Company directors release NFP study

The Australian Institute of Company Directors (AICD) has released its sixth study of not-for-profits’ governance and performance.

Conducted by research firm Baxter Lawley on behalf of the AICD and sponsored by the Commonwealth Bank, the study highlights many of the challenges and priorities facing the NFP sector, including financial sustainability, mergers and collaborations, and NFPs’ relationships with governments.

For the first time, the study also shines a light on governance practices and challenges of arts and cultural organisations and the complexities of federated structures.

More than 2900 directors from a diverse range of NFPs participated in the study, making it the largest survey of NFP governance in Australia.

Key findings included:

  • Close to a third of NFPs had discussed mergers in the past year. Seven per cent had merged and a further 7 per cent were in the process of merging.  The push for consolidation was greatest among NFPs with incomes above $10 million or those operating in social services and development. Only 15 per cent of NFPs with annual incomes of less than $250,000 had considered a merger, and entities in the arts, philanthropy, and sports and recreation were least likely to have discussed it
  • Financial stability remained the major concern for most NFP directors: four of the six highest priorities for directors related to financial health. These included maintaining or building income, diversifying income sources and managing costs
  • Directors involved in international activities (34 per cent) were far more likely to rate their efficiency as high compared with directors working in professional associations (17 per cent), religious activities (15 per cent) and in sport, recreation and social clubs (11 per cent)
  • Eight per cent of NFP directors discussed over the past year the closure of their organisations
  • On average, directors gave the federal government a score of 4.6 out of 10 for understanding the NFP sector. The reasons given for the low scores included the recent drawn-out consideration of the future of the Australian Charities and Not-for-profits Commission (ACNC), the reduction of funding to the sector and reforms in procurement
  • Eighty-seven per cent of NFP directors were volunteers. Among those who were paid, the average remuneration was $25,700 and the median $17,000, and
  • On average, survey respondents spent 24 hours a month working as directors.

Check out this study and others profiled below. They provide valuable insights into the sector. Include them on your agendas for future governance meetings. For the larger charities, the studies and reports provide ideal material for a governance retreat.

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