Strength in numbers

The establishment of a new not-for-profit consultative body designed to assist and identify the key issues affecting the sector will help to create a culture of continuous governance improvement.

The not-for-profit (NFP) sector makes an extraordinary contribution to Australian society and economy, with a combined annual revenue of over $100 billion generated annually and more than one million Australians employed by registered charities alone. That’s before we start counting the volunteers.

At the Australian Institute of Company Directors (AICD) more than 10,000 of our 37,000 members tell us they are involved with NFP organisations including charities, schools, hospitals, disability service providers and sporting organisations. However, our interaction with members suggests that up to two-thirds of all members actually have a link to this important sector.

Since the formation of the AICD in 1991, we have worked collaboratively with NFP boards to promote good governance through the development of NFP governance principles, established dedicated education products and governance tools. We also deliver and build on our successful annual NFP Governance and Performance Study. Additionally, in the last 12 months we have appointed an NFP sector leader and NFP policy adviser to drive engagement with members and the sector more broadly.

To strengthen our work in this space, in February we launched our NFP Chair’s Forum. It is made up of 28 chairs representing a diverse range of organisations to assist us with our work in the pursuit of excellence in governance.

The NFP Chair’s Forum is a practical demonstration of our commitment to the sector and to working with our NFP members. Launched by the Minister for Social Services, the Hon Christian Porter MP, the NFP Chair’s Forum will assist with the development of the AICD’s overall sector priorities, which include:

• Promoting excellence in governance of NFPs.
• Being the leader in NFP governance and a strong voice for the sector.
• Providing high-quality education, tools and resources in NFP governance.
• Influencing and working with government to create an appropriate NFP policy framework.

This consultative body will also assist us to identify and deliberate on issues affecting the sector. Just as importantly, it will identify future challenges to assist us in determining priorities for research or other information.

As a current NFP chair and director myself, I understand all too well the issues facing the sector and note that it simply cannot be business as usual. We must focus on a culture of continuous improvement for the governance standards in our sector.

NFPs face increasingly complex challenges and governance must continue to improve in response.

The publication in 2013 of the Good Governance Principles and Guidance for NFP Organisations was a landmark for governance in the sector. It is one of our most highly accessed resources. The questions for consideration which accompanied each of the principles remain a valuable resource for boards to use as a basis for their deliberations. Importantly, the principles recognised the diversity in size and scope of the NFP sector, and that this diversity made appropriate governance more complicated.

The Australian Charities and Not-for-profits Commission sets minimum standards of governance for charities – however, we ask the question whether that, just as in ASX-listed companies, NFPs should have a higher level of governance.

As part of this, we also think it is necessary for government to formally recognise the need for investment in building governance capability. This represents an excellent opportunity for collaboration between the sector, government and the AICD. This edition of Company Director features additional information on the launch (see page 33). Further updates will be provided as we continue to progress our work in the sector.

A final word on the Australian Governance Summit. On 3 to 4 March, we hold our inaugural domestic conference in Melbourne for which we have received more than 850 registrations, making it our largest conference ever. We look forward to the conference becoming the premier annual event for directors and governance leaders in Australia.