWOT analysis continued from previous page...

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Free series Carbon EconomyHelping your Not for Profit organisation operate in a low carbon economy.

Seminars running June - July 2013

Register today at: www.davidsoninstitute.edu.au or call 1800 012 501