Governance in a not-for-profit environment

As not-for-profit organisations grow, different skill sets are required on the board.

With more than 100,000 not-for-profits (NFPs) in New Zealand the chances are most people in governance roles cut their director baby teeth on the boards of one or more. And most likely still serve on at least one in an area they have passion for – and, with so many of them, pretty much any passion is covered.

Some NFP’s are substantial in character.  Researcher Dr Jo Cribb commented on The Spinoff in 2017 that they contribute more than $6 billion to GDP and employ more than 130,000 paid staff and 1.2 million volunteers.

Smaller boards are generally comprised of volunteers from within their membership, they may often have minimal experience around governance or managing, which creates its own challenges. 

The board is usually the management and the staff. As organisations get bigger, they will gain paid staff and start to separate management and governance. At that stage different skill sets are required on the board. 

They may look to have a varied board composition with elected and appointed roles to get some external expertise in governance on board. 

Often the organisation’s structure can become a challenge as many are the amalgamation of smaller local groups which, under the rules, retain significant power within the organisation, which may be counter to effective governance.

One of the most significant tasks of NFP governance is ensuring the organisation has sufficient funding. 

At the smaller end of the scale most of this comes via subs and grants from groups such as the gaming trusts. This tends to be short term and is usually pieced together from a variety of funders. There is no guarantee of continuity and operational costs, such as salaries, are hard to get and may not be sustained if the next grant is declined or reduced. 

This constant chasing of funding makes long term strategic planning hard, even if the board has the skills and resources.

As organisations grow the skill level on the board tends to increase, although often they are still volunteers. 

For example, on a medium-sized sports board I looked at six of its eight board members were IoD members and some larger NFP’s do pay board members, although this is often more a retainer than full compensation.

I serve on several NFP boards and the governance experience of the board members varies greatly. Often I am the only one with “governance” experience to the extent I have nick named myself  ‘the governance bitch’ on a couple of them. 

I am the one that says that under your rules you can’t actually do that; or ‘if you want to do that you need to change your rules’ – which usually means I get tasked with rewriting them.

The IoD provides some good resources for directors working on, or looking to work on, NFP boards including courses such as the one-day Not-for-profit Governance Essentials and it has a NFP page in its resources section.  

Cathy Parker is a director of Adrenalin Publishing and serves on several NFP boards including the Rainbow New Zealand Charitable Trust (trustee), Magazine Publishers Association Inc, Audit Bureau of Circulation Inc (chair), Auckland Wheelbreakers Inc (treasurer) and SuperDiverse Women advisory board. 

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