AICD study reveals resilience of NFPs during COVID-19

The Australian Institute of Company Directors (AICD) has released its annual not-for-profit (NFP) governance and performance study, which reveals while COVID-19’s effects on the sector were not as damaging as predicted many organisations could take years to recover.

The AICD’s NFP Governance and Performance Study is in its 12th year and remains the largest report on governance in the NFP sector with over 1,900 survey respondents this year.

Last year’s study highlighted that in many subsectors, COVID-19 had intensified the financial pressures that existed prior to the pandemic, including that of the devastating bushfires of 2019/20.

This year’s study paints a more optimistic picture as 84 per cent of respondents reported making a profit or breaking even in the 2020/21 financial year.

However, 40 per cent say it will take at least two years to fully recover from the effects of the pandemic.

Broadly there are also ongoing economic concerns, with 81 per cent of NFP directors worried about the strength of the Australian economy.

The report also reveals that 95 per cent of organisations changed their business model to deliver services to clients.

AICD Managing Director and CEO, Angus Armour, said, “This is a true testament to the resilience of Australian NFPs who not only met the challenge of COVID-19 but went above and beyond to continue to deliver vital community services during this most testing time.

“Encouragingly, this report shows a commitment by NFP directors to continue innovating and evolving their operational models. This would have played a major role in the survival of NFPs throughout COVID and will ensure clients are served even better in the future.

“While this report shines an optimistic light on the sector, it’s important to point out that the impacts of COVID will be felt for years to come. Many organisations will continue to face overwhelming demand for their services and ongoing financial struggles.”

Key priorities for the next twelve months for NFPs included responding to post-pandemic opportunities, as well as dealing with workforce issues and a greater focus on innovation. Interestingly, merger activity and discussion were at an all- time low.

The AICD remains committed to our vision of strengthening society through world-class governance and improving capability of leaders within the NFP sector.

This extends to a range of resources, including our dedicated NFP Resource Centre, NFP

Governance Principles, and our continued advocacy for better policy and practices to govern the sector.

Other key findings of the 2021 NFP Governance and Performance Study:

• 20 per cent of NFP directors responding to the survey were remunerated (highest in the life of the study).
• 74 per cent of respondents report their time commitment is about the same, or somewhat more than the previous year.
• 33 per cent reported their boards have been operationally involved in their organisation’s response to COVID-19.
• 83 per cent of directors agreed they were confident in their executive leadership team’s decision making.
• Merger activity is at a ten-year low, with only 18 per cent of NFPs discussing merging in the next year. Only 1 per cent reported to be winding up their organisation.
• 49 per cent of respondents believe a post-COVID environment will create more opportunities for their organisation.

The 2021 NFP Governance and Performance Study will include an online dashboard which will enable readers to delve deeper into the trends that have emerged over the year. It is due to be launched next year.

Media contact: Maegen Sykes 0439 167 567